By Timothy McQuiston, Vermont Business Magazine Secretary of Administration Kristin Clouser released Vermont’s revenue results for December 2022, which again showed strength in the vital personal income tax. For the third month in a row, all three major funds - the General Fund, the Transportation Fund and the Education Fund - ended with revenue above target. Year to date, the General Fund and the Education Fund remain ahead of target while the Transportation Fund is slightly behind.
Tax revenue collections for the state’s General Fund, Transportation Fund, and Education Fund receipts in December were a combined $266.2 million, or 5.3%, above monthly consensus expectations.
For the first six months of the state’s fiscal year, combined revenues across all three funds were 6.3% above combined consensus target.
General Fund revenues collected in December totaled $186.5 million, $12.1million above the monthly consensus cash flow revenue target.
Year to date, General Fund revenues were $80.6 million, or 8.8%, above consensus.
Positive receipts activity over the month were mostly concentrated in the two income tax sources – personal and corporate.
In a period of persistently high asset prices, strong corporate profitability, and upbeat consumption spending, personal and corporate income tax liabilities have moved substantially higher, and revenues for most consumption taxes have also moved up.
Revenues into the Transportation Fund beat monthly consensus expectations, bringing in $24.3million in December, $0.5 million above the consensus cash flow target estimate.
Year to date, receipts are still below consensus expectations by -$1.0 million, or -0.7%.
The T-Fund posted a third consecutive positive month relative to monthly consensus expectations. This occurred despite another lagging month for the gasoline tax.
In contrast, revenues came in better than expected in the T-Fund’s principal consumption tax source – Motor Vehicles Purchase and Use. In addition, receipts in the Motor Vehicles Fees category were above target.
Education Fund revenues last month were $0.9 million, or 1.6%, above the monthly consensus cash flow target, having collected $55.4 million in December.
For the first six months of the fiscal year, the Education Fund comfortably outperformed the consensus estimate by $10.4 million, or 2.9%.
Results last month and year to date are primarily driven by the various consumption taxes that underpin revenues in this fund.
These results reflect the enduring resiliency of consumption activity across the economy, even as Federal Reserve policymakers have sharply raised short-term interest rates as they attempt to slow inflation-accelerating increases in household and business consumption.
Revenue data for the first six months of the state’s fiscal year continue to show positive results in the aggregate.
According to Secretary Clouser: “The economy and revenues continue to reflect the push and pull of the exceptional federal fiscal stimulus and the Federal Reserve’s historically harsh tightening moves that are designed to tame the recent rise in inflation. This dynamic is inserting an unusually high level of uncertainty into the revenue outlook, but we are pleased that we enter the second half of the state’s fiscal year from a position of strength.”
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