MONTPELIER — The Shumlin administration is expecting economists to issue a downgraded revenue forecast this week, continuing a trend of lackluster revenue growth in recent years.
The state’s Emergency Board — comprising the governor and the heads of Legislature’s four money committees — will gather Thursday to receive a new consensus forecast. The updated revenue prediction is not expected to be good news.
Administration Secretary Justin Johnson said the administration expects Tom Kavet and Jeff Carr, consulting economists for the administration and lawmakers, to predict lower revenues for the 2017 fiscal year than they first forecast in January. The revenue forecast accepted by the Emergency Board in January already included a $9.1 million downgrade for 2017.
While revenues are still expected to grow over the 2016 fiscal year results, it will be less than was expected in January.
“I’m expecting a revenue downgrade. No idea how much yet — but I’m not freaking out,” Johnson wrote in an email. “It is the beginning of the fiscal year so we have time.”
Thursday’s Emergency Board meeting comes just days after the administration released preliminary revenue results for the 2016 fiscal year that ended June 30.
The state ended the fiscal year with revenues 1.13 percent, or about $16 million, below projections that were accepted by the board in January. The missed target included a $4.7 million revenue downgrade in January.
Despite missing the target, revenues grew in the 2016 fiscal year by 2.3 percent, or $31.7 million, over 2015. Revenues in 2017 are still expected to grow and outpace 2016 levels.
The state’s middling revenue growth has been a focus of both Republican candidates seeking to succeed Democratic Gov. Peter Shumlin, who is not seeking a fourth two-year term. Lt. Gov. Phil Scott has criticized Shumlin for state budgets that grow at about 5 percent each year while revenues are closer to 2 percent.
“I firmly believe we cannot raise more taxes — we do not have that capacity,” Scott said. “That’s why my administration will focus on growing the economy and I will not propose or sign a budget that grows faster than the economy or wages in the previous year.”
He added, “The solution to the revenue shortfall is not new ways to tax people, like through fees and surcharges. It is through growing the economy organically and making state government more efficient.”
Scott’s primary rival, former Wall Street executive Bruce Lisman, has been critical of Shumlin and Scott, who he blames for not pushing hard enough for tighter budgets during Scott’s tenure in public office.
“As the state’s highest-ranking Republican, Phil Scott had an obligation to say ‘no’ to budget growth of 5 percent a year in a 2 percent economy and he stood by silently, year after year,” Lisman said last week.
“He even failed to speak out against a proposed 4.9 percent budget hike for the lieutenant governor’s office earlier this year,” Lisman said. “It’s time for new leadership. Scott has had every opportunity, over the past 16 years as a state senator and lieutenant governor, to make his mark and he has not.”