[A] revised revenue forecast for fiscal year 2016 puts the state back in the black.
State economists say the general fund tax receipts will grow by 3 percent in the coming year, or by $40 million.
At the beginning of 2015, revenues were down by $18 million.
The revised forecast, presented by Jeffrey Carr, the economist for the Shumlin administration, and Tom Kavet, the economist for the Vermont Legislature, shows modest growth in the state’s economy.
But most of the projected uptick in tax receipts, roughly $30 million, is the result of tax increases that were enacted this year. The tax changes include an expansion of the sales tax to include soft drinks, the elimination of a tax deduction for state taxes paid in a prior year, a cap on tax deductions and a new meals tax on vending machine products. In addition, lawmakers found $53 million in spending reductions to help fill a $113 million budget gap.
Without the tax changes, general fund receipts would have grown by $9 million, according to Kavet.
General fund spending for fiscal year 2016 grew by 4.1 percent, or $59 million, to a total of $1.469 billion. Total spending grew by 1 percent and is projected to be $5.531 billion, including federal funds, transportation and education.
Estimates for the mid-year budget adjustment (the true-up of spending and revenue) have not yet been calculated, but preliminary projections are in the $30 million range, according to information from the Joint Fiscal Office.
Medicaid costs have been higher than expected in recent months, and the trend is expected to continue well into next year.
Fiscal year 2015 ended with $25 million more in the state kitty than anticipated. The surplus will be used to subsidize the Low Income Home Energy Assistance Program ($5 million) and for unanticipated state Medicaid expenditures ($13 million). The remainder, roughly $7 million, will be divvied up for retired teachers’ health care (50 percent), the education fund (25 percent) and the rainy day reserve (25 percent).
Economy continues to grow, slowly
The economy is growing at the slowest rate since World War II, according to Kavet and Carr. While all of the indicators are pointing in a positive direction, nothing is happening fast. In the first quarter of 2015, for example, real estate prices inched up by 3 percent above the 2005 to 2009 peak price for property in the state. Corporate profits in Vermont reached a record $122 million in fiscal year 2015, and are now leveling off. Skier visits hit an all-time high of 4.7 million in fiscal year 2015.
Unemployment continues to shrink in Vermont. The state has the fourth lowest rate in the nation at 3.6 percent; the national average is 5.3 percent.
The Northeast Kingdom, which has traditionally had high jobless rates, continues to lag behind the rest of the state with unemployment in the 5 percent to 7 percent range, despite a temporary uptick in the workforce last year spurred by Jay Peak construction projects at two resorts.
Wages have remained flat, and median household incomes have not recovered from the pre-recession high of nearly $60,000.
