by Timothy McQuiston Vermont Business Magazine The Personal Income tax took another hit last month and dragged down General Fund revenues for October. The PI is by far the most important GF revenue source. The disappointing GF revenues report came despite a rebound by the Corporate Income tax, which has been lagging much of the fiscal year and is still much in the red. The usually reliable Rooms & Meals tax, which largely tracks tourism activity, was slightly down as was the Sales Tax, which has been unreliable the last few years.
Revenue collections for Transportation were also down slightly, while Education showed a positive result.
General Fund revenues collected for the month of October totaled $107.36 million, -$0.20 million below the consensus cash flow expectation for the month. The October monthly consensus cash flow target reflects where General Fund receipts overall should be through the month, given the consensus revenue forecast for fiscal year 2018 adopted by the Emergency Board on July 21, 2017, according to Secretary of Administration Susanne Young.
The under-performance was driven primarily by -$5.69 million less than expected collections in Personal Income Tax. This variance was offset by the fact that not all of the expected $16.3 million in pending extra ordinary corporate refunds were fully paid out as expected in October. All other components of the General Fund were either slightly ahead or slightly behind target.
Year to date, the General Fund has under-performed by -$3.06 million, consisting of a cumulative down in the Personal Income Tax of -$6.41 million and a better than expected result in the Corporate Income Tax of $2.99 million and the Meals & Rooms Tax of +$0.8 million versus its cumulative target through October. The positive performance in the Corporate Tax is attributed to a lower than expected activity in Corporate Refunds.
The Transportation Fund collected $23 million for the month, -$0.58 million behind its $23.58 million target. All components of the Transportation Fund were modestly below target last month except for the Purchase and Use Tax which was up versus its monthly consensus cash flow target by $0.36 million. Year to date, the Transportation Fund is ahead of its cumulative target through October by +$0.69 million.
The Education Fund collected $18.45 million for the month, +$0.41 million above the consensus target of $18.04 million. Year to date the Education Fund is ahead of its cumulative through October target by $0.92 million.
Compared to the period through October of last fiscal year, cumulative General Fund revenues to date have decreased by -$12.43 million, at $457.48 mil-lion through the first four months of fiscal year 2018 versus $469.92 million for the same period last fiscal year. This decrease can be largely attributed to lower than projected Corporate Tax receipts, coupled with a partial payout of the pending extraordinary corporate refunds mentioned above. The Transportation and Education Funds revenues through the first third of fiscal year 2018 were also only slightly ahead of last year’s October receipts totals by $3.02 million and $4.14 million, respectively.
Secretary Young stated, “This month’s results in the Personal Income Tax pushes the year to-date total to a cumulative underperformance of -$6.41 mil-lion. This clearly is concerning, and warrants more in-depth analyses and caution pending the next update of the consensus revenue forecast for fiscal year 2018 and beyond. The next updated consensus revenue forecast will be completed in January,” the Secretary concluded.
Source: Secretary of Administration, Susanne Young 11.21.2017