state revenue fiscal update

[Carolyn Branagan]

The  three largest funds in state government are the General Fund, Transportation Fund and Education Fund. These three funds give us a good glimpse at how businesses are functioning, whether more or less Vermonters are employed, how well our infrastructure can be maintained and how well our children's education is funded. So far  this year all three funds are above target.

 The General Fund revenue is up $2.19 million above the estimate for this month, up 2.87%. We're still less than half way through the fiscal year, but for the year as a whole, the General Fund is 2.63% above the target. All four of the biggest sources for the General fund are above the estimates held for this time in the current fiscal year and are ahead of last year. The four taxes I study for the General Fund are Personal Income tax, Sales & Use tax, Rooms and Meals, and Corporate Income tax. 

In the Transportation Fund revenue exceeds targets by $2.58 million, up 17.16%.  For the year Transportation Fund receipts were ahead by $1.54 million or 1.74% over estimates. And better yet, the year to date Transportation Funds exceed last year's revenue by 1.40% for the year. The components of the Transportation fund are the Gasoline Tax, Diesel Tax, Motor Vehicle Purchase & Use Tax and several kinds of Motor Vehicle Fees,  and are all above target. Good news. These receipts are the most positive I have seen for the Transportation Fund for a long time. 

Within the Transportation Fund, some of the revenue collected is set aside  for infrastructure bond payment. This bond was set up a couple of years ago and all money collected must go to pay for the bond. The Bond is designed to fix our roads, bridges and culverts and money from it cannot be taken for any other project. The plan is working very well, even better than I though it would. So well that soon you may hear of  plans to use some of it to pay for Irene damage. Stay tuned.

The Education Fund also exceeds targets, but remember that the Education Fund is quiet this time of year. The largest source of revenue for the Education Fund is the property tax, and for the most part by this time of year property taxes have all been collected. The smaller sources of revenue continue to flow into the Education Fund year  round. I watch these sources because they make up about 12 percent of the total Education Fund. So the “non-Property Tax” Education Fund revenues receipts were above target this month by $0.84 million.

So far so good. Are things getting better or are our estimates becoming more realistic? Keep in mind the revenues are still below where we were in 2008.

There is still a lot of uncertainty from continuing global economic instability and of course we don't have a good signal yet on the federal budget cuts. I'm continuing to advise my colleagues to remain cautious.

 
Contact me at cbranagan@leg.state.vt.us   I want to hear from you.

Rep. Carolyn Branagan
Franklin-1, Fairfax/Georgia
Vermont House of Representatives

 

 

[Chris Santee]

Thank you, Carolyn.

[rod anode]

yeah thanks Carolyn, im still waiting for the sky to fall

[Thor]

Ed, there is still time for the soothsayer's that they use in Montpelier to screw up the numbers again!! Just be patient!!

[slpott]

You boys need to be nice and think positive. After all, it is Christmas.

[Carolyn Branagan]

Merry Christmas, guys.
C.

[David Shea]

My understanding is that the property tax relief for Hurricane Irene victims will be subsidized by the education fund.  Has a plan been put in place to repay the money?  How long will this relief be extended?
Secondly there is a proposal for destroyed homes to be purchased by the fed and the land to be condemned for future development and the property to be turned over to the towns.  Will this not effect the tax base as a whole especially if the landowners move out of state?

[Carolyn Branagan]

Hi  David,

First question:  You are referring to a plan that was announced by the Governor in October to help towns with abatement costs. I've written letters to the editor about this several times, one recently to the Franklin-1 newspaper directed to Fairfax property owners who owned property in communities effected by the storm, but I don't know if the letter actually appeared in the paper. Other letters did appear in the Messenger and County Courier.There is a letter I wrote about this plan here on Henry's site dated October 18.

Yes, the proposal will be paid for with money in the Education Fund. There is about $10 million left there from Vermonters who previously applied for help paying property taxes through the income sensitivity program.  The way this program works is based on income. Vermonters who have higher income pay a little more in school property tax to leave enough extra money in the Education Fund to help lower income Vermonters pay their school taxes. This  year (2011) a fewer number of low income Vermonters applied for the income sensitivity program, so that left money in the fund. The tax department is trying to research why fewer Vermonters applied for the program than before, I'll find out next week when when the legislature returns to session.

