[T]he state revenue report for May brings tax receipts back up to par for the current fiscal year.
Revenues were $2.62 million ahead of targets for the month. The uptick was driven by corporate revenues and modest gains in the rooms and meals, insurance, estate and property transfer taxes.
The rebound after April’s dismal personal income revenues came as a relief to Scott administration officials, who painted a grim picture of the state’s economy this spring.
April has, in past years, been a big month for tax receipts, and the $3.55 million shortfall was unusual, officials said. At the time, Republican Gov. Phil Scott used the drop in receipts as an opportunity to continue his push for reduced spending on public education.
The pickup in May revenues hasn’t dramatically improved the outlook on the Fifth Floor.
While Andy Pallito, the commissioner of the Vermont Department of Finance and Management, said the state will end the fiscal year with a balanced budget, next year’s revenues could be considerably softer.
That’s because corporate tax refunds could take a big chunk out of the budget — as much as $16 million — later in the year, Pallito said. The state’s economists will provide a revenue report during the third week of July to update a six-month-old forecast. At that time, a downgrade is expected, he said.
The cuts for fiscal year 2018 would come from areas of the general fund budget that are not already obligated. The total budget is $1.6 billion. Of that amount, about $750 million is available for general government operations. The rest is obligated for bonds, state employee and teacher retirement, and the general fund transfer to the education fund.
A 2 percent cut, Pallito said, would be the equivalent of roughly $15 million; a 4 percent reduction in state spending would be about $30 million.
Those possible reductions would be made on top of a $5 million cut in administrative costs agreed upon for fiscal 2018.
Pallito said the memo to state government leaders is a precautionary measure.
“If we don’t need it, we will wait until 2019,” Pallito said. Thinking ahead “gives the administration some choices,” he said.
The cuts would not be across the board, he said. Each agency would look at a range of options.
