State Can't Get a Break When It Comes to Revenues | Off Message

State Can't Get a Break When It Comes to Revenues

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Economists Tom Kavet (left) and Jeff Carr - NANCY REMSEN
  • Nancy Remsen
  • Economists Tom Kavet (left) and Jeff Carr
One day before the House Appropriations Committee expected to vote out its midyear budget adjustment bill, the panel learned it might have to find an additional $3 million in savings.

That’s because the Emergency Board, a committee made up of the governor and the chairs of the legislature’s money committees, revised downward the revenue projections on which the legislature bases its budgets. The board voted to change revenue estimates for the current year and for next year after it received a report Tuesday morning from the economic advisers for the administration and legislature. The pair of economists provides the governor and lawmakers with consensus revenue forecasts twice a year.

“This represents a change that is minuscule,” said Tom Kavet, the economic consultant employed by the legislature. 

Senate Appropriations Chair Jane Kitchel (D-Caledonia) commented, however, on the budgeting stress lawmakers have been feeling, as her committee begins to work on next year’s budget. “Should I get a rash yet?”

Andrew Pallito, finance commissioner, delivered recommendations to the House Appropriations Committee late Tuesday on how to accommodate the reduction in current-year funding. Although the economists expect general fund tax dollars to shrink $4.7 million, they said stronger-than-expected cigarette tax dollars would bolster the health care fund by $1.7 million, reducing the total decline to about $3 million.

Pallito proposed to delay adding new positions to the Department for Children and Families until July to save $310,000, to put off covering the extra week of Medicaid expenses until the next budget to save $1.74 million, to empty the Vermont Enterprise Fund of its remaining $420,000 and to require state government to find an additional $670,000 in labor savings.

Under these recommendations, the rainy day fund would remain untouched, Pallito said.

Kavet blamed the revenue revision on “a poor start to the winter tourism season, continued global economic sluggishness, slightly lower-than-expected yields from new taxes and assorted technical issues.”

Jeff Carr, the administration’s economist, noted that the general fund, which supports most of the operations of state government, relies increasingly on two of the most volatile tax sources — personal income and corporate.

Gov. Peter Shumlin acknowledged the additional challenges that the new revenue forecast posed for policymakers. Still, he said, “It is manageable.” He said the budget he would present Thursday would take into account the revised revenues for next year — which require that his staff find an additional $9.1 million in savings.

The good news: transportation revenues were revised up by $900,000 this year and $1.1 million next year. The economists said that lower gasoline prices have resulted in an increase in consumption for the first time in 10 years.

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