State Revenues On Target, But Personal Income Tax Soft
09/14/12 5:50PM By Bob Kinzel
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State revenues for the first two months of the 2013 fiscal year are right on target.
But there are concerns about how healthy the personal income tax is.
While state revenues in July were a little bit short of the target goal, the situation in August was just the opposite when revenues were roughly 1 percent higher than projections.
Administration Secretary Jeb Spaulding says he needs to see a few more months of revenue activity before he can say a definite trend is emerging.
"Overall we're on track," Spaulding said. "The month of August allowed us to make up the underperformance of July in the general fund. So that's the good news. But it's such a short time frame there we really caution about reading anything into it until we get more months under our belt."
The state made its goal in August largely because of unexpected money from the estate tax. The goal was $1.5 million but the state took in over $6 million.
And this additional revenue offset a nearly 11 percent decline in receipts from the personal income tax. Spaulding says it's too soon to jump to any firm conclusions about the future performance of the personal income tax.
"We see the kind of volatility in the various sectors we realize that we need to look at a little longer period of time before we reach any kind of conclusion about whether there's something significant there," Spaulding said. "It does seem counterintuitive as jobs are being created we think we see signs of continued economic improvement. So it raises some questions but not necessarily the answers."
Spaulding says the state economy is strongly influenced by economic developments at the national and international level. He says lately there's been good news on these fronts.
"The fact that the European financial community is starting to address their situation a little bit more aggressively and the Federal Reserve says they're not backing down on their efforts to keep the economy moving and Congress actually passed their 6 month continuing resolution, I think will actually be a positive influence for the next while going forward for Vermont as well," he said.
Two consumer taxes are showing solid gains. Revenue from the meals and rooms tax is up more than 7 percent and money from the state sales tax is running almost 5 percent higher than projections.