Revenues Weak, State May Tap Rainy Day Fund

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(Host) Administration Secretary Kathy Hoyt says Vermont will probably have to dip into its rainy day fund in order to balance this year’s budget. Hoyt says a new revenue report shows continued weakness in state income tax receipts.

VPR’s Bob Kinzel reports.

(Kinzel) A new report that may be good news for some Vermont taxpayers is likely to have a negative impact on the state treasury. According to Administration Secretary Kathy Hoyt, income tax refunds for the year are running higher than expected and paid returns contain smaller checks for the state.

Hoyt suspects that much of the drop in income tax receipts is due to a reduction in capital gains revenues. State income tax collections are down almost 10% for the year and Hoyt thinks they’re going to get worse in the months ahead:

(Hoyt) "We just think that means that we’re going to have a very flat Spring. I don’t think we can count on a bounce there…. We may sort of see a problem with the income tax continually from now on through April. But April, I think will be as always, April is where we really see the results in the income tax and I think we’re going to lose some ground."

(Kinzel) If state revenues continue to under-perform, Hoyt says it will be necessary to tap into the state’s rainy day fund to help balance this year’s budget because it’s too late to make any more cuts to the current budget.

Hoyt says the rainy day fund currently has about $75 million in it. She is hoping that less than $30 million will be needed to balance this year’s budget:

(Hoyt) "That’s why we set those rainy day funds aside and haven’t really tapped them yet, in terms of our budget, because that’s what they’re for if April just doesn’t deliver at all close to expectations…. I believe that we’re going to see a very disappointing April."

(Kinzel) Hoyt says there is some good news in the new revenue report. Hoyt says both the sales tax and the rooms and meals tax brought in more money than the administration had projected.

For Vermont Public Radio, I’m Bob Kinzel in Montpelier.

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