Joint Fiscal Office revenue update: general fund above forecast but multiple economic risks flagged — tariffs, consumer confidence, tourism and federal tax/Med‑

Patrick Titterton of the Joint Fiscal Office provided a state revenue update, reporting where major funds stood through March and outlining near‑term risks that could affect revenues.

Titterton reported that through March the general fund had collected “about a little under $1,700,000,000,” tracking roughly 2.3% above the consensus forecast, which translates to nearly $40 million above forecast so far for the fiscal year. He said the Education Fund non‑property revenues were roughly on target and the Transportation Fund lagged slightly, about 1% below forecast in dollar terms. Personal income and corporate income tax collections accounted for much of the general‑fund overage.

Titterton spent the bulk of his time describing macroeconomic and policy developments that could affect those collections going forward. He flagged a set of federal tariff announcements and postponements and described how tariffs can raise costs for businesses and consumers, and create planning uncertainty that can reduce investment and hiring. He said imports critical to construction — notably Canadian softwood lumber and other building materials — face tariffs that could increase the cost of building and therefore affect property transfer tax receipts and construction activity.

He also highlighted a sharp decline in a consumer confidence index: “At the beginning of the year, the index was at 71.7 … as of this month we’ve gone down … to 50.8,” he said, adding that the recent level is the second‑lowest on the series since the 1950s. Titterton said lower confidence and higher financing costs can reduce discretionary spending that drives meals and rooms and sales and use tax collections.

Titterton reviewed credit‑market signals: higher long‑term Treasury yields can translate into higher borrowing costs for mortgages, auto loans and business financing. He noted rising yields and market volatility have coincided with rising delinquencies in some loan categories (for example, elevated delinquency among subprime auto loans), an increase in consumer stress that could cut consumption and slow revenue growth.

On tourism — an important sector in Vermont — Titterton said tourism supports roughly $4 billion in annual activity in the state and accounts for a substantial share of retail, lodging and meals and rooms tax receipts. He noted several anecdotal reports of Canadian travelers reducing or cancelling trips and observed that Canadians historically make up a meaningful share of some Vermont destinations’ customers; he cautioned that changes in cross‑border travel rules and Canadians’ travel decisions could affect revenues tied to tourism.

Titterton also discussed possible federal‑level changes that could flow through to state revenues. He warned that congressional tax changes embedded in reconciliation proposals could alter federal tax items that serve as Vermont’s starting point (adjusted gross income) or change credits tied to the federal code; he said the precise structure of any federal change matters to Vermont’s receipts. He also noted an ongoing federal policy discussion about the hospital provider tax safe harbor that could reduce a commonly used 6% threshold to 3% and—based on staff calculations—would reduce the state’s available federal match (staff estimated a roughly $104 million reduction in state match availability under one staff calculation and said the precise fiscal effect would merit further analysis).

Titterton ended with a cautionary note but also a reminder of the immediate good news: “The general fund here today is almost $40,000,000 above the forecast so far,” he said, but he urged members to watch tariffs, consumer confidence, bond markets and pending federal policy changes that could change next year’s outlook.

Ending

Titterton advised that the March results leave the current fiscal year in a favorable position but that committee staff will continue monitoring incoming tax‑day receipts, tariffs and credit markets for changes that could affect next fiscal year’s consensus forecast.