The state's economists say Vermont revenues will fall $31 million short of projections in fiscal year 2015.
The revenue downgrade represents a 1.8 percentage point drop in anticipated state tax revenue. Overall growth in fiscal year 2015 will be 3 percent instead of the 4.8 percent gain projected in January.
Gov. Peter Shumlin emphasized in a briefing with the media Thursday morning that the reduction in predicted tax receipts is a "minor adjustment" to the $1.4 billion General Fund.
Shumlin said he would reduce state spending by $31 million in response to the downgrade. The governor has asked state agencies to reduce their budgets by 4 percent.
There will be no layoffs as a result of the rescissions, Shumlin said. The administration will not touch the state's retirement or debt reduction obligations. The Education Fund reserve will be reduced.
Shumlin said the good news is that "it's July, not January." "It gives us almost the entire fiscal year to make this adjustment."
Later Thursday, the governor was to meet with lawmakers. He will ask the Joint Fiscal Committee to agree to rescissions in the fiscal year 2015 budget.
The governor and Jeb Spaulding, the secretary of the Agency of Administration, said the decline in state tax receipts is caused by national economic trends. Spaulding said the biggest blow was a significant drop in personal income tax collections in the month of April, which is typically the state's biggest month for tax receipts.
The state has $65 million in budget stabilization funds and $5 million in Rainy Day Funds that Spaulding said would not be tapped.
The governor emphasized that the state's revenues are growing, just not at the level anticipated.