by Timothy McQuiston, Vermont Business Magazine Secretary of Administration Sarah Clark today released Vermont’s revenue results for February 2025. The General Fund, Transportation Fund and Education Fund all exceeded their respective monthly consensus cash flow target by a combined $202.3 million, exceeding the $196.8 million monthly consensus target by $5.6 million, or 2.8%. This is based on the annual consensus forecasts as adopted by the Emergency Board at its July 2024 meeting.
Total General Fund revenues for February were $119.8 million, $2.2 million, or 1.9%, greater than the $117.6 million monthly consensus cash flow target. A combined -$4.5 million underperformance in the Personal Income Tax, Corporate Income Tax, Estate Tax and Liquor Tax offset the $6.7 million cumulative gains above target by all other revenue sources.
The Personal and Corporate taxes can fluctuate greatly this time of year as tax returns and payments come in and refunds are paid out. It typically takes until May or June to get a clear picture of the performance of those revenue sources. To date, they are both ahead of annual projections.
The Personal Income Tax is the most important state revenue source. The tourism-related Meals & Rooms tax had a strong month. It had lagged behind targets for most of the fiscal year, which began July 1, 2024.
It was notable that the under-performance in the Estate Tax last month was again tied to that source reaching its statutory maximum level of $28.875 million in receipts for the 2025 fiscal year back in January.
According to Budget Director Aaron Brodeur: 16 V.S.A. § 2885(a)(2), “(a) A Vermont Higher Education Endowment Trust Fund is established in the Office of the State Treasurer to comprise the following: (2) in any fiscal year in which a General Fund surplus exists and the General Fund Stabilization Reserve is funded to its required statutory level, funds raised by the estate tax levied under 32 V.S.A. chapter 190 that are more than 125 percent of the amount projected by the Emergency Board in the July annual forecast made pursuant to 32 V.S.A. § 305a.” The 125% threshold has been reached and all estate taxes are now being deposited into the Higher Education Endowment Trust Fund. The monthly targets, therefore, appear to have not been met only because the 125% annual maximum has been achieved.
[The General Assembly established the Higher Education Endowment Trust Fund in the Office of the State Treasurer in 1999 to provide non-loan financial aid to Vermont students attending the University of Vermont, the Vermont State Colleges, and other Vermont post-secondary institutions (16 V.S.A. § 2885). The annual distribution amount is dependent on the investment gains or losses during the prior fiscal year.
[The Fund’s portfolio posted a gain of 10.2% during FY2024, which allows for a base distribution of $1,702,704, representing 5% of the Fund’s rolling 12-quarter balance. Accordingly, each institution will receive the following distribution for non-loan financial aid to Vermont students: 1. University of Vermont: $567,568; 2. Vermont State Colleges: $567,568; 3. Vermont Student Assistant Corporation: $567,568.]
Revenues in the Transportation Fund exceeded their $21.5 million February consensus target by $0.6 million, or 2.7%, yielding $22.0 million in total. A combined -$0.6 million underperformance in the Motor Vehicle Purchase and Use Tax, and Motor Vehicle Fees offset the $1.2 million cumulative gains above target by all other revenue sources.
Monthly Education Fund revenues of $60.5 million were $2.8 million, or 4.8%, greater than their February $57.8 million cash flow target. A marginal underperformance by the Lottery Transfer offset the $2.7 million gains made by all other sources.
According to Secretary Clark: “The second half of the fiscal year continues to exceed expectations. As the pandemic era cash balances in the State Treasury recede to pre-pandemic levels over calendar years 2025 and 2026; the Administration remains committed to ensuring these unanticipated surpluses are strategically invested in engineering a soft landing for the State’s existing programs and not directed toward program expansion that will only compound future fiscal pressures.”
Montpelier, VT – Agency of Administration. March 31, 2025
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