Montpelier
Budget writers told lawmakers earlier this week that state receipts are anticipated to be off 1 percent or 2 percent. That’s a downgrade of between $16 million and $32 million, according to Steve Klein, the director of the nonpartisan Joint Fiscal Office, which provides financial information to the Legislature.
The Scott administration is anticipating that receipts will be at least $10 million below projections. Corporate taxes have fallen nearly $5 million in the first six months of the fiscal year, and projections show that trend will continue through June 30, the end of the fiscal year.
A revenue report issued on Wednesday by Susanne Young, the secretary of the Agency of Administration, confirms that projection. Young said corporate taxes are $9 million below projections already for this fiscal year, and she doesn’t anticipate that receipts will rebound in the second half.
Personal income taxes have been slightly higher than expected, making up some of the loss. Year-to-date receipts are $684.54 million; the forecast was $688.54. The difference is $4 million, or 0.58 percent.
State economists already lowered revenue estimates in July by $28 million.
Jeffrey Carr, the economist for the executive branch, and Tom Kavet, the legislative economist, will present a consensus midyear forecast to lawmakers next Thursday.
The Scott administration and legislative budget writers will use the forecast as a baseline for the midyear budget adjustment.
If the shortfall is $16 million or less, most of it can be absorbed in the current budget, Klein said.
He told lawmakers that the administration plans to set aside money from a $60 million federal receipt fund balance to make up for $10 million in revenue shortfall. Another $10 million will be used as a caseload reserve fund for the Agency of Human Services.
The midyear budget correction includes a number of small ups and downs in expenditures, cost savings and revenues.
Andy Pallito, the commissioner of finance and management, told the House Appropriations Committee on Tuesday that one of the biggest changes in the Budget Adjustment Act is a $21 million savings ($4 million of which is from the state match) in the Medicaid program. Fewer young adults than anticipated are using the program.
Klein and Pallito also explained that a $100 million “Medicaid reserve” described by outgoing Gov. Peter Shumlin in his farewell address is not really a reserve.
Shumlin was referring to an $86.7 million global commitment fund balance of federal dollars that has built up over the past five years. The state received federal Medicaid dollars based on projected spending on the program; the fund balance is the difference between those projections and actual amounts the state spent.
It’s not clear at this point whether the state can keep the money. Klein and Pallito said the state may have to return it to the federal government.