July tax revenues up, but personal income slumps

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July tax revenues up, but personal income slumps

Mon, 08/23/2021 - 10:57am -- tim

Vermont Business Magazine Secretary of Administration Susanne Young today released Vermont’s revenue results for July 2021. General, Education, and Transportation Fund revenues came in above target. However, the Personal Income tax, the states most important General Fund revenue source, was below its expectation. The PI had been leading the way in Vermont's revenue surplus over the last two years. Young indicated that while it's too early to tell (July is the first month of the 2922 fiscal year), the PI is a reliable economic indicator.

Meanwhile, other sources, like the Corporate, tourism-related Rooms & Meals and secondary taxes picked up the slack.

Revenue collections for the month of July 2021 have been compiled. The State’s General Fund, Transportation Fund, and Education Fund receipts were a combined $6.91 million, or 3.5% above monthly consensus expectations from the upgraded consensus revenue forecast adopted by the Emergency Board on July 30,2021.

General Fund revenues for the month totaled $124.81 million, or $3.04 million above the monthly consensus revenue target.

“While most subcomponents of General Fund revenues performed close to targets, it is worth noting that personal income, which is a good bellwether for the economy, underperformed while one-time inheritance and estate taxes overperformed, creating a net increase in monthly receipts,” Secretary Young explained. “It is also important to note, this revenue report for the first month of the fiscal year does not reflect a trend in any major fund or revenue source.”

The Transportation Fund was $470,000, or 2.16%, above consensus expectations for the month, bringing in $22.03 million.

The Education Fund (excluding property taxes) was $3.4 million, or 5.97%, above the monthly consensus target, with $60.42 million in total receipts for the month.

“Sales and use taxes continue to fuel the overperformance in the Education Fund, accounting for $2.91 million of the $3.4 million in added revenue,” said Secretary Young.

“Federal policy, like the advance child tax credit and pandemic unemployment assistance coupled with unprecedented federal spending bills like the American Rescue Plan Act is putting more money in Vermonters’ pockets, which they are in turn, using to buy goods and services and propping up Vermont’s economy. The near-term outlook in the three major funds is strong; however, we must continue to consider these federal policies as onetime events as we build fiscal year 2023 budgets,” Secretary Young said. “If we establish a base level of spending that is not sustainable once this federal funding goes away, we will create a very difficult fiscal environment down the road.”

Source: Montpelier, VT - Secretary of Administration 8.23.2021