(Host) According to a new report, most elements of the Vermont economy performed strongly during the first quarter of the new fiscal year.
But Administration Secretary Michael Smith says he remains very cautious about how the economy will do in the next 9 months.
VPR’s Bob Kinzel reports.
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(Kinzel) Perhaps the biggest surprise of the September revenue report was the strong performance of the personal income tax.
These tax receipts, which are the single largest source of state revenue, were up almost ten percent from a year ago. The corporate income tax and the meals and rooms tax also recorded significant increases.
Despite the strong showing, Administration Secretary Michael Smith is cautious about the immediate future.
(Smith) "Generally things for the first quarter in the General Fund seemed to be higher than predicted and that’s good news……….I want to be very cautious in that we are looking out ahead in making sure that we navigate what we think are some rough waters coming up on a national economy."
(Kinzel) Smith says he’s most concerned that a drop in the national housing market could have a larger impact in Vermont.
(Smith) "And does the housing market spill over to other parts of the economy so far………in Vermont we’ve had a fairly soft landing in terms of that particular aspect of the economy whereas in other parts of the country they’ve had a severe impact in terms of that market."
(Kinzel) The first quarter report also shows continued problems in the state’s Transportation Fund. Gasoline and diesel fuel sales are down and people are buying fewer new cars.
Smith says the Administration is looking at several strategies to provide more money for the Transportation Fund without raising the gas tax.
For instance, in the current year’s budget, the Transportation Fund finances roughly 60 % of the budget of the Department of Public Safety. Smith thinks more of these expenses should be shifted over to the General Fund.
(Smith) "Perhaps if we have room bond proceeds for transportation projects secondly to reduce………where there’s Transportation Fund use for General Fund money and thirdly looking at whatever sort of revenue structures they have out there whether its fees or anything and seeing if there’s any room we haven’t gotten that far yet."
(Kinzel) Smith says it’s clear that overall revenue growth will be smaller this year than in the previous four years. He says this means that there will be additional pressure to restrain spending throughout state government next year.
For VPR News, I’m Bob Kinzel in Montpelier.
AP Photo/Toby Talbot