Tax revenues stay well ahead of targets for June and year

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Tax revenues stay well ahead of targets for June and year

Mon, 08/01/2022 - 4:59pm -- tim

Vermont Business Magazine Vermont General Fund tax revenues, as expected, continued to exceed expectations for the month of June and for fiscal year 2022, which ended June 30. The vital personal income tax once again led the way, exceeding targets for the month by more than $25 million. With the General Fund and Education Fund revenues comfortably above targets for the year, state revenues will be well above the projected fiscal year total, despite the Transportation Fund missing its target. The T-Fund has struggled to maintain consistency, but the increase in fuel costs could bolster revenues in the near term. Meanwhile, the Ed Fund in June fell back as sales tax receipts under-performed, despite an otherwise strong year.

Secretary of Administration Kristin Clouser released Vermont’s revenue results for June 2022 today.

The state’s General Fund, Transportation Fund (T-Fund), and Education Fund (Ed Fund) receipts in June were a combined $295.6 million, or 12.8%, above upwardly revised monthly consensus expectations.

Last Thursday, based on future strong performance, especially by the personal and corporate income taxes, as well as the tourism-related rooms & meals tax, the Emergency Board increased General Fund targets by over $130 million for FY23 and over $30 million for FY 24, despite risks related to inflation, COVID and international political problems.

Cumulative revenues for the fiscal year are 7.9% above the consensus projections of the state’s economists.

General Fund revenues collected for the month totaled $210.6 million, $40 million above the monthly consensus cash flow revenue target. Fiscal year to date, General Fund revenues were $2.1 billion, exceeding their target by $225 million or about 12%.

The June numbers were driven by the same forces as previous months: a strong receipts performance of the Personal Income Tax and the similarly positive receipts performance of the Corporate Income Tax.

All components contributing to General Fund revenue came in above target in June, with the exception of Insurance Premium and Property Transfer Taxes.

Revenues into the Transportation Fund slightly lagged monthly consensus expectations, bringing in $27.5 million in June, below the consensus cash flow target estimate of $31.6 million.

For the fiscal year, the T-Fund brought in $287.9 million, which was $8.3 million, or 2.8%, below the consensus cash flow target.

Revenues for the month in the T-Fund were down 13% overall, with gasoline tax the only component on target.

The overall negative receipts performance of the T-Fund appears to be a reflection of the various cross-currents associated with the price of fuels. This trend has the potential to set the Transportation Fund back on track in Fiscal Year 2023.

The Education Fund revenues were $2.2 million, or 3.7% below the monthly consensus cash flow target, having collected $57.6 million in June.

For the entire Fiscal Year however, the Ed Fund received $676.2 million, which is 1.3% higher than the consensus cash flow target.

The unusual, below target performance of the Education Fund this month can be attributed to lower than expected proceeds from the Sales and Use Tax and under-performance in the Lottery Transfer component.

Other components performed in-line with projections and previous trends this fiscal year.

State revenues for Fiscal Year 2022 are about $3 billion, when taking into account the three major funds. This exceeds consensus estimates by almost 8%.

According to Administration Secretary Clouser: “We have ended this fiscal year in excellent financial shape, thanks largely to higher than expected revenues for personal and corporate income taxes. It is unlikely, however, that these revenues will continue to surge in this fashion throughout Fiscal Year 2023. We need to anticipate a return to business as usual when we construct our budgets for Fiscal Year 2024.”

8.1.2022. Montpelier, VT - Administration Secretary