March tax revenues crush expectations

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March tax revenues crush expectations

Mon, 04/19/2021 - 1:52pm -- tim

by Timothy McQuiston, Vermont Business Magazine Tax revenue collections for the month of March 2021 once again have exceeded projections for all major funds. The State’s General Fund, Transportation Fund, and Education Fund receipts were a combined $60.81 million, or 39 percent above monthly consensus expectations.

State officials attribute the robust results to both some tax filing changes, which have pushed out refunds, and, mostly, to economic gains led by federal stimulus and consumer confidence.

While led by the personal income tax and its whopping 129.2 percent increase ($31.8 million), all categories, but for a few minor ones, were above projections for the month. Even the tourism-related Rooms & Meals tax was up over 26 percent for the month.

Travel, tourism, restaurants, bars and hospitality in general was perhaps the hardest hit industry during the pandemic. The SBA is set to launch its $28.6 billion Restaurant Revitalization Fund grant program.

On January 19, 2021, the consensus revenue expectations were upgraded substantially for fiscal year 2021 as compared to the August 2020 forecast.

Secretary of Administration Susanne Young released Vermont’s revenue results for March 2021 today.

General Fund revenues collected for the month totaled $143.69 million, or $51.83 million above the monthly consensus revenue target.

Secretary Young said: “Higher than expected General Fund revenues are partly due to the extension of the income tax due date, which has reduced the number of tax refund filings, but are also partly due to a renewed buoyancy in the pace of the US economic recovery. Factors helping the economy include the additional round of stimulus payments from the American Rescue Plan Act, steadily improving consumer confidence, and the growing sentiment that the pandemic is coming to an end.”

The Transportation Fund was $4.04 million, or 17.6%, above consensus expectations for the month, bringing in $27.03 million. Cumulatively in fiscal year 2021, the Transportation Fund receipts total $198.3 million, only down 0.15% from cumulative consensus expectations for the end of the third quarter.

“Transportation Fund receipts appear to have largely caught up from several months of below expectation receipts and the Transportation Fund is now on-target,” Young said.

The Transportation Fund has been lagging for several years as auto sales have been flat and fuel usage, especially during the pandemic in 2020, was down.

The Education Fund was $4.93 million, or 12%, above the monthly consensus target, having collected $46.1 million for the month.

“March receipts into the Education Fund were led by Sales and Use Tax receipts, reflecting continued consumption expenditure activity greater than predicted in the January forecast,” Young said.

“The increased pace of economic recovery and growth has happened more quickly than anticipated in the January 2021 consensus revenue forecast,” Secretary Young stated. “The American Rescue Plan, bringing aid to individuals and more than $1 billion to the State over the next few years, is boosting revenues now and, if invested strategically, will help to transform our economy, especially if invested in our communities and regions that need it to complete long overdue infrastructure projects.”

Source: Montpelier, VT - Secretary of Administration 4.19.2021