Vermont cleared its 2013 fiscal year target with $26 million to spare in the general fund, Secretary of Administration Jeb Spaulding reported Thursday.
The transportation and education funds ended the fiscal year shy of expectations. June receipts were 4.88 percent, or $118.16 million, lower than projected.
July 1 marked the start of the 2014 fiscal year.
Gov. Peter Shumlin said the general fund news is encouraging because both personal and corporate collections have shown growth.
“We know we cannot count on unimpeded progress,” Shumlin said in a news release. “With the federal gridlock and fiscal problems, unpredictable weather, and global economic uncertainty, we have plenty of challenges ahead. While we must keep our focus on economic progress, the year-end results for the state budget add to our confidence that we are on the right path,” he said.
Spaulding attributed the disappointing June numbers to personal and corporate refunds that totaled more than what had been budgeted for. Personal income taxes fell short of their mark by roughly $5.7 million, corporate by about $1.1 million.
Year to date, both the personal and corporate income tax categories exceeded projections, by 5.77 and 0.9 percent, respectively. Personal income taxes typically comprise more than half of the state’s general fund; corporate income taxes are the third biggest source.
Among the major elements of the state’s general, transportation and education funds, motor vehicle fees were the only other revenue source that fell short of June projections by more than $1 million.
High performers in June included sales and use taxes, the second biggest source of money for the general fund. That amounted to $19.22 million, more than 4 percent above budget. Year to date, though, sales and use tax collections were slightly lower than expected.
Gasoline and diesel fuel taxes injected a combined $8.77 million into the transportation fund in June, about 31 percent and 17 percent more, respectively, than anticipated when the budget was last revised at the January meeting of the Emergency Board.
That wasn’t enough to push the transportation fund past the finish line, though. It came in $910,000 short.
The education fund also missed its mark by about $350,000.
Compared to the prior fiscal year, nearly every source of revenue increased. Most notably, personal income taxes exceeded fiscal year 2012 earnings by more than 10 percent, or $63.65 million. Corporate income taxes also exceeded the prior fiscal year by more than 10 percent. The inheritance and estate tax and property transfer tax improved by more than 15 percent and 16 percent, respectively.
Shuffling surplus and deficits
An extra $26 million in the general fund will give the state some breathing room in future budget cycles.
Half the surplus will be directed to a “supplemental property tax relief fund,” from which all or a portion will go to the education fund. One-quarter of the general fund surplus will go to the rainy day fund, and the final quarter will be reserved as a buffer for reductions in federal funding.
The shortfall in the transportation fund, on the other hand, might pose a problem for next year, according to Steve Klein, director of the Joint Fiscal Office.
Klein said a portion of the transportation fund raised in FY13 was set aside for FY14, but it can be used instead to help balance the books for the fiscal year that just ended. Some projects that weren’t completed in the past year may not be carried forward.
If the forecast for transportation fund revenues goes up for FY14, the state will be in good shape to absorb the shortfall. If it goes down, then the problem with any FY14 shortfall plus the FY13 shortfall will have to be addressed, he said.
The education fund is more of a concern to Klein. Any transfer this year from the general fund will be nice, he said. “But looking at FY15, we’re still looking at a major problem,” he said.
Officials hope to have a better sense next week of what to expect from the new fiscal year. The Emergency Board must meet twice a year, in January and July, to adjust revenue expectations based on current economic indicators. The next meeting is scheduled for Tuesday.
