Week of July 27
By SEN. CAROLYN BRANAGAN (R-Franklin County)
Late last week, economist Steve Kavet confirmed before the state legislative Joint Fiscal Committee that revenue for fiscal year 2017 did not meet expectations.
Regular readers will remember the fiscal year ended June 30. As we expected all year, the revenues fell short in a number of areas. Total revenue shortfall for FY17 was nearly $29 million.
Though there are over 400 funds in state government, it is always helpful to look at the three major funds supported by state revenue: the general fund, the transportation fund and the education fund.
The general fund ended the fiscal year 0.07 percent above the expected revenue target, mainly because there was $17 million in unpaid tax refunds still in the fund.
The transportation fund ended the year falling below expectations by 1 percent, mainly because of shortfalls in new motor vehicle fees.
The education fund ended the year 0.5 percent below expectations, mainly because of the slow sales and use tax receipts.
So what does the landscape look like for FY2018? The “Trump Bump” expected after the general election last November does not seem to be delivering as hoped. The promises of lower taxes, increased infrastructure spending/jobs and reduced regulations are getting lost in the hectic first six months of the administration. We see little clarity on health care reform, tax policy and international trade, foreign affairs and infrastructure investment.
All this turmoil at the federal level shows in our state finances. In Vermont, employment grows at a rate below that of the nation, and our population growth has stalled. Our economy remains in a fragile position.
So revenues in FY18 will be slightly below those predicted for FY17. There is expected to be a recession in the budget of approximately $30 million. The Joint Fiscal Committee plans to meet in a few more weeks to look seriously at what should be cut within the 2018 budget. The sooner cuts are made, the better.
I am watching closely and will report back when decisions are made. Contact me at email@example.com.