The state's new revenue report includes mixed results. The good news is that the corporate income tax and the rooms and meals tax are exceeding projections.
The bad news is that the personal income tax, which accounts for roughly 1/4 of all state revenues, has failed to meet revised estimates.
Corporate income tax
One bright spot in the new report is the strong performance of the corporate income tax.
For the first 11 months of the current fiscal year, the rooms and meals tax is up almost 10%, and the corporate income tax is up just over 30%.
"The corporate income tax has been our savior, and that has filled in the gaps in the personal income tax, and that was not anticipated, but that tells you that companies at least in Vermont are still very healthy," said Adam Greshin, the state's commissioner of Finance and Management.
Transportation tax
The state gas tax has shown little growth.
There's been little growth in the state's gas or diesel fuel tax revenues over the past year because of the growing number of electric cars and trucks on the road.
A special summer study commission will study how to raise money from EV drivers to reflect their use of the state's highways.
Greshin says the issue has been percolating for several years — and the state needs to find an answer.
"It's not like it's coming out of the blue, I mean, we've moved down this road — so to speak — consistently over the past few years, but it does look like it's coming to a head," Greshin said.
One option under consideration is to impose an assessment on electric vehicles based on the number of miles they are driven each year.
The Scott administration is keeping a close eye on the performance of Vermont's personal income tax, which is down roughly 3%.
Revenues have now underperformed for four months in a row.
COVID aid slowing down
Greshin attributes the personal income tax slowdown to the phasing out of over $2 billion in federal COVID-19 aid in the last few years.
"And that led to greater spending, that led to more employment that led to higher wages, all of that, and we see that in our revenues," Greshin said, "but as that supports wanes we have to anticipate a waning in our revenue picture."
The state's Emergency Board is scheduled to meet at the end of July to review the state's revenue outlook.
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