State economists: Vt. short-term revenue forecast remains bright

Published: Jul. 28, 2022 at 4:59 PM EDT
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MONTPELIER, Vt. (WCAX) - An influx of federal pandemic funding continues to keep Vermont’s tax revenues rosy, but inflation and the economic impacts of the war in Ukraine pose risks to the state’s long-term financial health, according to a new forecast from top state economists.

Vermont’s Emergency Board met Thursday to hear the latest state revenue forecast. State economists describe the last two years as one of the greatest economic experiments of all time -- a global pandemic followed by unprecedented stimulus spending affecting the global economy in good and bad ways.

Vermont has received $10 billion in federal relief since the pandemic began. As the funding has trickled through the economy, Vermonters generally have more money in their pockets and they’re looking to spend on services, goods, and travel. But demand is outstripping supply and that’s contributing to inflation, as are supply chain woes and the war in Ukraine.

Administration economist Jeff Carr says that with billions still winding through the economy and the federal reserve raising interest rates to tamp down inflation, it has created a dynamic economic environment. “It’s like we have one foot on the accelerator in part of what we’re doing and then we have the other foot on the brake. The accelerator is starting to ease up a bit and the brake is starting to be pushed harder and harder,” he said.

The E Board, which is comprised of Governor Phil Scott and key lawmakers, use the economic forecast to inform taxing and spending decisions as they craft a budget. They unanimously approved the revenue forecast, which shows the state’s General Fund slated to gain another $138 million above the expectations set back in January

The economists also warn that there is a lot more risk nine months from now, especially if the war continues.

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