A new red flag rises on state revenues
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By Louis Porter Vermont Press Bureau - Published: March 9, 2010
MONTPELIER – State General Fund revenues were $10 million less than expected in February, making the job of state budget writers even tougher.
Most of the problem came from weaker than anticipated personal income tax receipts. But what is more worrisome than the raw numbers – even though those figures marked a 17 percent drop in expected General Fund revenue – were other possibilities raised by the lower than anticipated income for the state.
The state had made new revenue estimates in January, comparatively recently for the numbers to already be diverging from those estimates. It is also the second month in a row of revenues coming in lower than expected, and adding to the revenue anxieties, the source of the underlying problem is not entirely clear.
"It is certainly not good," Secretary of Administration Neale Lunderville said. "We are starting to develop a trend in personal income that is disturbing."
The problem could have implications for the current fiscal year and perhaps for the next fiscal year which budget writers in the Legislature are preparing for now.
"We are not growing as fast as we anticipated, the revenues are not there," Lunderville said. "The impacts of this kind of trend will play out for the current and the next fiscal year."
"The Vermont economy is still fragile. The recovery we think we are seeing is still very fragile," he added. "We hoped we were moving more quickly back to economic health but it doesn't look like we are making as much progress as we had thought."
The drop comes as lawmakers are already confronting a $150 million gap between projected revenue and current expenses of state government in the General Fund. Now, between January and February, the General Fund has taken in about $15 million less than expected.
"Our already steep climb just got $15 million steeper," Senate President Pro Tem Peter Shumlin said.
In January when the state's Emergency Board – that's the governor and the heads of the legislative "money" committees who decide what expected state revenues would be – last met they decided not to reconvene for six months in the hope that the economy and state revenues were on the way to recovery. During the recession the board had been meeting more often.
But that decision is being reconsidered, Lunderville said.
"That decision has not been made yet," he said. "This is a warning flag for the remainder of the year, not just for revenues but for the budget as well."
"We are already thinking of ways to address the budget problems if this trend continues," Lunderville concluded.
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