Tourism Revenues Up, Despite Irene
10/25/11 5:50PM By Bob Kinzel
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(Host) Preliminary statistics show that Vermont's tourism industry weathered the fall foliage season well, despite the damage from Tropical Storm Irene.
But as VPR's Bob Kinzel reports, there are growing concerns that another national recession could affect the state's fragile revenue base.(Kinzel) State officials were concerned that the damage to Vermont's transportation system would discourage people from coming here during the foliage season.
But Tom Kavet, the chief economist for the Legislature, says early indications suggest that the state has come through the fall in good shape. He notes that revenues for the rooms and meals tax are up 11 percent for the first three weeks of this month.
(Kavet) "You know, if I saw something falling off a cliff, there'd be alarm bells going off. So right now, it's too early to say, but there's nothing that is saying there's been a disaster through the first 24 days of October. And of course this is peak season for tourists' visitation."
(Kinzel) Kavet says the state's income tax withholding revenue also remains fairly strong.
While some jobs were lost by businesses damaged by the floods, he says there were also employment gains particularly in the construction industry:
(Kavet) "Offsetting that will be a whole lot of expenditures that are made to clean up and repair damaged structures. And those expenditures often come from outside the state, from an insurance company or FEMA money, outside money. And that generates a lot of sales and use volume."
(Kinzel) Despite this generally positive news, Kavet has concerns about the future because he says the possibility that the national economy will fall back into another recession is growing:
(Kavet) "The risks of recession have subjectively gone up from probably in the 20 to 25 percent to about 40 percent. So, we're looking at a much more vulnerable situation going into the close of the first half of the fiscal year."
(Kinzel) Kavet also estimates that there's been a loss of roughly $110 million to the state's grand list because of flood damage to homes and businesses. This is on a base of about $82 billion.
He says these projections pale in comparison to special tax exemptions given to businesses that are located primarily in Chittenden County.
(Kavet) "The losses that the state has incurred from tax increment financing represents more than eight Hurricane Irenes. So this never hits the newspaper, nobody even sees it. ... It's very hard to say with a straight face that you wouldn't be getting in the county that's the fastest growing in the state, you wouldn't be getting this development without this tax break. It represents a big shift in costs to taxpayers in the rest of the state who are paying for this property that's off the grand list."
(Kinzel) Kavet says he'll have a much better idea about the impact of Tropical Storm Irene on overall state revenues in several weeks.For VPR News, I'm Bob Kinzel in Montpelier