Vermont Business Magazine Revenue collections for the month of October 2019 released today support a trend in which personal income taxes remain relatively strong, corporate taxes are unpredictable, and the Transportation Fund continues to underperform because of low gasoline receipts and sluggish car sales.
Meanwhile, the stalwart rooms & meals taxes, which supported the state’s revenue stream for many years when personal income did not, is not keeping up, despite coming off the fall foliage season. R&M largely reflects tourism activity. The expectations for the R&M have been high because of its strength over the last few years. Despite slipping recently, it is still ahead of year-to-year targets.
The sales and use tax, which had been missing targets for several years, is ahead of expectations. This could be because of the state capturing more and more taxes from online sales.
“General Fund receipts were 2.44% above the consensus cash flow target for the month; Education Fund receipts were on target; and Transportation Fund revenues were below expectations,” stated Administration Secretary Susanne Young.
General Fund revenues collected for the month totaled $130.23 million, or $3.10 million above the monthly consensus revenue target, which is tied to the annual consensus revenue forecast adopted by the Emergency Board on July 29, 2019.
In particular, personal income tax performed above expectations by $3.99 million.
“While pleased with the better than expected revenue coming into the General Fund,” Secretary Young noted, “as we build the budget for presentation to the Legislature in January, it is clear that should any revenue upgrade be recognized by the Emergency Board in January, it will be quickly absorbed by ongoing operational costs of government. The gap, to date, between the revenues forecast for FY 2021 and anticipated growth in spending required to meet current services obligations, is approximately $55 million. Adding in the initial budget requests for increased general fund spending for program need, the gap to date grows to over $70 million.”
The Transportation Fund was 4.06%, or (-$0.99 million), short of expectations for the month bringing in $23.38 million. All sources within the Transportation Fund performed below expectations this month with the exception of motor vehicle fees, which met expectations.
Year-to-date, the Transportation Fund is $1.03 million, or 1.07%, below the consensus forecast.
The Education Fund was essentially on target having collected $50.53 million for the month, which was $0.06 million, or +0.12%, ahead of the forecast.
Sales and use tax and meals and rooms tax performed above expectations, while motor vehicle purchase and use tax and lottery revenues performed below expectations. Year-to-date, the Education Fund is just $0.51 million, or 0.27%, above consensus forecast.
Note: Adjusting for redirection of certain health care-related taxes under Act 6 of 2019 and redistribution of the meals and rooms tax under Act 76 of 2019, for comparison purposes only, in the accompanying General Fund tables, the year-to-date revenues for October 2019 (FY 2020) represent changes of +3.14%, -1.36%, and +8.03% for the General Fund, Transportation Fund, and Education Fund, respectively, from the same period in FY 2019.
Source: Administration 11.22.2019