The state fell just shy of meeting its budget last year, according to preliminary data on Vermont’s major revenue receipts, released by the Agency of Administration Wednesday.
Some figures will be adjusted slightly before the end of the month, as the state closes the books for the 2014 fiscal year. But they’re not likely to change much, said Sarah Clark, deputy commissioner of finance and management.
The much-scrutinized General Fund cleared its goal with almost $2.5 million to spare. The Education, Transportation and Transportation Infrastructure Bond funds, however, fell short. (The portion of the Education Fund analyzed here does not include property taxes.)
Overall, the funds missed projections by about $2.88 million for the fiscal year that ended June 30 — a very small fraction of the combined $1.78 billion in expected collections.
Jeb Spaulding, Secretary of the Agency of Administration, called it even.
“I don’t think anybody would argue that less than two-tenths of a percent is off-target,” Spaulding said.
The slim margin belies the extreme volatility in the largest portion of the biggest fund.
Personal income taxes comprise roughly half of the General Fund, whose $1.325 billion target dwarves the others. Personal income tax collections fell short in FY14 by $22 million, or 3.21 percent.
A record inheritance and estate tax collection in April — $19 million — made up for much of that deficit.
Budget writers at the end of the legislative session also tapped the estate tax surplus to cover a $5 million business incentive. Funding of the Vermont Enterprise Investment Fund was originally proposed as contingent on surplus revenue at the end of the fiscal year.
But estate taxes are impossible to predict, and it was lucky for the state budget the one-time funds came through at the same time other revenue streams shrunk.
The question now before state officials and their consulting economists is whether the personal income tax decline was a one-time event or a future trend.
The answer will determine whether to lower the FY15 projections on which the current fiscal year’s budget is based.
Steve Klein, who heads the Joint Fiscal Office, echoed state economists who have said the drop is largely attributable to a hiccup at the end of 2012, just before federal tax codes changed. At that time, sophisticated taxpayers around the country cashed in assets to avoid paying higher taxes in future years.
“The personal income taxes could all be a function of 2012,” Klein said. “But not necessarily.” State economists are looking hard at tax records and economic models to figure that out, he said.
Spaulding said he hasn’t heard any other economic explanation for the underperformance.
“However, it is not out of the realm of possibility that it will still have some sort of a rollout effect,” he said.
In the event economists downgrade future revenue expectations, Spaulding said the state will act quickly to realign the budget with the revised forecast.
“If there is a downward revision, the sooner you address it, the easier it is,” Spaulding said.
Legislative economist Tom Kavet and executive branch consulting economist Jeff Carr will present their consensus revenue forecast to state officials July 24.