Patrick Titterton, senior fiscal analyst at the Joint Fiscal Office, told the House Appropriations Committee on April 18 that Vermont’s major state funds were largely tracking near their January consensus revenue targets through March but warned of several downside risks that could affect collections later in the fiscal year.

Titterton said the general fund had collected about $1.7 billion through March, the education fund just under $600 million, and the transportation (T) fund roughly $230 million. He noted the April remittances are typically the most important month for revenue and that some shortfalls in March — especially in DMV fees and purchase-and-use tax collections — may reflect timing issues rather than permanent declines.

His presentation outlined the composition of each fund and why those compositions matter for volatility. “Over half of the general fund is coming from personal income tax,” Titterton said, which makes that fund sensitive to changes in income and employment. He added that, taken together, income and corporate taxes represent about two-thirds of general fund revenue. For the education fund, he said sales-and-use tax receipts are the largest non-property-tax contributor and account for the bulk of those non-property revenues.

Titterton described an estate-tax windfall this fiscal year: the state has collected about $43 million in estate taxes through March, he said, and because receipts exceeded the statutory 125% trigger the distribution shifted. He said roughly $28.9 million will be deposited in the general fund and about $14.3 million will be allocated to the Higher Education Endowment Trust Fund under the statutory allocation rule.

Why it matters: the committee uses these revenue estimates to set budget priorities and to plan for the coming fiscal year. Titterton repeated that the numbers reported so far are heavily influenced by last year’s income and that changes tied to economic shocks are more likely to show up in later months.

Titterton flagged three major categories of risk:

1) Tariffs and international trade policy: Titterton walked members through scenarios in which federal tariffs — including broad-based measures and sector-specific tariffs such as higher levies on autos and Canadian softwood lumber — would raise input costs for Vermont businesses. He explained the mechanics: tariffs are paid by importers but often are passed down the supply chain and show up as higher end prices, which in turn affect ad valorem taxes such as sales-and-use and purchase-and-use taxes. He noted recent federal actions increasing some lumber tariffs to levels as high as 34% and described how repeated border crossings of intermediate goods can raise costs for manufacturers. “There’s a lot of uncertainty in the business community, which makes it very difficult for them to plan,” he said.

2) Consumer confidence and credit markets: Titterton said a major consumer-confidence index fell from 71.7 in January to 50.8 in April, the second-lowest reading since the survey began in 1952. He described the index as a leading indicator of spending behavior: when confidence falls consumers may defer discretionary purchases, reducing sales-tax and meals-and-rooms receipts. He also pointed to rising bond yields and higher borrowing costs — for example, average 30-year mortgage rates rising to the high 6 percent range in April — and increasing delinquency rates in some credit segments, which could further depress consumer spending and investment.

3) Tourism and cross-border travel: Titterton said tourism is unusually important to Vermont’s economy, accounting for about 9% of state gross domestic product and an estimated $4.0 billion in annual spending. He said tourism supports roughly 31,000 jobs and produces an estimated $282.3 million in tax revenue statewide. Because a meaningful share of visitation to parts of northern Vermont comes from Canada, he warned that changes in border policy, exchange rates and recent visa registration requirements for Canadians staying more than 30 days could alter visitation patterns. He noted anecdotal reports from businesses in northern resort areas that a substantial share of their visitors are Canadian — citing 30–40% estimates from individual operators — and said reduced Canadian visitation could have concentrated effects on small, tourism-dependent communities.

Titterton also summarized additional federal developments that could affect Vermont revenues, including proposed changes to the federal “safe harbor” standard for provider taxes (a change that analysts have estimated could reduce Vermont’s federal Medicaid match by roughly $104 million in state-eligible funds, equating to about $252 million in gross Medicaid funding if enacted) and recent federal contract cancellations that led to localized layoffs in Vermont.

Committee members asked technical and policy questions; Titterton repeatedly emphasized timing effects in monthly remittances and the need to watch April numbers. He said the Joint Fiscal Office posts monthly tracking and visualizations on its website and that Department of Finance and Management schedule reports provide more finalized figures on the third business day after month-end.

Titterton concluded by telling members that, despite the risks discussed, “things look fine right now” for the current fiscal year but that the committee should monitor developments closely as the economic effects of tariffs, credit conditions and changing tourism patterns work through the system.

The committee did not take any formal action during the presentation and scheduled additional briefings and monthly updates to continue monitoring revenue developments.