Vermont tax revenues take a beating, off nearly 10 percent

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Vermont tax revenues take a beating, off nearly 10 percent

Thu, 05/04/2017 - 4:06pm -- tim

Vermont Business Magazine The Personal Income tax, by far the state's most important General Fund revenue source, was below its target by over $25 million for April. The PI had been running ahead of annual projections, but has now fallen over $11 million behind with only two months left in the fiscal year. The Sales and Rooms & Meals taxes also were below targets. The only component now ahead for the year is the Corporate tax, which was up for the month over 34 percent and for the year nearly 19 percent.

Overall, General Fund revenues collected for the month of April totaled $201.10 million, which is -$21.65 million, or 9.7 percent, below the consensus monthly revenue target adopted by the Emergency Board on January 19, 2017, according to Secretary of Administration Susanne Young. The poor performance in April was driven by a -$25.34 shortfall in the Personal Income Tax. The Corporate Tax for April finished ahead of projections by +$3.94. April marks the 10th month of FY2017.

Through these first 10 months, total receipts for the General Fund are -$3.55 million below projections, or $1,237.75 million against a target of $1,241.30 million. This does not take into account up to $16 million of pending Corporate Tax refund requests currently under review.

“We knew that our revenue picture for the fiscal year would come into focus at the end of April,” said Young. “Unfortunately, while we ended March with a $18.1 million positive position, the April revenue downturn has moved us to a net negative $3.5 million position.”

“The lower-than-expected tax receipts in April coupled with relatively flat receipts in Meals and Rooms and Sales and Use taxes with only two months left in the fiscal year is a concern. I will not be surprised to see a revenue downgrade in July as new consensus targets are established,” added Young.

The Transportation Fund collected $22.91 million for the month of April, which is -$1.47 million below its $24.38 million target. This underperformance was driven by a decrease across all revenue streams within the fund. Year-to-date receipts in the Transportation Fund are $216.19 million against a target of $219.16.

Governor Phil Scott's Communications Director Rebecca Kelley said in a statement: 

“Today’s report on April revenue collections is yet another reminder of the significant economic challenges Vermont faces. With the April revenue downturn and only two months left in the fiscal year, we face a potential budget gap at year end.

“Coupling this trend with our shrinking workforce and decline in K-12 student populations, it is more important than ever to focus on growing the economy and making Vermont more affordable – priorities the Governor has set for his Administration. We cannot afford to ignore these trends, and we must recognize that the status quo will not reverse them.

“With the potential for a shortfall, it is clear the state cannot afford an FY2018 budget that spends a single penny we do not need to spend. That’s why the Governor feels it would be irresponsible to leave up to $26 million in property tax savings on the table, which the state could realize through school districts’ more affordable health plans.

“Governor Scott will continue to work with the Legislature on this proposal, and other savings opportunities, to put the state in the best position to reverse these trends.”

The Education Fund collected $15.75 million for the month of April, which is -$1.22 million below its $16.97 million target.

Compared to revenues collected at this point in FY2016, there is an increase of 2.42%, or +$29.26 million in the General Fund; a 1.28%, or $2.73 million increase in the Transportation Fund; and a -0.01%, or -$0.01 million decrease in the Education Fund.