Thursday's Joint Fiscal meeting

On Thursday the Joint Fiscal Committee met with several members of the administration and economists to discuss end of fiscal year 2011 revenues and expenditures. As revenue estimates and actual results were reviewed the conversation broadened to the factors that have an impact on our state's economy. Vermont is not alone in the world. What happens economically on a national and global scale reaches quickly into our state and colors all we do.

As you know, the state FY2011 budget year ended with approximately $38 million more in revenue than estimated. That's a lot of money, but the truth is this incoming revenue is only slightly more than last year, 2.5% more. We're just about even with the amount of revenue collected back in 2008.

So, we got a little more revenue than predicted, but the economy is worse. Here's how:
* The price of oil worldwide is way up. We are all so dependent on petroleum products that increases in the price are like a huge tax that digs way into taxpayers' expendable income.
*The federal stimulus money is drying up and the intended effect of kickstarting the economy did not happen. As some predicted, the funds merely postponed the negative effects of the recession. We are seeing those effects now.
*The Japanese earthquake and tsunami injured the American auto industry. Parts and new cars take a very long time now to get to us from Japan and the impact on the American auto industry is felt nationwide.
*The European debt crisis never seems to end. Now Italy and Spain are lining up for a bailout while Germany is quickly growing tired of giving them all handouts.
*In Washington the ongoing game of chicken between those in 'power' and those who want to be still doesn't a resolution. At least there's an end date of August 2. Don't worry, there won't be a default, but just what the solution will look like is a big unknown.

The continued slow recovery at the national level shows up most in continued unemployment. Job growth nationally is nearly at a standstill with a national unemployment rate of 9.1% and in Vermont 5.4%. Compared to national numbers for unemployment Vermont looks pretty good, but Vermonters like to work and those who are unemployed are frustrated. Also the housing market is very slow. Housing starts are a key factor in measuring the health of the economy and while we look better than national numbers, we're still way behind 2008. For a longtime Vermont housing values continued to increase while nationally housing value went down. Now it looks like housing value in our state will level out for a while and may not increase until sometime after 2014. This will show on the grandlists. Vermont budget builders are expecting a recovery from this current recession sometime in 2013 or 2014.

There is good news. Our governor is refreshingly prudent in his plans for the extra money that came in at the end of fiscal year 2011. He wants to set it aside to make up for federal cuts to Human Services, especially cuts on services to our most vulnerable elderly. And he wants to add to the statutory reserve money, bringing it ultimately up to 8% instead of the 5% we have used for years. I strongly support both these plans.

Feel free to contact me at cbranagan@leg.state.vt.us for more information. I want to hear from you.

Rep. Carolyn Branagan
Franklin-1, Fairfax/Georgia