The Shumlin administration, months after touting what a great place Vermont is for jobs, has announced that due to declining tax revenues the state is looking at reducing FY15 budgets in all areas by 4%:
Gov. Peter Shumlin ordered all agencies to draft a plan to trim 4 percent from their just-approved budgets.
Final spending reductions are expected to total about 2 percent, with some areas of the budget held harmless from cuts.
On July 24, top economists briefed Shumlin and members of the Emergency Board about a range of indicators leading them to expect about $31 million less in state tax revenue over the coming year.
The pace of recovery is not as robust as they had thought at the start of the year.
On Thursday, the administration released July tax revenues that came in about 1.77 percent under budget.
As Jim Reardon, the state budget director said:
“It’s always a difficult process,” state budget director Jim Reardon said Friday. “But the fortunate thing is we’re at beginning of the fiscal year so it’s much more feasible to make adjustments.”
Yes, it’s great that it’s in the first month of the new fiscal year – but it also means that the revenue trends that were evident in the FY14 budget, and that his office has years of data on, were not incorporated into the FY15 budget. Missing your first month’s budget number is not something to celebrate. It means you missed something entirely, or your assumptions about revenues are problematic.
And why the big miss, from a year over year perspective? Not enough rich Vermonters are dying fast enough:
General Fund revenues totaled $101.00 million for July 2014, -$1.82 million or -1.77% below the monthly and cumulative budget forecast targets. Total GF revenues for the month for were -$2.46 million or -2.38% behind the actual results for the prior fiscal year (FY2014), primarily as a result of the volatile Estate Tax finishing the month at $8.77 million less than last year.
In other words, last year’s budget bacon was saved by somebody dying, and since Vermont sees fit to levy an estate tax (remember that this tax is on what was left over after your assets and income were taxed when they were earned, in other words, it’s double taxation), there are times and places where the budget holes are not going to be filled. The state seems to eagerly await the filling of other holes, notably gravesites, so the annual budgets remain unimperiled.
What’s interesting is that even the state’s small budget estimate for revenues in this category is off by almost 100%. It means that the state’s annual budget, and the jobs of those people who work for the state, is significantly impacted by a tiny, infinitely small percentage of the state’s population. To put this in perspective, what would the budget cuts look like if a couple of the other revenue categories were off to the same
degree as the Inheritance & Estate revenues are?
Then the budget might be in full-on meltdown just as the fiscal year starts. Oh, and to keep this in perspective, Shumlin wants to increase spending for single-payer by $2.2 billion. Based on the recent budget performances, a lot of Vermonters are going to have to die to cover that new expense – I hope they’re up for it.