Economists report stellar state revenues

By Riley Robinson/VTDigger

Vermont’s revenues are in boom times, state economists announced Tuesday, Jan. 17, as public coffers are buoyed by what economic adviser Jeff Carr called “epic, unprecedented, off-the-charts” federal money — for now.

Those same economists predicted the state’s general fund revenues will drop nearly 9% in the fiscal year that begins July 1, a drop that would outpace even the 2009 downturn during the Great Recession.

The 9% decrease, which excludes health care revenues, is “without the assumption of a full-blown recession,” and assumes the Federal Reserve can achieve a “soft landing” for the national economy, Tom Kavet, the Legislature’s economist, told the panel of officials who typically meet twice a year to receive the state’s fiscal forecasts. The group, known as the Vermont Emergency Board, is composed of Gov. Phil Scott and the four legislators who chair the Vermont House and Senate budget and tax committees. 

While the projected decrease is striking, it’s also expected, board members noted. Any reduction in revenues is a decrease “from a very high point,” said House Appropriations chair Diane Lanpher, D-Vergennes — “artificially high” even, due to the windfall of federal money during the Covid-19 pandemic. The downturn during the Great Recession was different, Lanpher noted, as it was a reduction from normal, base-level spending. 

Federal Covid relief money over the past couple of years has delivered about $10 billion to Vermont, roughly $16,200 per Vemonter, according to the Joint Fiscal Office. 

Even with a 9% drop in revenue in 2024, the general fund would still rake in far more than past projections in net dollars, Kavet said. Economists have dialed up the FY24 prediction by $37 million since their last forecast, published in July 2022.

The state’s general fund, its largest pool of state tax dollars, is expected to bring in $120 million more this fiscal year than last projected. Economists expect the education fund will bring in an additional $29 million more this fiscal year, compared to July’s prediction. 

But inflation complicates the good news, Kavet warned, especially in the