Vermont ends fiscal year with surplus

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(Host) There’s some good economic news for the state of Vermont.

On Friday the Douglas administration announced that the state will end the current fiscal year with a 36 million dollar surplus.

Officials say the outlook for the new fiscal year is also good.

VPR’s Bob Kinzel reports:

(Kinzel) The state of Vermont closed its books on the 2006 fiscal year on June 30. State officials were expecting a strong surplus and that’s exactly what happened.

General Fund revenues grew by roughly 7.5 percent, fueled by strong growth in personal income tax receipts. The state income tax accounts for about 50 percent of all revenue collected in the General Fund. Administration Secretary Michael Smith says income tax revenues grew by a healthy 8.3 percent over the past twelve months.

(Smith) "It really shows that the economy is strong right at the moment and it is producing some strong personal income revenue as well."

(Kinzel) Smith says the state recorded a $36 million surplus in the 2006 fiscal year. Lawmakers and the administration this session put a plan in place to spend roughly $27 million of the anticipated surplus on a number of one-time programs.

Next week the state’s Emergency Board is expected to give its approval to a plan to allocate $8.5 million this summer to provide dairy farmers with a premium subsidy. It’s designed to help them offset losses due to rain, higher fuel costs and low milk prices. Smith says it’s likely that this money will come from an upgrade in the new revenue forecast.

(Smith) "What it is, is one-time money and it’s going to be ’07 upgrade. We had anticipated using that money anyway, so it’s one-time money in the ’07 upgrade."

(Kinzel) There was some troubling news in the state’s Transportation Fund. The Fund recorded a nearly $6 million deficit because of slumping new car sales and higher gas prices.

(Smith) "I’m concerned. I think you’ll start seeing a rebound at some point here but I think it’s going to be at least a year away. And we just need to anticipate that we’ve been overly aggressive in estimating our revenues in there."

(Kinzel) Smith says he expects the Emergency Board next week will upgrade its forecast for the General Fund to reflect strong economic growth. At the same time he believes the Board will downgrade its forecast for the Transportation Fund. That’s a move that could result in some program cuts in this year’s Transportation Budget.

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

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