 So, we are now live and this is a joint meeting of House Ways and Means and House Appropriations. And we've asked Tom Quebec to give a very, very brief sort of overview of the revenue forecast. I know a lot of members have listened to it already. And so most of what we're going to do today is members from both committees a chance to ask questions. We get started. Katie, did you have anything you wanted to say by way of production? Just to remind anyone who is listening in that at two o'clock the e-board did meet and we did take a vote and this forecast has been approved. And so it's what it is. It was approved unanimously. And so with that, I think Tom should just step in and do a quick review. Many of you may have joined in. Have you, did you? I think most people have heard the presentation at least once. So, so Tom, go ahead. Yeah, I think the prior presentations and just the first page of what, you know, is in the handout kind of gives the whole picture. It's a very unusual forecast. It's a very unusual time as you all know. And this is not a economic forecast that's being driven by economics. It's being driven by the virus and responses to it. And we've spent as much time looking at epidemiological models as we have economic models. And that's over a sustained three or four month period. Earlier on when, when Mike P check commissioner P check started doing collecting epidemiological information to help with the planning regarding reopening. We were involved in that and we've met regularly to share information that the coordination with the administration and and legislative personnel has been excellent and my estimation, the tax department's been extraordinary and doing runs, very detailed runs try to figure out what's happening. They're working from home in most cases, and still being incredibly productive and, and responsive despite all the pressures they have. Commissioner P checks work. Also has been very time consuming and detailed. And it's kind of the core both in terms of the state's ability to be in the position it is today which is, which is really kind of best in the nation in terms of COVID stats and, and health metrics and that kind of thing. It's a tenuous position, always because we're, we're very interconnected with the region. And it's hard to sustain that if you're not a place like New Zealand where you test everybody that comes in. And I can sort of manage those flows in a way that that we really can't so it's it's not like just because we're in a good place now, you know that's that's necessarily going to stay. But it's a big advantage and really to to everyone's credit who's been involved in in that process. Yeah, these, these two areas that, you know, normally we're, we're, you know, not spending that much time looking at, which is the path of a pandemic, the viral characteristics and, and path that that the virus might take. And then the federal response, fiscal and monetary response to that is is a unique situation to be in because neither one of those is particularly predictable. You would think that maybe the federal offset could be a little more predictable and the monetary policy has been, but the fiscal policy has been erratic and even a core assumption that we have as part of the numbers that we generated and presented today was that there would be another tranche of fiscal support in the neighborhood of a trillion and a half. So, you know, kind of not less than about that amount. And that's really in question is it's it's not clear that that will come through and the executive order for its substitute doesn't come close to beneficial economic impacts that could really be really be meaningful and involves additional state expenditure. And to accomplish even part of it. So, I, given those unknowns, I, I, I think it's very, very unlikely that this forecast will have a normal shelf life that, you know, in, in January we'd revisit it I think it's going to be a process much like we've had since March where we generate based on the best information we have, and then we revise them as more information comes in. So early on we, we thought the lockdown might extend through June so we were estimating impacts as if things were pretty much closed through June. That turned out not to have to be the case. And, and that's one of the reasons we had much better revenue performance. You know, than, than we had thought back then. So we've kind of adjusted to new information with a may update a June update, much more cursory than this exercise. But then, but then this and I think we'll need to do that into the future. And I think your planning unfortunately is standing on the same quicksand that we are so I, you know, you may need to change course. In a moment's notice, given new information and new realities. And that's just where we're, where we're at. So, you know, the numbers that are, you know, that are out there all in this summarizing this chart on page 15, which is the, you know, that that typical chart that we have about relative to the last board forecast rate of revenue stand. And across all of the funds, you know, it's about $275 million less than was expected in, in January, and that's spread, you know, not very evenly across the funds, it's all detailed, you know, in, in the tables and all that, but there's a very significant revenue risk. And, you know, absent a significant