Vermont revenues both disappointed and delivered in July — not entirely uncommon or unexpected for the first month of the fiscal year, according to Secretary of Agency of Administration Jeb Spaulding.
“It is nice to be basically on target for the month and significantly ahead of last year, but I caution against reading too much into collections from the first month of a new fiscal year,” Spaulding said in a news release.
He said July revenues traditionally are both volatile and small compared to other seasonal trends. But he can’t help feeling encouraged by “steady upward revenue progress” when comparing year-over-year growth.
The following charts compare July’s actual receipts and transfers into the General, Transportation and Education funds against the month’s targets for those funds. A third comparison shows how July’s revenues compare to actual receipts from the same time last year.
Hover over each bar to see the actual dollar figure, in millions, for the major revenue sources in each fund.
The General Fund fell just $320,000 short of its $103.78 million target, weighed down mainly by lower than expected receipts in personal income, sales and use, and corporate income taxes.
The Transportation Fund exceeded its nearly $18 million goal by $370,000, with diesel fuel taxes and motor vehicle fees making up for missed marks in gasoline and motor vehicle purchase and use taxes.
In the Education Fund, the same shortfalls in sales and use and motor vehicle purchase and use taxes also appeared. The non-property-tax portion of the fund closed July about $400,000 shy of its $14.61 million mark.
The corporate income and estate taxes in July show out-of-the-ordinary performance.
Corporate income tax collections were 89.05 percent below projections due to a technical adjustment. Out-of-state taxpayers submit consolidated tax returns, as Sue Zeller, Deputy Commissioner of the Office of Finance & Management, explained. All the money they pay gets put into the corporate income tax fund, then distributed to the proper accounts.
Some of the money that got returned out of the corporate income tax account could have come to the state in July, but it also may have been reported as corporate income tax earnings in prior months. July’s low number, therefore, could be reflecting a balancing out of higher than expected corporate revenues in recent months, Zeller confirmed.
The estate tax, by its nature, is an unpredictable source of one-time funds, rendering a prior-year comparison notable, perhaps, but virtually meaningless. In this case, Zeller said, the state knew that a very large estate had been settled and would result in a large tax payment. The state’s economists, therefore, were able to predict a big infusion in July. This helps explain why July’s inheritance & estate tax receipts were close to target, but far beyond such revenues in the same month last year.
Zeller noted that the newly raised diesel tax took effect July 1 and, in most cases, won’t be collected until next month. The strong performance of the line item in the Transportation Fund, therefore, may be due to increased travel or other anomalous circumstances. It is not yet a solid indication of what the tax will deliver in the coming year.
The lottery transfer of $1 million even is intentionally static for July, Zeller said. It’s possible and even probable that July lottery receipts would afford a larger transfer to the Education Fund, but budget writers knew there still would be some accounting left to do. Consider July’s transfer a down-payment to be reconciled in the coming months.
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