The slow economic recovery means Vermont will take in $20 million less in revenue than was anticipated.
The news came the day before Gov. Peter Shumlin delivers his annual budget address. The governor said he still plans to present a balanced budget that relies on no new broad-based taxes.
But Shumlin said he’s also looking for additional revenue to shore up the state Transportation Fund.
At least twice a year, a panel known as the Emergency Board – made up of the governor and the chairs of the Legislature’s money committees – meets to adjust the state’s revenue forecast.
A pair of consulting economists serves as Vermont’s resident financial oracles. They sift through national economic models, New England data and state tax trends to come up with their projections.
"There has been a downshift in the macro-economic outlook and it’s affected almost all of the funds, and especially will affect fiscal ’14," said economist Tom Kavet.
Kavet said the possibility of large federal budget cuts, and the still fragile recovery led to the lowered revenue forecast.
Kavet and fellow economist Jeffrey Carr did not completely accept a more negative state forecast supplied by Moody’s Analytics, a national firm.
"Our general outlook is more optimistic than Moody’s but it’s still a bit of a downgrade," Kavet said. "So I think there’s still a lot that could go right. The economy is really poised to be doing much, much better. If things in Washington could be resolved I think we’d be seeing growth of 4 percent or so."
But the uncertainty led the economists to pare back revenue projections for the state’s general fund by $11.1 million. Estimates for the Transportation Fund were reduced by $3.3 million while the forecast for the Education Fund was scaled back by $1.8 million.
Governor Shumlin pointed out that state revenues are still growing, just not at the pace that was anticipated.
"We’re recovering faster than the New England states around us and will continue to see growth," he said. "Obviously the effects of paralysis in Washington and the disaster of recession in Europe is having some impact on us. But we’re continuing to take in more money than the year before and that’s good news for Vermont."
Of particular concern to the administration is the Transportation Fund. Gas tax revenues are a major component of the fund, and they’ve been declining as people drive less and use more fuel-efficient vehicles.
Shumlin said he wants to address the problem, and hinted that his budget address will include additional revenue proposals for the Transportation Fund.
"We’re not talking about needing more money than we used to raise," he said. "We’re talking about plugging the hole in the leaking bucket that’s asking Vermonters to pay less than they used to in transportation revenues as our roads and bridges crumble."
State transportation money is used to match federal dollars. So Shumlin said the Transportation Fund needs more money or Vermont will not be able to take full advantage of the federal funds.