The plan is to help town budgets where a lot of property owners request tax abatement for loss of use. Typically towns may have one request for abatement in a year for fire resulting in loss of use. But with the storm damage central and southern municipalities were facing dozens of requests for abatement, potentially a huge impact. The criteria is simple: loss has to be at least 50% of the value of the primary structure on the property and loss of use must be at least 90 days. The loss has to have occurred from a federally declared disaster. School and municipal taxes have to be abated equally.

Total cost is estimated at $4 million from the education fund.  The Tax Department will send instructions to towns. This is not law yet,but I  think it will move quickly and be law by Town Meeting day.  The selectboard told me there was very  little  storm damage in Fairfax  and no  requests  for abatement.

Carolyn

[Carolyn Branagan]

More on the first  question:
There is no plan that I know of to repay the Ed Fund. Remember the school property tax is a statewide tax, so this money left unused was paid in by higher income Vermonters  who are property owners.  They paid more  property tax so there would be money left in the fund for use by lower income property owners who qualify for the income sensitivity program. To repay the $4million it would take less than a half cent on the statewide rate,  about .4 of a cent. This proposal is only good until April 1, 2012.

C.

[Carolyn Branagan]

Second question:
 I think you are referring to a federal program through FEMA. I don't know much about the nuts and bolts of the buyout program, but the intention is to buy land likely to flood again and remove the homes. Since most people have a large amount of equity in their homes, the program gives some financial compensation. Yes, it will absolutely have impact on the grand list for the municipality, because that property will be listed at no taxable value.   But little impact on the statewide school property tax.
I don't understand how the landowner moving out of state would have impact? Can you tell me more about what you are thinking on that? 

C.

[David Shea]

Thanks for taking the time to reply to me regarding these questions.

The concept of buying back properties that were damaged can provide for economic stimulus for our state if the family that lost their property rebuilds in VT.  If the family takes the buy out money but then decides to move out of state the effect is: lost property tax revenue, future income tax revenue, sales tax revenue.

In essence this program has the potential to create a tax increase for the those who decide to stay in VT.

[Carolyn Branagan]

Yes, OK, I see what you are saying. I don't know how many buyout families end up leaving their home state, but it seems likely there are some. I'll ask around at the statehouse. That's an interesting angle I hadn't thought of.But maybe if I had property in a flood plain I'd be glad for this program.
 You are correct that when property is lost from the grand list for any reason the remaining taxpayers have a bigger share to pay. it's true for all taxes, when the tax base shrinks the rate goes up.
 I haven't figured out how to get on Henry's site from a statehouse computer, so it might be next weekend before you hear back from me. But don't worry, I'll report when I'm back in town. Happy New Year.
C.

[David Shea]

Carolyn,
No problem, get back when you can.  I recently traveled through central Vt on Business and witnessed the ongoing struggles of the families impacted by Irene.  It is a sad site to behold even four months later.  I have had discussion with other friends / business owners regarding the "buyout program".  It seems like there is disagreement among us whether this program should happen or not.

At the core it appears to be a program to help the small guy out, but in reality this is just another bank bailout.  The back taxes will be paid first, then the first & second lien holder will be paid off, then the balance will be issued to the property owner.  The expense of the program will be distributed across the entire nation since it is federally funded but in the end Vermonter's will bear the cost with a potential for an increase in local property taxes as a result of private property being owned by municipalities.

The real winner in my opinion is the banks.  Instead of having to foreclose on a property that is now worthless our federal government is letting them off the hook by paying off the note.  What I think would make more sense if a program like this is necessary is for the fed to examine the amortization schedule of the loan, ( interest that has been paid to the bank ) adjust the bank payment based on the amount of interest that has already been earned vs principle payments made.  As I am sure you know, as the owner of a family business, more interest is paid on a loan early in the term vs latter on.

Take care and good luck fighting the fight in Montpelier,
David Shea

[Carolyn Branagan]

David , I spoke with a lady this week at the statehouse who is working with FEMA people and also the Stratton Foundation to help in the rebuilding of properties left damaged or destroyed from Irene.  She was very familiar with the buyout program. She told me the application for the buyout is  very long and complicated, so there had been few applicants. She only knew of 7 statewide, and of those, 2 were moving out of state, the rest were going to  rebuild in Vermont. The buyout, if the application was accepted, would pay 75% of the assessed value, then the property would be owned by the town, and would not generate any tax revenue. She said the program was  designed to be hazard mitigation, and was intended to help reduce housing in dangerous areas, in this case flood plain.
I hope this information is  what you were looking for. It certainly helped me understand the program better.

Carolyn

[David Shea]

I appreciate your attention to this topic and with you the best.