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As predicted, state revenues fell dramatically in April because of the Covid-19 crisis, Vermont’s Agency of Administration reports.
Revenues in the state’s general fund fell by $140 million, 57% below their monthly target, largely because tax deadlines were pushed until July 15 to provide relief during the pandemic.
About 40,000 fewer tax returns were filed in April of this year compared with April of last year, the agency reports. The state is expecting to receive the balance of the tax receipts owed after the next fiscal year begins in July.
Rooms and meals tax receipts dropped by about $7 million, as restaurants and the state’s tourism industry were forced to shutter during the pandemic. Businesses were also given permission to delay rooms and meals tax payments until July.
While the state is expecting to see delayed tax payments in the coming months, it is also expecting to permanently lose $50 million in the general fund before the new fiscal year because of diminished economic activity.
But Secretary of Administration Susanne Young said the state’s financial picture could soon take a slight turn for the better.
Previous revenue estimates didn’t “take into account” Gov. Phil Scott’s gradual reopening of the economy, she said.
“If recent steps announced are implemented successfully by not increasing public health concerns, then that assessment will likely change and May revenues could improve compared to April,” Young said in a statement.
On Monday, Scott announced a “gradual reopening” of the state’s retail sector starting next week.
Last week, the governor said nonessential manufacturing and outdoor economic activity could soon resume.
Revenues in the state’s transportation fund fell by $6 million last month because of a decline in the motor vehicle purchase and use tax, and motor vehicle fees, Young said.
The state’s education fund took a $10 million hit in April. The fund also relies on the rooms and meals tax as well as the sales and use tax, which fell by $5.1 million last month.
The governor and lawmakers are working on a budget adjustment to close the $200 million hole that is expected in the general fund by the end of the current fiscal year.
They are working on other proposals to fill the $54 million hole expected in the education fund this year and the $44 million budget gap projected in the transportation fund.
Lawmakers are hoping to use some of the $1.25 billion the state received from the CARES Act to cover these budget gaps. But right now federal guidance explicitly prevents states from using the money to backfill revenue losses.
On Monday, legislators on the Joint Fiscal Committee approved Scott’s plan to spend a small portion of the $1.25 billion on the state’s Covid-19 response.
The state has already spent $48 million of the federal dollars on the Covid response, and the Scott administration now has the authority to spend up to $166 million on a number of approved expenses.
The state has already spent or committed to spending $5 million on ventilators and $6 million on personal protective equipment (PPE), including masks, for health care workers, according to Mark Bosma, spokesperson for Vermont Emergency Management.
But the need for these items will likely persist.
“We expect future expenses related to PPE, testing, contact tracing, outbreak response, isolation housing, etc. for the response,” Bosma said.
The Department of Public Safety, which purchases PPE and manages emergency operations for the state, is now authorized to spend up to $15 million of the funds on Covid-19. It has spent or committed to spending about $11 million.
The Department of Health can now spend up to $16 million on expenses, including testing for the virus and contact tracing.
It has used up about $2 million of the federal funds so far.
The Department of Vermont Health Access now also has the flexibility to use $33 million to provide hospitals and other medical providers with financial assistance during the pandemic.
Many health care providers have struggled to stay afloat during the pandemic. Doctors have been limited in the services they can provide patients and hospitals have been prevented from performing elective procedures.
The state has given $7.3 million to the Brattleboro Retreat and $1.3 million to Springfield Hospital to keep the two institutions solvent.
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