Personal income tax blows past projections by over $117 million in April

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Personal income tax blows past projections by over $117 million in April

Mon, 05/16/2022 - 3:29pm -- tim

(1) FY21 Personal Income includes $162M in deferred payments from FY20

(2) FY21 Corporate Income Tax includes $19.2M in deferred payments from FY20

Vermont Business Magazine Led by the personal income tax – the state’s most important revenue source – Vermont’s revenue results for April 2022 vastly exceeded projections.

General Fund, especially, and Education Fund revenues came in above target for the month while Transportation Fund revenue lagged the monthly target. Fiscal year-to-date, General Fund and Education Fund revenues are comfortably above target while the Transportation Fund is slightly behind target.

However, Secretary of Administration Kristin Clouser, who released the numbers Friday evening, said we shouldn’t expect a repeat next fiscal year. FY 2023 begins July 1.

The General Fund, Transportation Fund, and Education Fund receipts were a combined $531.4 million, or 35.0%, above upwardly revised monthly consensus expectations. Cumulative revenues stand at 6.7% above revised consensus expectations through the third quarter of the state’s fiscal year.

General Fund revenues collected for the month totaled $448.4 million, a stunning $138.7 million above the monthly consensus cash flow revenue target.

Fiscal year to date, General Fund revenues were $1,784.6 million, exceeding their target by $158.4 million or 9.7%. The exceedingly high cumulative receipts performance of the Personal Income Tax and the similarly positive cumulative performance through April of revenues in the Corporate Income Tax account for almost all the positive performance of the General Fund in April and year to date.

Economic vibrancy in calendar year 2021, buoyed by federal stimulus payments, led to an unprecedented spring personal and corporate income tax filing season, Clouser said.

Revenues into the Transportation Fund lagged expectations, bringing in $24.4 million in April compared to the consensus cash flow target estimate of $27.0 million. Fiscal year-to-date, the T-Fund brought in $234.0 million which was -$4.0 million or -1.7% below the consensus cash flow target.

Revenues for the month in the T-Fund were below target in all three non-fuel sources.

The Motor Vehicle Fees component was particularly off the mark for the month of April and receipts activity in the Motor Vehicle Purchase & Use Tax and in the Other Fees category were also weak last month.

While some of this may be explained by typical end-of-month issues that cause receipts to “spill over” between months, the fact remains that taxable activities tied to the T-Fund, notably fuel purchases, appear to be lower than has recently been the case for the broader categories of the economy. The T-Fund has been the weakest performer of the three for many years.

The Education Fund revenues were $1.8 million, or 3.2%, above the monthly consensus cash flow target, having collected $58.6 million in April. Year to date, the Ed Fund received $566.7 million, which is 1.3% higher than the consensus cash flow target.

Monthly receipts into the Ed Fund continued the pattern of reflecting the underlying strength of household consumption activity while also benefiting from the solid recovery of the leisure and hospitality sector.

The Rooms & Meals tax, which tends to track tourism, was 20.9% ahead, while the sales tax was 3.7% above expectations.

The three major state funds are a combined $161.6 million ahead of consensus revenue estimates heading into the final two months of the fiscal year.

According to Administration Secretary Clouser: “Fiscal 2022 is shaping up to be an extraordinary year for revenue collection, one that will be difficult, if not impossible, to repeat in the year ahead. We are already seeing signs of a moderation in federal fiscal and monetary policy which will inevitably have an impact in Vermont. This certainly bears watching as we develop next year’s budget.”

Source: Secretary of Administration 5.16.2022 Montpelier