State economists told some legislators this week that Vermont’s economy remains resilient and is not as bad as state leaders might think, but they must also exercise caution with future fiscal plans.
The Vermont Emergency Board is a fiscal panel composed of the governor and the chairs of the Vermont Senate Appropriations and Finance committees and the House Appropriations and Ways & Means Committees. According to the Agency of Administration the board meets in January and July to adopt the revenue forecasts for major funds including the state’s General and Transportation Funds. The projections are based on reports from independent economists separately hired by the administration and the legislature.
The report issued by those economists on Thursday offers a “generally positive revenue” forecast while calling for modest changes.
Jeffrey Carr, the economist for the Agency of Administration, said despite pessimism and predictions of a recession last year, the economy and the state’s revenues are strengthening.
“Here we are a year later,” noted Carr. “The economy’s still making forward progress. Inflation is, in fact, coming down. The unemployment rate in Vermont is near a historic low. For 2024 we’re projecting a $29.3 million increase in General Fund. In the Education Fund the number’s a little bit smaller but it’s the same direction. It’s up 9.7 percent, just about the same percentage that the $29.3 million for 2024 is to the General Fund.”
During a discussion on American Rescue Plan Act money, its obligated spending and potential federal callback of funds, Economist for the Legislature Tom Kavet said they would be assessing vulnerabilities and noted that the money is less impactful now than when the program began.
“The things that it’s being spent on in Fiscal ’24-5-6-7, it’s going to buy a whole lot less than people thought when it first went in,” said Kavet. “Right now, if you look at the price of goods like the CPI (Consumer Price Index) compared to the month just before the pandemic, February of 2020, it’s up 18 percent. And in construction and building and the like it’s advanced even more and it’s going to be hard to get the same infrastructure bang that that money was intended to do. So I think that’s an important thing to realize too. It’s not going to actually buy as much as when it first landed.”
Kavet cautioned that even though many of their forecasts show positives, they are minor economic steps.
“For Fiscal ’24 the available General Fund, it’s still in decline and not a tiny decline,” Kavet said. “And then in Fiscal ’25 it’s a little bit of a decline. Even though we’re adding relative to July it’s not like everything’s doing great. There’s a lot of good news in the economy but it’s not like on the revenue scene we’re looking at something that’s a big upgrade or something that’s sort of relative to last year oh everything’s fine. No there’s going to be a lot of...”
“There’s no recession,” Carr interrupts. “We have no recession in the forecast.”
