(Host) There are new signs that Vermont’s economy is not coming out of the recession as quickly as anticipated.
The Douglas Administration says an unexpected drop in state revenues over the last two months means that there will need to be more cuts in next year’s budget.
VPR’s Bob Kinzel reports.
(Kinzel) The new revenue numbers come at a time when the House and Senate Appropriations committees are trying to close a $150 million gap in next year’s budget.
This job just got harder because state revenues fell $15 million below new revised projections in January and February.
Administration Secretary Neale Lunderville says the decline means that there will need to be further cuts in next year’s budget:
(Lunderville) "The data that we’re seeing now seems to indicate that we were too optimistic about the economic recovery and that’s not only for the current fiscal year but it would be for next fiscal year as well."
(Kinzel) The biggest decline came in personal income tax revenues. Lunderville says individual withholding taxes are down, but more importantly, he says the initial size of income tax refunds is larger than the state expected:
(Lunderville) "If they’re not working as many hours or they’ve lost a job or they’re not seeing the money come back as quickly as they anticipated – there are a lot of factors there, none of which are particularly good for signs of our recovery."
(Kinzel) Economist Art Woolf says there are some positive signs on the horizon for the Vermont economy.
He says some businesses are seeing an increase in orders but he says it may be awhile before this increase translates into more jobs:
(Woolf) "They’re hesitant to hire, they’re worried about the future and they’re waiting to see if the increase in orders is just temporary or if it’s permanent. And once it goes on for a few months they’ll be much more likely to hire workers and we’ll start seeing job growth return slowly.
(Kinzel) And Woolf says it may be years before Vermont’s employment market fully recovers from the recession:
(Woolf) "Nobody thinks that we’re going to get out of this recession either nationally or in Vermont with any kind of speed. It’s going to be probably on the order of years like 3 or 4 years before we get back the job counts and the job numbers that we had in 2006 and 2007."
(Kinzel) Woolf says he’s also encouraged that initial filings for unemployment benefits are lower than they were a year ago – he says that’s another sign that most companies are stabilizing their workforce.
For VPR News, I’m Bob Kinzel in Montpelier.