federal offset, there could be real budgetary stress. And unfortunately, the actions that would need to be taken at the state level, whether it's reducing spending or increasing taxes would both have very deleterious impacts on the economy. And I'll read a journal article out today that references some moody moody's estimates on on how how significant that might be, and they project that it would be about cost about 4 million jobs, not to have a state and local government unrestricted fund in the neighborhood of 500 billion. It represents about 4 million jobs, and about 3 percentage points off our real gross domestic product over the next two years. So, you know, it's anybody's guess exactly how that's going to play out that's still happening. And, you know, we'll have to be responsive to all of that. So, I do want to just make this mostly q&a because you have heard most of what is in the presentation before. So with that, I'll, I'll look for hands. Okay, anybody have a question. Yeah, I'm going to start with one. If you if you don't have enough money and you shouldn't raise taxes and you shouldn't cut spending. What are you supposed to do. Federal assistance, you don't have a choice, unless you want to borrow money. So you could increase debt. But for a short term event like this that that would be dicey just to fill a budget hole. That would be risky to unless you thought you were going to pick that up somewhere else. So, you know, there's not a lot of choice at the state level, I think. And, you know, it would just be a real bind. What about using reserves. Well, yeah, sure. Certainly, rainy day funds and all the states were in pretty good shape financially with rainy day funds going into this, some better than others, and same with unemployment insurance funds and things like that. And we were, we were in good shape, but, but, you know, we had a rate, we have a good rainy day fund and this is a hurricane. So, you know, get your umbrella out but it's, it's going to go way beyond that, you know, get a boat representative Anthony has his hand raised. I just wanted to ask, Jeff or Tom what the lag would be. Should we enhance revenues knowing that that will have a depressing effect on the economy. What's the, what's the timeline. If revenues are increased, whether it's income or consumption. You can specify. I'm just thinking about your worry of covering borrowing because frankly, neither of the other two opportunities or alternatives are attractive. And this wouldn't be the first time the state would take a short term emergency and turn it into a long term commitment to keep Vermonters afloat, but I'm interested in the lag time. I'm interested in the lack of the depressing effect of an adjustment in revenues. You mean if, if there was borrowing that offset decline in revenues. No, if you purposely raised revenues so that it would enable you to borrow further out in order to maintain some degree of provision of social service. If you just, if you just did business as usual on an accrual basis and and covered each fiscal year as we traditionally have done. Right. So if you raise taxes then to pay either debt load or offset. What otherwise would be cuts. Yeah, that's a good question. Yeah, okay. So, you know, obviously depends where you would raise taxes and I typically in the past when there've been situations like this where there needed to be taxes raised. It was clearly it was clearly done on a temporary basis. And that can help offset some of the negative impacts from a tax increase if people don't perceive it to be permanent, then you don't get the same, you know, decision making process that more negative around that I. So, again, you just have to look to where there's capacity. And, and there's obviously a limit to that too but I think that, you know, they're there have been income tax surcharges and various things like that. Going all the way back to the smelling administration that have been employed at times of severe revenue stress and that would be that that would probably be the least negative way to, you know, if you want to take that course. Thank you. George. Thanks, Tom serving this the same vein from an economist's point of view. They both have negative effects the raising taxes of any kind and reducing spending, but is there one that can one be said to be worse than the other, or have it, or is there a different lag time between the two. If you cut spending, you have very immediate impacts. I, and I, you know, a lot of those jobs have pretty high local multipliers. So, of the two that would have more immediate negative impacts. I, you know, again, if it depends on on what the taxes if it's a broad based tax that, you know, that that can have fairly quick income offsets as well. You know, the kind of thing like a surcharge on, on very high earners or, you know, a segment like that, which are not apt to get a big change in terms of local consumption. That would be the just from any impact on the economy. That would be the least negative, but yeah, of those two. Okay. And, you know, I'm listening to your earlier presentations today. It seems as though we've had a bit of a bounce back economically in Vermont. You know, it's still grim, but it's not nearly as grim as we thought it was going to be. Is that peculiar to Vermont or other states with relatively low levels of COVID experiencing the same