Vermont officials get revenue update

MONTPELIER, Vt. (AP) -- Vermont's revenue forecast is showing a slight improvement, with general fund and transportation fund collections expected to be up in fiscal year 2014, two consulting economists said Tuesday.

The economists said they expect a slight increase from their January forecast of 0.3 percent in the general fund to $4 million for the fiscal year and a 7.4 percent increase in the transportation fund to $17.2 million, primarily from the recent change in the gas tax. But the economists predicted a slight decrease in the education fund — a modest $500,000 drop.

Economist Thomas Kavet said the state ended the last fiscal year 1.5 percent above expectations, which is a plus, but that the economic recovery has been slow.

"At this stage of this business cycle we'd usually be looking at a much more vigorous recovery. We'd normally be having accelerating rates of growth and we're not. And the reason is the headwinds that exist from federal fiscal policy," he said. "So we've got on the one hand monetary policy that's just full blast — you know interest rates as low as they could possibly be — and now we've fiscal policy that's doing the opposite, that's weighing on things and holding things back."

The 410 layoffs at IBM in Vermont last month hasn't been factored into the data but they "will likely only postpone Vermont's full labor market recovery by a few months from what had looked to be 'on course' for a completion some time later during calendar year," said a report from Jeffrey Carr of Economic and Policy Resources Inc. of Williston.

"The only redeeming aspect to the IBM layoffs is that they come at a time when the Vermont economy is in its best position — with a general upward trajectory to its labor markets — to absorb any displaced workers," compared to four to five years ago, he said.

Vermont's unemployment rate continues to be lower than the jobless rate in the U.S. and the lowest in New England for 24 consecutive months, Kavet's report said.

Vermont's meals and rooms revenues also benefited from a strong ski season, with snowfall during key holidays and snowstorms in core markets of southern New England and mid-Atlantic states.

Gov. Peter Shumlin said Vermont is on the right track.

"We just got to keep on doing what we're doing and grow jobs," he said.