Tax revenues continue strong performance

by Timothy McQuiston, Vermont Business Magazine The state’s tax revenues continue to exceed expectations, as they have for more than a year. The General Fund, Transportation Fund and Education Fund in August all finished the month with revenue above target, continuing a show of strength early in the fiscal year. The monthly revenue report was released by Secretary of Administration Kristin Clouser today.

The state’s three funds were a combined $240.1 million, or 13.8%, above monthly consensus expectations. For the first two months of the fiscal year, combined revenues across all three funds were 8.2% above target.

General Fund revenues collected for the month totaled $154.4 million, $26.7 million above the monthly consensus cash flow revenue target.

The August numbers reflect a continuation of the above-forecast trend in personal income taxes and corporate income taxes, which handily offset slight misses in meals & rooms tax and estate tax receipts.

The magnitude of the better than expected performance of personal income taxes sets up the General Fund very well for a strong showing through the first quarter of the fiscal year, Clouser said.

Revenues into the Transportation Fund exceeded monthly consensus expectations, bringing in $27.0 million in August, $0.46 million above the consensus cash flow target estimate.

Receipts activity continued to be mixed versus consensus expectations, with the two fuel taxes generally underperforming and other sources – motor vehicle fees and motor vehicle purchase and use tax receipts - generally performing well.

Year to date, revenue collections in the T-Fund remained slightly ahead of target, which reverses a lagging trend from the previous year.

Education Fund revenues last month were $2.1 million, or 3.6%, above the monthly consensus cash flow target, having collected $58.7 million in August.

The Education Fund had strong performance against target in virtually every revenue category, paced by the $1.0 million higher than expected lottery transfer last month.

The recent upbeat nature of Education Fund receipts activity overall was the result of continued buoyancy in consumption taxes, which was likely a reflection of the continued positive nature of consumption activity by Vermonters and visitors to the state.

Revenue data for the first two months of the fiscal year show the upbeat level of receipts activity in the General Fund and the generally positive character of all revenue collections year to date.

According to Secretary Clouser: “This clearly represents a strong start to fiscal 2023. While receipts activity has continued to exceed expectations, it’s still early in the fiscal year and with persisting uncertainty in the economy, we remain wary of drawing conclusions about prospects in the months ahead.”