(Host) There are new signs that an economic slowdown has hit the state of Vermont.
The state’s revenue report for May shows a decline in most major tax sources. And it’s likely that the state will have to downgrade its projections for transportation-related taxes next month.
VPR’s Bob Kinzel reports.
(Kinzel) At the end of this month, the state will close its books on the 2008 fiscal year.
Administration Secretary Mike Smith says the good news is that the state’s General Fund is likely to record a small surplus at the end of June because the state economy was in pretty good shape during the first half of the year.
The bad news is that virtually every important source of revenue showed a decline last month.
For instance, revenues from the personal income tax were down almost 13 percent; receipts from the sales tax were down just over six percent; the property transfer tax was also down about 6 percent and the motor vehicle purchase and use tax was down 4 percent.
Smith says it’s clear that people are worried about the strength of the economy and that means they aren’t in the mood to spend money on big ticket items:.
(Smith) “I think that is a good sort of indicator that people are being very cautious out there."
(Kinzel) Higher energy prices have caused Vermonters to cut their fuel consumption.
Gas tax revenues were down almost 5 percent last month and diesel fuel revenues were down almost 28 percent.
Smith says he’s concerned about the fiscal health of the state’s Transportation Fund.
(Smith) “The high price for fuel is driving the transportation numbers, which is good. People are car pooling, more people are driving more fuel efficient cars. That is outstanding but it does affect our revenues as we look forward. And in July we’ll adjust these revenues and I suspect that the Transportation Fund we’ll have to adjust downward again in terms of ’09 revenues. And we’ll make the adjustments on the expenditure side as well."
(Kinzel) Smith says the administration expects that this difficult financial situation will continue well into the next fiscal year.
(Smith) “We do, in ’09, the next fiscal year, which starts July first, do expect weakening of some of our revenues. And we have predicted that and projected that and based our budget on a weakening of our general fund revenue sources."
(Kinzel) The state’s Emergency Board will convene next month to get an updated economic forecast. That report is expected to predict sluggish revenue growth for the coming year.
For VPR News, I’m Bob Kinzel in Montpelier