MONTPELIER — The consensus forecast for Vermont's major revenue funds warns of continued significant shortfalls for the next two years and points to troubling job losses in key economic sectors, according to a report released Wednesday by the state Emergency Board.
While the projected revenue losses are not as large as they were the last time the board met, they're still significant, and pose a hurdle for the administration and lawmakers to overcome when the Legislature returns next week to hash out the remaining three-fourths of the state's Fiscal 2021 budget.
The report, based on the work of administration economist Jeffrey Carr and Legislative Joint Fiscal Office (JFO) economist Tom Kavet, forecasts reductions across the board in the general, transportation and education funds. These funds are major sources of revenue which, with the addition of federal aid, pay for schools, transit infrastructure, social services, and a host of other programs.
The Emergency Board includes Gov. Phil Scott and lawmakers who chair the Legislature's budget and tax committees. It meets twice yearly to review the state's finances.
The consensus forecast now calls for the General Fund to lose $181 million in fiscal 2021. That's a good deal less than the $266 million the Emergency Board expected the general fund would lose when it last made projections in the spring.
For the Education Fund, a loss of $62.7 million in revenue for fiscal year 2021 is projected, followed by revenue decreases of $38.8 million in FY 2022 and $14.6 million for
The consensus transportation fund forecast expects a revenue decline of $29.3 million for fiscal 2021, a smaller decline of $15.5 million revenue decline in FY 2022, and a $7.4 million downgrade for fiscal 2023.
Members of the state House and Senate Appropriations committees are scheduled to get to work Tuesday, with meetings that can be watched on live streaming video.
The House Appropriations Committee is expected to hear from witnesses including Finance & Management Commissioner Adam Greshin at 1 p.m. Tuesday, followed by Vermont National Guard Adjutant Gen. Gregory C. Knight and Education Secretary Daniel French.
The Senate Appropriations Committee will meet with witnesses including Greshin and Susanne Young, the state Secretary of Administration, starting at 3 p.m. Tuesday. The full Legislature is due to convene virtually on Tuesday, Aug. 25.
What budget guidance will lawmakers hear from Greshin? Governor Scott wasn't quite ready to offer specifics Friday.
"I think you'll see a balance of efficiencies ... with using some one-time money," Scott said Friday during his regular COVID-19 briefing. "We're not at this point looking to dip into our reserves but that doesn't take it off the table."
If the pandemic had not hit, Scott said, the state was on target to run a surplus in Fiscal 2020 which could carry over into the next budget year. As it stands, the state is fortunate to have rainy day reserves it can call upon, he said.
According to the JFO forecast, general fund revenues, which comes from income taxes, corporate taxes, and taxes on meals, rooms and liquor, among other sources, are expected to decrease by 13.8 percent, to $1.41 billion.
The JFO forecast also estimates losses of $103.8 million for the fiscal 2022 and minus $36 million in fiscal 2023 in the general fund. Those figures include health care revenues, which separated out are expected to increase from a loss of $11.2 million in fiscal 2021 to growth of $3.9 million in fiscal 2023.
The report also cited jobs loss data that showed the severe damage COVID-19 did to the state's economy:
- Vermont saw a 14.4 percent decline in total payroll jobs from June 2019 to June 2020, and a 15 percent decline when factoring only private sector payroll jobs.
- The state's reliance upon travel and tourism, manufacturing and health services led to job losses of 22.9 percent between February and April, compared to a national average of 14.5 percent.
- On a sector-by-sector basis, the leisure and hospitality industry in Vermont saw a nearly 50 percent reduction in payroll jobs between June 2019 and June 2020, a 27 percent reduction in construction jobs between June 2019 and June 2020, and an 11.2 percent decline in manufacturing jobs over the same period, according to the report.
The projections are perilous, the report said, because the federal government has yet to weigh in with a second round of COVID-19 relief for the states.
"If federal fiscal policymakers are unable to reach agreement on further, significant stimulus measures (within the range of than $1.0 trillion to $1.5 trillion), the likelihood of a second dip to the COVID recession increases significantly," the report said. "This is because federal fiscal policy would likely turn contractionary by the late Fall-Winter timeframe and it is expected that the U.S. recovery by that time will not have had enough time to builds its own, unassisted level of forward momentum to avoid a second dip — likely resulting in a so-called "double dip recession."
Friday, Scott said the uncertainty in Washington on a second pandemic relief bill leaves the state not knowing if more aid is on the way, or if restrictions on the use of CARES Act funds will be lifted.
"We're going to present something [to the Legislature] in real time but it could change based on what they do [in Congress]," Scott said. "If they appropriate more money we'll be able to do more."
As of Friday, that second relief bill remained stalled in the U.S. Senate.
Greg Sukiennik covers Vermont government and politics for New England Newspapers. Reach him at email@example.com.