Tax revenues hold steady for May, GF $50M ahead of targets for year
by Timothy McQuiston, Vermont Business Magazine – Revenue collection in the General Fund was essentially on target for the month of May and remains significantly above target for the year at about $50 million. The Transportation Fund performed above its monthly target for May but remains slightly below its annual target. The Education Fund was slightly below its monthly and annual targets. Secretary of Administration Susanne Young today released Vermont’s Revenue Results for May 2019. May marks the eleventh month of Fiscal Year 2019.
General Fund tax revenues collected for the month totaled $67.74 million, or -$0.03 million below the May consensus target. Year-to-date, fiscal year 2019 General Fund revenues are $50.03 million, or 4.31%, above expectations.
The personal income tax, the most important GF revenue source, was again strong and has led the surge in revenues since the beginning of the calendar year. The corporate income tax, which can fluctuate widely, was more than $1.5 million below its target for the month, while still being nearly $11 million ahead of fiscal year expectations.
For the consumer taxes, sales again was below targets, as was the usually reliable rooms & meals tax. The motor vehicle purchase & use tax was up over 5 percent. The MV tax is often used as a general economic indicator, while the R&M is a good judge of relative tourist activity. The sales tax has been plagued for years by online sales. However, Amazon and others have either started to pay online sales tax or are required to do so. Still, the sales number has not completely bounced back to expectations.
“General Fund collections in the areas of personal income tax and corporate income tax remain significantly above consensus expectations for the year, and more than offset underperformance in other areas, most notably the estate tax,” noted Secretary Young. “With only two weeks left in the fiscal year, a substantial revenue surplus is expected at fiscal year-end on June 30, 2019, The surplus has been appropriated to replenishing reserves at the Agency of Human Services, increasing the balance in the General Fund Balance (Rainy Day Fund), and building the balance in the State employees’ retiree health benefit trust fund, bringing us another step forward on the path to paying down our unfunded liabilities.”
The Transportation Fund collected $25.88 million for the month of May, or $0.92 million above target. Despite the positive month, year-to-date, fiscal 2019 Transportation Fund revenues are -$0.76 million, or -0.30%, below target.
The Education Fund collected $38.65 million for the month, or -$0.39 million below target. Year-to-date, fiscal 2019 Education Fund revenues are -2.71 million, or -0.56%, below target. The largest factor in the Education Fund performance is sales and use tax, which year-to-date is -$2.63 million, or -0.69%, below target.
On a year-over-year basis, after adjusting for legislative changes noted below, the three funds in aggregate continue to reflect solid gains in a broad range of tax categories. Adjusting for these changes, for comparison purposes only, the year-to-date fiscal 2019 revenues represent increases of 6.17%, 1.41%, and 3.96% for the General Fund, Transportation Fund, and Education Fund, respectively, from the corresponding first eleven months of fiscal 2018.
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