MONTPELIER -- The slow economic recovery means Vermont will collect nearly $20 million less in revenue for the state education, transportation and general funds in the next fiscal year than had been anticipated, two consulting economists told state officials Wednesday.
The news came at the semi-annual meeting of the Emergency Board, made up of Gov. Peter Shumlin and the four legislative money committee chairs, a day before Shumlin's scheduled annual budget address outlining spending priorities for fiscal 2014, which starts July 1. The board hears and approves revenue forecasts and can make some fiscal decisions when the Legislature is out of session.
The economists, Tom Kavet of Williamstown-based Kavet, Rockler & Associates, and Jeff Carr of Economic and Policy Resources Inc. of Williston, gave the following forecasts for the three major state funds:
-- The transportation fund, which pays for road and bridge upkeep and construction, was downgraded by $5.6 million, or 2.3 percent;
-- Non-property-tax portions of the education fund were downgraded by $2.5 million, or 1.5 percent;
-- And the general fund, which covers government programs ranging from public safety to libraries, was downgraded by $11.1 million, or 0.3 percent.
The state's fiscal picture is clouded in uncertainty, not least by a lack of firm estimates about how much and what types of federal aid might be cut in budget talks in Washington. Carr and Kavet told the Emergency Board that they usually base their forecasts on data from Moody's Analytics, but this time were diverging from Moody's to offer a more positive outlook than that being offered by the forecasting firm.
Kavet said things might go better than expected, especially if there is a favorable outcome in Washington.
"I think there's still a lot that can go right. The economy is really poised to be doing much, much better," Kavet said.
Carr said the forecast reflects "the fact that the recovery has progressed at an excruciatingly slow pace since 2009, and this is not expected to change" within the next five months.
And Shumlin emphasized the difference between a revenue forecast and actual revenues.
"If you look at our revenue picture in (fiscal) ‘13, we were up 5.5 percent from the year before. Then in ‘14, even with this adjustment, we're up 4.6 percent over last year," Shumlin said. "We're saying we're going to grow a little less quickly than we were over the previous year. We're not back where we were."
But both Carr and Kavet noted the continuing debate in Washington is not helping. The two men work for different Vermont-based economic consulting firms and file separate reports with the Emergency Board, but work to come to a consensus about what the bottom-line forecast numbers are.