A revenue report for June released Friday by the Agency of Administration shows that the state closed out fiscal year 2015 with $1.38 billion in revenue — approximately 1.5 percent above its revised projections.
The news that the state ended the year with some $20.9 million in extra cash is a reversal of expectations; six months ago economists predicted that Vermont would come in $10 million short for fiscal year 2015.
“When it comes to this sort of thing black is always better than red,” Secretary of Administration Justin Johnson said. The report is preliminary and may change depending on certain transfers that occur before it is finalized.
The end-of-year tally suggests that revenue grew by about 3.8 percent over last year, according to Johnson, indicating that there is consistent growth in the General Fund. Despite the strong end-of-fiscal year showing, the structural problem that has led to annual budget gaps over a seven year period remains: The state’s spending level has consistently outpaced revenue.
“The underlying problem is still there,” Johnson said. “It certainly hasn’t got any worse.”
Tom Kavet, the Legislature’s economist, and Jeffrey Carr, the economist for the Shumlin administration, will present an updated state fiscal forecast later this month.
According to a release from the Agency of Administration, $5 million of the surplus from FY 2015 will go to a fund for economic development in Windham County in the wake of the closure of the Vermont Yankee nuclear plant.
The preliminary results of the end-of-year receipts suggests that there will be sufficient money to trigger a provision the Legislature put into the FY 2016 budget bill: the first $5 million left over from the fiscal year 2015 General Fund will go to the low income home energy assistance program.
That will help to make up for a $6 million cut in the program. The Legislature this year adopted Gov. Peter Shumlin’s proposal to eliminate the state’s total contribution to the program, despite concerns among lawmakers and advocates that Vermonters have relied heavily on the fund during recent cold winters.
Karen Lafayette, an advocate for heating assistance, applauded the Legislature’s commitment “not to let people go cold.”
“This state, with very few exceptions, has always come through with additional state dollars to supplement the federal government,” Lafayette.
Under the budget act, the next $13 million left from FY 2015 is to go toward balancing the Medicaid budget.
Medicaid expenditures have been running high for months; in early May, reports suggested that the state was on track to be as much as $20 million over budget for the fiscal year.
Federal dollars fund slightly more than half of Medicaid expenditures and the state picks up the remainder. Johnson had not seen a tally of exactly how much over budget Medicaid ended up, but expects that the state’s share will exceed $13 million.
The Medicaid numbers will be finalized next week, Johnson said.
If there is any remaining general fund revenue, half will go to a fund for teachers’ retirement benefits. The rest would be split between the education fund and a rainy day fund.
Although the revenue report indicates that the state finished the year better than expected, Jim Reardon, commissioner of Finance and Management said that Vermont will “still have the spending pressures” in the long run.
“You still have significant spending pressures, most notably in health care and human services,” Reardon said.
According to the report, corporate income tax receipts exceeded expectations by 17.3 percent.
Rooms and meals taxes also performed better than expected this year — which could be attributed to a strong tourism season related to snow conditions at Vermont’s ski areas last winter.
Meanwhile, the inheritance tax came in 30.8 percent lower than expected, though Reardon and Johnson noted that it tends to be volatile.