thing. I'm not sure I'd really call it a bounced back exactly. You know, we had some good fortune with the deferred personal income revenues that were deferred from April to July. That's all backward looking that's that's based on 2019 tax year, and it was just a delay in the collection so that's not. That's not really a bounce. There's been some improvement in, you know, in labor markets and some reduction in unemployment, we were starting from a worse position. Early on, we did a more complete shutdown. So, you know, just on a percent change basis, you know, that's looking better and the health metrics support. There's an opening that a lot of places, you know, could support, but it's almost all the bounce that we're seeing is coming from this phenomenal infusion of federal transfer payments. I mean, really, when you start to add up to programs and, and, you know, that when you go back to 2009 2010. And we had tropical storm Irene, and we got a big hit of disaster relief money that really showed up in a big way on grossed a product and a lot of things, where we, you know, you had a measurable uptick in economic activity by virtue of this, you know, disaster spending. It's, you know, what we've gotten in this just dwarfs anything we've ever experienced before. So there's, there's been tremendous stimulus, things like, you know, a bounce back and motor vehicle purchase and use are more a function of the federal transfer payments. And, and not to necessarily those most in need that just shows that a lot of that money is going to people that, you know, for whom they can either save it spend it on, you know, things that aren't necessarily basic needs kinds of things. And, and there's a tremendous amount of money that's sloshing around. That's, you know, that's unlikely to provide a very long term bounce but it's, it's giving us most of the juice that we have now. And what we need is enough momentum to deal with some of the sectors that aren't going to recover quickly that have longer term impacts and, and, you know, transition some of those workers and some of those businesses into things that will be sustainable. And that's not a quick thing at all. So, you know, that's why there are a lot of lingering effects that that are going to occur. And certainly at the very bottom there needs to be a lot of support so so they're not massive defaults on on mortgages and rent payments and various things like that which otherwise would occur when people are out of work. Thank you. Tom, I'm wondering if you can tell us the sectors that you are concerned about assuming that we're going to stay on this trend of partial shut down or maybe go into a tighter shut down with the second wave coming. And what opportunities, what we ought to be thinking about doing in terms of supporting whatever sector it is that's going to be hurting the most. Yeah. I mean, leisure and hospitality is, you know, probably, you know, the sort of the bull's eye of where this is, this is hitting. There's certainly other sectors to retail. You know, when you look at our sales and use numbers and masks, the fact that there's just this phenomenal increase in internet related sales. It's, it's, it's through the roof, and it's certainly a good thing that that's a part of the tax base now, because without it, we would see big declines if you even took out the addition of wayfarer that we had we would have had a decline in sales and use revenue, rather than a year over year increase, even though it was lower than that was projected in January. But we've seen both sales at existing internet vendors go up, and we've seen a number of vendors go up so a lot of stores and and and such that are saying all right if I'm going to survive I've got to sell online, a lot of my markets local I still have to sell online. So we're seeing more and more of that happen, but leisure and hospitality is going to be the, you know, the sector that until there's, and it doesn't really matter whether it's a government directed shutdown, it's, there are two real responses to this, and you see this worldwide is, you know, one might be the guidance that a government provides. The other is what people do based on their own good sense and information that they have. And so I don't think you're going to get a lot of the tourism back, particularly because a big part of that is an older age cohort that is most vulnerable to the health risks. And that's not going to come back until people feel safe. And probably that means post some vaccine. And so so that could be much more long term. I don't know that there's enough money to keep all those businesses afloat. And so, you know, whether they transition and pivoted something else. Same with the workers, there does need to be, you know, a level of support of certainly a safety net for the people involved, but I don't know that there's enough money to just keep, you know, all those businesses around when there's, when they're not generating any, any activity. So there could be permanent, much more permanent long lasting disruption there. And it's probably beyond the scope of either federal or state action, you know, try to offset that. Thank you. I have a question. Tom and I'm not sure really how to articulate it I know what I'm thinking and it has to do with the several years we've had of the one time money events at the end of the year, and