by Timothy McQuiston, Vermont Business Magazine Secretary of Administration Kristin Clouser released Vermont’s revenue results for May 2023. May was another underperforming month for the General Fund, however, both the Transportation Fund and the Education Fund achieved their respective monthly targets. The personal income tax, the most important single source, lagged against expectations and is now falling behind for the month and the year with only one month to go.
Year to date, only the General Fund has exceeded its cumulative target through May which was derived from the annual fiscal year 2023 consensus revenue forecast adopted by the Emergency Board at its January 17, 2023 meeting.
The State’s General Fund, Transportation Fund, and Education Fund receipts were a combined $197.5 million, missing the $199.4 million monthly consensus target by -$1.9 million, or (1.0%). Cumulative results through May 2023, however, remained $30.0 million, or 1.0%, above the $2,914.3 million consensus target set back in January following the January 2023 Emergency Board meeting.
General Fund revenues for May totaled $117.3 million, -$2.3 million, or (1.9%), below the $119.6 million monthly consensus cash flow target. For the fourth month in a row, Personal Income Tax receipts failed to meet their monthly consensus cash flow target, missing by -$1.5 million in May. Health Care revenues missed their monthly consensus cash flow target by -$3.3 million- and included a combined -$4.1 million miss by Insurance Tax and Net Property Transfer Tax receipts. Both the Corporate Income Tax and the Meals and Rooms Tax, however, remained strong during the month of May, and exceeded their consensus targets by a combined $4.9 million. The Estate Tax, Liquor Tax and Other category also provided an additional $1.7 million of combined receipts above their May consensus expectations.
Revenues in the Transportation Fund achieved their $26.2 million May consensus target. Year to date, cumulative receipts remained below consensus expectations by -$1.4 million, or (0.5%) through the eleventh month of fiscal year 2023. May results showed a combined -$1.1 million downside miss, relative to target, for the Gasoline Tax, Diesel Tax, Motor Vehicle Purchase and Use Tax, and the Other Fees category. That under-performance was essentially offset by an above target performance in the Motor Vehicle Fees revenues during May, which exceeded their consensus target by $1.1 million.
Education Fund revenues exceeded their $53.6 million May consensus target by $0.3 million, or 0.6%. The downside -$0.2 million Motor Vehicle Purchase and Use Tax and -$0.8 million Sales and Use Tax misses were more than offset by $0.8 million of higher-than-expected net interest revenues and a combined $0.5 million above target receipts during May in the Meals and Rooms Tax and Lottery receipts components.
According to Secretary Clouser: “May represents the third month in a row the State has failed to achieve its combined monthly consensus revenue target. Although the administration is confident the General Fund will exceed its fiscal year-end goal, it remains to be seen by how much. June will be critical for determining whether the Transportation and Education Funds meet their respective annual consensus forecast targets as approved by the Emergency Board. That being said, the fact that the Transportation Fund only achieved its May target due to higher than expected motor vehicle fees offsetting losses in every other revenue component and revenues in the Education Fund having met its target almost solely due to investment earnings, is reason for concern. Given these concerns and the current uncertainty regarding the future performance of global, national, and local economies, the upcoming July consensus revenue forecast will be vital for determining how Vermont invests its future resources in a fiscally responsible and sustainable manner. The results of that July consensus forecast update and how revenues actually fare over the first half of next fiscal year in a highly uncertain environment will also determine the size and direction of any prospective budget adjustments that may be necessary in January.”
Source: 6.23.2023. Montpelier, VT - Secretary of Administration
