Mounting headwinds from higher oil prices, receding federal fiscal stimulus, manufacturing losses associated with the Japanese earthquake and tsunami, festering European sovereign debt crises, and political gridlock in Washington that threatens the nation’s financial integrity, have all conspired to stall the emerging recovery, bringing job growth to a virtual standstill and lowering projections of economic activity in FY12. Despite all this, the Vermont economy has generally outperformed the U.S. as a whole, and closed FY11 with tax revenues slightly above (+2.5%) January projections.
Virtually all of the FY11 revenue surpluses were in personal and corporate income taxes, which collectively added nearly $30 million in above-target receipts. The estate tax logged its highest single year ever, netting more than $35 million, about 70% of which went to the General Fund and the remainder to the Higher Ed Trust Fund. However, the one-time nature of many of these FY11 revenue events and lower projected economic growth in FY12 will limit G-Fund upgrades to about $7 million in FY12 and $16 million in FY13. Transportation Fund revenues closed FY11 less than one-tenth of one percent (0.1%) below prior estimates and received a slight downgrade in the upcoming two fiscal years, due primarily to higher oil price assumptions.