2. VERMONT’S OVERALL REVENUE SOURCES AND COMPARISONS

 

2.1. STATE REVENUES

State revenues in Vermont are traditionally divided into three or four areas: General Fund revenues, Transportation Fund revenues, Special Fund revenues, and Fish and Wildlife Funds (which make up less than one percent of total state revenues). In this section, we review key changes in the contribution of these various revenue sources to total state revenues, as well as changes within the funds. These changes reflect a combination of changing tax law, changing expenditure patterns, and the impact of in flation on various revenue sources. This study focuses primarily on General Fund and Transportation Fund revenues; it examines Special Funds to a lesser extent.

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NATIONAL COMPARISON

As a form of measurement, state taxes per capita and per $1,000 of personal income provide a state-level comparison measure only. This measure does not take into account any local (county, city, or town) sales, property, or income taxes, which can dramatically affect tax burdens. [A number of other states use county-level taxes; county-level taxes do not exist in Vermont.] It also does not take into account relative exportability of tax burdens or the use of non-tax revenues by states.

State Tax Collections Per Capita: [See Appendix 4, Tables 2 and 6.]

FY75:National = $ 377Vermont = $ 397Vermont Rank = 18
FY95:National = $1,522Vermont = $1,370Vermont Rank = 32

State Tax Collections Per $1,000 of Personal Income: [See Appendix 4, Table 7. Calculations use 1994 personal income data.]

FY95:National = $69.76Vermont = $68.30Vermont Rank = 30

Personal Income Per Capita: [See Appendix 4, Table 1.]

1975:National = $ 6,085Vermont = $ 5,148Vermont Rank = 37
1995:National = $23,208Vermont = $21,231Vermont Rank = 29

While Vermont’s 1995 rankings for state tax collections per capita (32), state tax collections per $1,000 of personal income (30), and personal income per capita (29) were similar, the rankings fluctuate from year to year. In 1990, for example, Vermont ranked 24th in personal income per capita.

 

2.2. STATE AND LOCAL REVENUES

Local taxes can be a significant portion of total tax burden. The major types of local taxes include property, income and sales taxes. In Vermont, property taxes are the primary local tax used.

NATIONAL COMPARISON

Vermont’s state and local revenue share is similar to that in other states. What is atypical is the share of property taxes as a proportion of local taxes. Many other states have local sales and/or income taxes as well as local property taxes. In part, this is a New England phenomenon. States in other regions have more developed county governments, which rely on broader revenue sources.

FY93 Share of State and Local Revenues

Vermont

50 State Average

Local

36%

40%

State

64%

60%

Source: Federal Tax Administrators. [See Appendix 4, Table 5.]

The national comparison of all state and local revenue collections, including school tuition, local fees, etc., indicates the similarity in state and local shares of revenue. The use of this data, however, must be qualified; it contains considerable double counting between various governmental entities. For the FY95, 12-state comparison that follows, we looked at only state and local tax revenues.

12-STATE COMPARISON

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Major Source: US Census Bureau. Local revenue data from State Dept.’s of Revenue. See Appendix 6, Tables 2 & 21 for additional source information.

Among the 12 comparison states, the average state and local share of tax revenues is 61% state tax revenues and 39% local tax revenues. (See chart above.) Vermont, at 56% state revenues and 44% local (property tax revenues), has the third highest reliance on local taxes after New Hampshire and New York. New Hampshire relies on property taxes, while New York has local income and sales tax revenues in addition to property tax revenues.

Because of the significance of local taxes, we obtained FY95 state and local tax data for the 12 comparison states. The local data include local sales, property and income taxes, which are the primary sources of local revenue we identified and qualified. [Oregon and New York have local income taxes. In New York, local income tax revenues are approximately equal to 20% of total state income tax revenues, although they come from only two counties. Six of the ten states with general sales taxes have local general sales taxes.]

As the data below indicate, Vermont’s per capita state and local tax revenue is below the 12-state average, while Vermont’s per $1,000 of personal income is above the average.

State and Local Tax Collections: [See Appendix 6, Tables 4, 5, 10 and 11.]

Per Capita: 12-State Avg. = $2,659VT = $2,455VT Rank = 7
Per $1,000 Personal Income:12-State Avg. = $ 110VT = $ 116VT Rank = 6