Vermont Business Magazine Vermont tax revenues under-performed again last month, as the personal income tax, the most important component in the state's tax structure, did not reach expectations. Personal income tax receipts have struggled for several months and resulted in the Shumlin Administration cutting spending in several departments by $31 million. Secretary of Administration Jeb Spaulding released the preliminary August fiscal year (FY) 2015 revenue results today for the General, Transportation, and Education Funds. August is the second month of FY 2015. General Fund (GF) revenues totaled $88.35 million for August 2014, -$3.59 million or –3.91 percent below the monthly target. Year-to-date, GF receipts were $189.35 million, -$5.41 million or –2.78 percent below the cumulative target. However, GF revenues were $1.69 million or 0.90 percent ahead of the same period for the prior fiscal year (FY 2014).
Secretary Spaulding said, "We are pleased that both Sales and Rooms & Meals Tax receipts surpassed their monthly targets and are running roughly 4.5 percent ahead of last year for the same time period, as they are a good barometer of economic activity. However, the lagging performance in the Withholding component of the Personal Income Tax, which was $4.3 million or 9.8 percent below target for the month and the main reason General Fund revenues as a whole are under projection, is concerning and requires ongoing attention. While collections in the first two months of any fiscal year are never enough to be an indicator of how the rest of the year will unfold, we will be watching Personal Income Tax receipts carefully in the coming months and analyzing what could be causing the deviation from projection. There are likely multiple factors, but, certainly, the under-performance suggests that underlying wage growth may not be as robust as the State's low unemployment rate would ordinarily indicate. This is a phenomenon that seems to be emerging on a national level."
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The Transportation Fund (TF) came in lower than projected for the month of August, finishing at $22.03 million, -$1.73 million or –7.30 percent less than its monthly target. On a cumulative basis, TF revenues were $41.96 million, -$0.68 million or –1.60 percent below the cumulative target. Compared to the prior fiscal year (FY 2014), TF revenues were $0.80 million or 1.95 percent ahead.
"The mixed results in the T-Fund over the first two months of fiscal year 2015, with July being a positive month, have done little to provide any direction regarding revenue for the year. Further, it appears there is a higher than normal amount of "in process" transportation funds that have not yet been credited to T-Fund accounts. That typically results in the following month being a "bounce back month," so I caution against drawing any conclusions about transportation revenue trends at this time," Spaulding stated.
The Education Fund (EF) also came in lower than budgeted for the month of August, finishing at -$0.42 million, or –2.86 percent, below its monthly target. However, year-to-date EF revenues were $0.23 million or 0.79 percent ahead of the cumulative target. In addition, EF revenue was $0.83 or 2.91 percent higher than the prior fiscal year (FY 2014).
Source: Spaulding's office. 9.5.2014