(Host) Governor Jim Douglas says he’s concerned about signs that the Vermont economy is still not improving. Douglas says the situation will require the administration to limit state spending in the future.
VPR’s Bob Kinzel reports.
(Kinzel) Last week, in his annual report, state economist Jeffery Carr predicted that Vermont would see little economic growth in the next six to months months, followed by limited growth in the next year or two. This slow period of economic growth was described as a “jobless” recovery because it’s unlikely that a lot of new jobs are going to be created during this time frame.
While the state’s most recent financial figures show that Vermont is still on track to meet its revenue projections for the fiscal year that ends on June 30, the governor is concerned about a downturn in the state’s consumption taxes and an unemployment rate that is inching upward. Both the sales tax and the rooms and meals tax were off by almost 20% last month and the unemployment rate is now 4.1%. Douglas says the economic news is very mixed:
(Douglas) “And I think that’s what we’ve seen: some indicators, such as high unemployment and the softness in our revenue performance, that are not good; occasional good news from various employers about hiring some new workers. But overall I think we have to maintain our strict fiscal discipline and make sure that we understand that the recovery is going to be quite slow.”
(Kinzel) Douglas says one of the administration’s biggest jobs in the coming months is to put together a state budget for the 2005 fiscal year. The governor says it’s clear that there will be few opportunities for state government to grow:
(Douglas) “The Legislature acted very responsibly this year in passing a General Fund budget increase of only 1.4%. We need to continue to keep our belts tight as we look to prepare a budget for the next fiscal year and realize that we have to continue to exercise restraint.”
(Kinzel) On the positive side, Douglas notes that the state’s rainy day budget funds have grown due to a one time appropriation that was part of the recent federal tax cut bill:
(Douglas) “So it certainly provides some flexibility but we don’t know if that’s a sustainable source of revenue over the long term. That’s why it’s important to use it for one time expenditures and not build it into our base.”
(Kinzel) Legislative leaders will sit down with the administration next month to consider any possible revisions to revenue projections for the new fiscal year.
For Vermont Public Radio, I’m Bob Kinzel in Montpelier.