How far in the red? Grim new numbers from Vermont economists
MONTPELIER, Vt. (WCAX) - State economists are calling for Vermont to tighten its belt to the tune of $170 million next year as a result of COVID-19. Our Calvin Cutler has the details from economists on the long road to economic recovery and the difficult budgeting decisions ahead.
Vermont has arguably done the best job in the nation in containing COVID-19 but the cautious approach to opening the economy that kept people safe came with a price. Vermont has taken one of the biggest hits to all sectors of its economy.
"We've I think simultaneously had the most significant and the most accelerated downturn in our economic history at least dating back to the Great Depression," Vt. State Economist Jeff Carr said.
When COVID-19 shut down Vermont in March, sales, services, spending and travel came to a screeching halt.
Spending at restaurants and retail, and the subsequent tax collections, fell through the floor in the spring. The shutdown left tens of thousands unemployed overnight, further curbing cash flow into the economy.
Our unemployment rate stands at about 9% with some 45,000 people still out of work.
"We basically put the economy in a medically induced coma while we dealt with the public health issues and now what we're trying to do we're going through the process of now of balancing the further public health measures that are needed with reopening the economy and trying to limit the permanent damage," Carr said.
That damage will directly affect the state budget and the services the government provides to Vermonters.
Next fiscal year, the state is facing an anticipated shortfall of more than $180 million in the general fund, $30 million in the transportation fund and $60 million in the education fund.
The federal government is helping our economy along with about $3.5 billion in stimulus funding to date in the form of PPP loans, the CARES Act, extended unemployment and direct cash payments to citizens.
But the state is hoping for more help from Washington and much of what lawmakers can do to deal with the looming fiscal crisis depends on Congress and whether the U.S. as a whole can contain the coronavirus.
"Those are the things that are driving the economy and those are just packed with unknowns," said Tom Kavett, the Vermont Legislature's economist.
Lawmakers and administration officials will use this data to make budget decisions on where to cut expenses and where to raise revenues.
We’ll get a taste of those next week when Gov. Phil Scott will pitch his newest budget recommendations to the Legislature.
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