(Host) Administration Secretary Kathy Hoyt says it’s very likely that the state will need to tap into its “rainy day” funds in order to balance this year’s budget. A new revenue report shows that receipts from the personal income tax and corporate taxes are weaker than projected.
VPR’s Bob Kinzel reports.
(Kinzel) In the last few weeks, a number of economists have expressed the belief that the recession may be over at the national level but according to Administration Secretary Kathy Hoyt, there is little evidence of economic recovery in Vermont. Despite several downward adjustments in the state’s revenue projections, a new report shows that the state is still $9 million short of its revenue goal in the current fiscal year and the situation is expected to get worse in the next few months.
Hoyt says a continued weakness in the personal income tax is the main reason why the state is experiencing a revenue shortfall. Refunds this year are larger than expected and paid returns are smaller:
(Hoyt) “I think there are a lot of people who have had losses from last year that they have booked because the equity markets are so bad. And you remember Vermont has a pretty good percentage of people who have some investments that would be affected by a poor showing in the equity market. I think the other thing is that we’ve had some layoffs. That means that people are not having a whole year’s worth of income at the same level as they did before.”
(Kinzel) The administration has already cut more than $30 million in spending from this year’s budget and Hoyt says it is unrealistic to expect any further cuts this late in the fiscal year. That means money from the state’s rainy day fund will have to be used to cover any budget deficit. It’s possible that between $10 and $30 million will be needed to balance the state budget:
(Hoyt) “That’s my prediction. I don’t know how much. I don’t know. I am always hopeful but I just don’t see, I just don’t see that with a straight face you could say we won’t hit them. I really believe we will, and I think the real question is how much do you have to hit them.”
(Kinzel) Hoyt says the state’s transportation fund appears to be doing better than in previous months. Revenues from the gas tax and the purchase and use tax showed strong growth during the reporting period.
For Vermont Public Radio, I’m Bob Kinzel in Montpelier.