State On Target to End Fiscal Year With Surplus

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(Host intro) Administration Secretary, Charlie Smith says the state is on target to end the current fiscal year with a modest surplus. Smith says the Administration would like to dedicate twenty-million dollars from the surplus to help reduce a projected Eighty-million dollar deficit in next year’s Medicaid budget.

VPR’s Bob Kinzel reports.

(Kinzel) The state of Vermont is now three-quarters of the way through the 2005 fiscal year and there are strong indications that the state will record a comfortable budget surplus when the fiscal year ends on June 30th. According to the latest state report, revenues are running 13-million dollars ahead of a consensus forecast that was adopted by the Douglas Administration and lawmakers in January. Administration Secretary Charlie Smith says the outlook for the full fiscal year is good.

(Smith) “I think we feel pretty good with this most recent month’s returns. We feel pretty good that we will finish comfortable in the black. I’m hesitant to forecast how much because there’s so much that happens in the month of April in terms of personal income tax filings and refunds and paid returns and so forth. There are just a lot of dynamics that are very hard to predict.”

(Kinzel) Governor Douglas is hoping to use roughly twenty-million dollars from this year’s surplus to help eliminate a projected eighty-million dollar deficit in the Medicaid program. Smith says the state is on track to be able to make this transfer. And he thinks key lawmakers generally support this approach.

(Smith) “We do have general consensus at this point in terms of a carry forward from ’05 to ’06 as part of the strategy for balancing the ’06 Medicaid budget.”

(Kinzel) A number of tax categories are showing significant growth. The rooms and meals tax is up almost thirty percent. The corporate income tax is running forty-three percent ahead of the same period last year and the property transfer tax is up twenty-two percent.

(Smith) “The property transfer tax has been booming. It’s been booming for a number of years. And it’s really out-stripped all forecasts for a long period of time now. I would expect we would in time, and fairly soon, see some kind of a softening in that significant inflation in property value in Vermont. I think there’s some relief there that many people are hoping for in time.”

(Kinzel) The revenue report also shows that the state’s Transportation Fund is running slightly behind projections largely because of a drop in car and truck sales. The state’s purchase and use tax is down twenty-two percent for the first nine months of the fiscal year causing an eleven-million dollar drop in revenue.

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

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