(Host) According to a new report, Vermont’s revenue shortfall is among the worst in the nation. Administration Secretary Kathy Hoyt says a drastic drop in capital gains revenues is a major reason why.
VPR’s Bob Kinzel reports.
(Kinzel) The National Council of State Legislatures has just released a study that looks at budget pressures and revenue collections from virtually every state in the country. The study shows that the downturn in the economy last year hit Vermont harder than most other states.
Across the county, revenues declined on average by 1.8% during the most recent fiscal year. But in Vermont, the shortfall was 5.8%, sixth biggest drop in the nation.
Hoyt says Vermont’s shortfall in revenue is largely due to a sizeable decline in state income tax collections. Hoyt says this happening because Vermont relies more on capital gains tax revenues than most other states:
(Hoyt) “A lot of our residents have unearned income and therefore were in the stock market and subject to capital gains. And we all know what’s happened to the stock markets and the capital gains that vanish. And so I think that you probably see that reflected in our ranking in terms of loss of revenue.”
(Kinzel) The Dean administration is putting together a plan to reduce spending in the new fiscal year budget by roughly $40 million. Hoyt says $9 million will be saved by using money earmarked for the state’s tobacco settlement trust fund. The rest will have to come from programs that have experienced significant growth in the past few years:
(Hoyt) “The issue is, where is the money in state government and where are the growth areas? And I think a lot of them are in the human service area. Clearly human services programs make up more than half of our budget.”
(Kinzel) Hoyt says that the state has 500 jobs vacant at this time. That’s roughly 6% of the entire state work force. Hoyt says it’s likely that some additional job reductions may be proposed:
(Hoyt) “We’re really doing an assessment of numbers, of positions that we have that are vacant that we could just keep vacant. We’re looking, my guess is that we’re going to end up with some numbers of cuts in terms of positions and hopefully we’ll minimize how many direct layoffs there are in this kind of time. But you can’t rule that out – everything has to be on the table.”
(Kinzel) Hoyt will present the administration’s budget cutting plan to the Legislature’s Joint Fiscal Committee in about two weeks.
For Vermont Public Radio, I’m Bob Kinzel in Montpelier.