$10B boost in COVID cash has Vermont revenue forecast riding high
MONTPELIER, Vt. (WCAX) - A new forecast from state economists paints a rosy picture of Vermont’s recovery from the pandemic, at least for the next few years.
Vermont state leaders were all ears Friday as state economists presented the latest revenue forecast. They say the state is riding a wave of federal cash from congressional relief packages to the tune of $10 billion in direct relief, PPP loans, business grants, and other relief. That money is flowing through the economy and back into state coffers through sales, rooms and meals, and property taxes.
State economist Jeff Carr predicts that windfall of cash -- almost a quarter billion over the next two years in the General Fund, $40 million in the Education Fund, and $13 million in Transporation Fund -- has the state on solid footing for now. “If 18 months ago and we were sitting here and someone told me that, I would have said it was borderline insanity,” Carr said.
On top of that, Vermont still has about $600 million in unspent relief cash, and there could be more stimulus on the way with a Biden infrastructure plan. But even with the state flush with cash, the governor and lawmakers will still have to grapple with how best to spend it all. Some say the surplus should be spent on state debt, like the multi-billion dollar unfunded pension liabilities.
“We want to ensure that the hardworking state employees aren’t socked with extraordinarily high costs or reduced benefits,” said Darren Allen with the Vermont-NEA, the state’s teachers’ union.
While Carr says the next two years are promising, the long-term financial forecast is unclear and that the state’s economy will have to stand on its own. “We’re only beginning to understand how we went on the upside of this thing, let alone how it unwinds,” Carr said.
Economists say there’s also uncertainty about the duration and impact of pandemic-driven inflation on homes and consumer goods, and that the global economy is also reacting to the delta variant and subsequent health restrictions. “It is present globally, it does mutate, and it’s just a matter of time before there are mutations that could be problematic. That’s going to have to be dealt with,” said legislative economist Tom Kavet.
State leaders welcomed the positive revenue forecast while acknowledging the state can’t count on federal largesse forever.
The governor and lawmakers emphasized taking advantage of the windfall now by investing in initiatives that will Vermont up for future success.
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