State expects $20 million surplus by year’s end

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(Host) Despite slower than projected revenue growth last month, Administration Secretary Michael Smith says it’s likely that the state will end the fiscal year with roughly a $20 million surplus. Smith says he’s optimistic because he says there are clear signs that the Vermont economy is rebounding.

VPR’s Bob Kinzel reports.

(Kinzel) The revenue report for May contains both positive and negative news about the Vermont economy. Receipts for the personal income tax, the sales tax and rooms and meals tax were all lower than projections but they’re also considerably higher than the same period a year ago. Administration Secretary Michael Smith:

(Smith) “We did not see the significant drop off that we saw last year. So we’re encouraged that even thought the May revenues were down, we’re encouraged that the General Fund will end the fiscal year with a revenue surplus.”

(Kinzel) Smith says he’s optimistic about the short term outlook for the Vermont economy because he sees definite signs that a recovery is taking place:

(Smith) “You see the revenues increasing the way that wasn’t anticipated and that shows recovery. Secondly job growth is starting to happen here in this state. And thirdly the unemployment rate is fairy low compared to the national average in the states. So I think you’re starting to see quite a bit of indications that we are recovering.”

(Kinzel) Smith says he believes Vermont’s overall economic condition is one of the strongest in the country because the state’s three budget contingency funds have all been restored at five percent reserve levels:

(Smith) “During this last year and a half we’ve been able to fully fund those stabilization reserves, at the same time have a surplus in ’04 and a revenue surplus in ’03. I’ve got to believe we’re in only a handful of states that can claim that sort of achievement.”

(Kinzel) Smith says he does have some concerns that the state’s Transportation Fund might run a small deficit when the fiscal year ends on July 1. If this happens Smith says the state will dip into its Transportation Budget Reserve to balance the fund for the year.

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

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