Business & Economy

Data visualization: Personal income receipts fall short again

Vermont’s General Fund revenue shortfall for the current fiscal year slipped in November from about $12 million to $18.63 million, Gov. Peter Shumlin’s administration announced Monday. The monthly revenue report again cited lower than expected personal income tax receipts as the weakest link in the state’s budget planning.

Secretary of Administration Jeb Spaulding said in a news release that the revenue picture this fiscal year is hard to interpret. November was the eighth-straight month that personal income receipts have come in below projections.

Personal income taxes make up about half the state’s General Fund, and now comprise almost all of its shortfall.

The state’s economists had predicted approximately $41 million in personal income tax receipts in November, but the state brought in $38 million. The overall revenue gap of $6.72 million is almost 8 percent below the monthly target.

“The fact that Personal Income Tax receipts, the largest source of General Fund revenue, have underperformed every month since April, and are now almost $18 million below projection for the fiscal year, is of significant concern and a big reason why the Shumlin administration is seeking to reduce state spending without delay,” Spaulding said in a news release.

Spaulding, along with Department of Finance and Management Commissioner Jim Reardon, informed the Legislature’s Joint Fiscal Committee in November that they intended to unilaterally execute budget cuts before the newly elected Legislature reconvenes in January.

Lawmakers rebelled, questioning the executive branch’s authority to act unilaterally under the current circumstances. The Shumlin administration later conceded, saying it still believes it has the right, but would rather work with elected officials than argue over the jurisdiction.

He said the urgency remains, but there is some indication that the year-to-date shortfall, five months into fiscal year 2015, may be offset by other growth.

“Improving job and economic growth rates, as well as better than forecasted performance in consumption taxes … support this thinking,” Spaulding said in the release.

“We strongly believe, however, it would be risky not to adjust spending downward at this time, given receipts to date and uncertainty about the road ahead.”

In the Transportation Fund, recent low gasoline prices may have taken a toll on the state’s revenue collections: Gas taxes, excluding diesel, fell almost $1.5 million short in November alone, missing their target by more than 22 percent. Fiscal-year-to-date, the slippage leaves the fund less than $1 million shy of the forecast.

The nonproperty tax sources for the Education Fund — largely consumption taxes — made their targets with $640,000 to spare.

All funds and almost all revenue streams are outperforming metrics for the prior fiscal year. But Spaulding emphasized in his release that, due to the Thanksgiving holiday coming so late last month, that some collections made in November will be attributed to December.

“This difference affects the accuracy of comparisons to monthly targets and year over year performance,” Spaulding said.

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Hilary Niles

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  • “In the Transportation Fund, recent low gasoline prices may have taken a toll on the state’s revenue collections: Gas taxes, excluding diesel, fell almost $1.5 million short in November alone, missing their target by more than 22 percent. Fiscal-year-to-date, the slippage leaves the fund less than $1 million shy of the forecast.”

    Gotta love it when the lawmakers put a progressive tax on fuel, then the price drops. Carma’s a bitch isn’t it?

    It’s been 8 months and our leaders still haven’t figured out why income taxes keep coming in below expectations.

    Walter, are people leaving the state for greener pastures?

  • Steve Allen

    I have a couple of questions that perhaps someone can address? First, isn’t the tax on gasoline a flat rate? Why would the reduced cost of a gallon of gas cause a budget shortfall? Second, while Vermont has a low level of unemployment, could the lack of income tax be due to Vermonters who have given up looking for work or that have enrolled in the numerous public assistance programs the State offers?

    Steve Allen
    Waitsfield, VT

    • Scott Mackey

      The legislature recently converted the tax from a straight “cents per gallon” to a hybrid combination of “cents per gallon” and “price per gallon”. The idea was to capture more revenue from rising gasoline prices that were leading to consumption declines on the cent per gallon tax. Mr. Jorgensen’s post refers to that.

      I understand, however, that there is a floor under the “price per gallon” component that will prevent revenues from falling too far as the price of gas falls.

  • Chet Greenwood

    Shumlin needs to take off his “rose colored” glasses when he adds his input to the budget.

    During his campaign speeches, he consistently stated that his administration had created 7500 new jobs since he became Governor.

    According to the VT DOL, the total employment decreased by 3200 jobs in that same time. Who do you believe?

    The new jobs added certainly weren’t the caliber of those lost otherwise the tax revenue wouldn’t take as big a hit.

    Can’t have it both ways, Governor!

  • The official trend, jobs and people with income leaving the state ahead of Single Payer. And so it will continue….

  • don keelan

    has anyone bothered to ask how many well to do taxpayers are no longer Vt. residents for tax purposes? I know at least a half dozen or so in southwestern Vt. who now have declared AZ and FLA. as their tax homes—with more to go.

    • Don, I don’t think we will know for sure until next years tax filing data comes in. I know of several in my community that have either changed their residency or have all together moved.

  • Karen McCauliffe

    It should be noted that not only did the Oct & Nov 2014 personal income tax revenues come in below forecasts, but they were also below Oct & Nov 2013 levels. In previous months this year when personal income tax revenues were below forecasts, they were still above 2013 levels.

    Will this become a new trend for the months ahead. Let’s hope not!