Despite Clouds, Signs of Improving Economic Weather
Notwithstanding a spike in unemployment in July, the Vermont labor force has shown largely positive signs this year. After falling for 25 straight months, the labor force increased in five of the first seven months of 2014. The labor force includes people employed as well as those out of work but actively seeking jobs. In July, the net number in the labor force grew by 200, a rise of 1,118 unemployed and a decrease of 916 employed.
Flagging tax revenue
Vermont income tax receipts dropped 20 percent—$124 million—during the recession and did not rise above the pre-recession level until fiscal 2013. Income taxes were up less than 2 percent for fiscal 2014, which ended June 30. The slow growth in income and sales taxes for the first half of this year led state officials to reduce the revenue forecast for fiscal 2015 by about $30 million.
Personal income: Not just wages
The income tax is the largest source of General Fund revenue, but represents a small share of Vermonters’ personal income. Personal income includes sources beyond salaries and wages, such as Social Security and dividends. Personal income is more than the IRS’s “adjusted gross income” or Vermont’s “taxable income.” But it’s a common measure of state economic wellbeing. In 2013 it was $28.7 billion. As a percentage of personal income, Vermont income taxes averaged 2.2 percent from 2008 to 2013.