we haven't been able to count on them as ongoing funds. They're one time event one time event and it appeared and not appeared we know now that fiscal year 20 would have ended would have been a stellar year. And with those have continued to have been one time event or were we actually seeing the economy growing where where we could move more of those events into the ongoing status. And, and so, and then where are we now are we chipped into all the one time events or into the ongoing events and I'm just trying to it in order to put a budget forward in a, you know, next week and in the in the next upcoming weeks. I've got to figure out what's one time and what's ongoing going forward and what's been harmed. Yeah. There's there's a little of each in terms of how those get baked into any analysis. And we review this with the tax department. You know, looking at individual events and, and the way they, they, they spread through a lot of different tax sources and, and a lot of different places so I quite often they're connected to some business sale. And in which there's a high level of Vermont ownership and, and it's extremely difficult when the event happens even when you learn about it. You know, let's take something like the sale GW plastics would just happen 240 million dollars announced sale price. You know, we know it's a family owned enterprise but we don't know the exact terms of the sale. We don't know the exact ownership structure. We can't guess whether, I mean, there are events bigger than that that have yielded almost nothing to the state coffers, because of, you know, where people's primary residents happen to be who were in ownership positions. And there have been other events smaller than that that have generated huge amounts of, of tax revenue. So, you know, it's, it's not like you don't get some of those all the time, but you would be way out on a limb. If you assume that what happened in tax year 2019 was something that was replicable. You know, when I say a small number of events, it, I mean, you would be stunned at the magnitude, and it's not just, you know, it doesn't just hit one taxpayer but their, their trusts and, and, you know, ownership connections that involve a whole group of taxpayers that, that play into this. So, it's really complicated and I think it would be doing, you know, it wouldn't be a best practice forecast to just sort of say, Oh yeah, that's, that's just going to happen every year. It's increasingly in personal income and we've called this out for a long time. It's increasingly more volatile, because there are so few taxpayers that represent so much of the revenue that we get. That's also true in corporate, that's also true in a state. And, you know, those are just really hard to forecast, you know, on that taxpayer by taxpayer basis, and you're going to get a lot of volatility. And, you know, some of that be on the upside, not ridiculously so but, you know, then to be going in and all of a sudden be $70 million short. And, and that, that could happen in, you know, with same rapidity that you get some of the upside events. So I don't know if that's helpful but that's how we look at that. Thank you. Mary, you had a follow up. And it is. Thank you, Kitty, and it is a follow up to that. And I understand the principle. It appears to me and I was asking you about this last or couple weeks ago, Tom, that we keep having maybe we don't have the a repeat itself but be it which is very similar to a repeats itself so that what in our world we think of as one time money really seems to be even if it doesn't nicely fit into the a package and it's be instead or see, but it's all in that general category where it seems to be happening year over year. And to me, this is an important question because the distinction between how we spend one time money versus ongoing is is really significant. Pretty fundamental to our ability to support the work that we're trying to do. And yeah, yeah, no, I can appreciate that. And if you look at estate tax revenue. That that'll give you the same flavor. You know, multiply that times. You know, if you get a hundred or last maybe 50 or something and and you get what could happen in personal income. If you're just sort of, you know, you add up what can happen in the swings that can occur. And they can be honest, they truly can go both direction I know in the last two years, as we've been on an upcycle. There's been a proliferation of those and that also is a function of the fact that more and more income is landing in the pockets of the very wealthiest folks and and so that, you know, that's good in terms of tax revenue there's a higher than that marginal tax rate that's applied, but it increases volatility, the way to plan for volatility is not to expect that that's going to be there as as an ongoing thing so that there's a lot more contingency planning that needs to take place, unless the cost of dealing with a miss on the downside is no problem. So I, you know, it's really just a feature of the tax system, and it's changed over time it's become more volatile. And, you know, when when when things are going up there's a better chance you're going to have those surprises that are on the upside. When things are going down, you can get big surprises on the downside and we may see that in the coming year. That's, you know, that's that's the world we're in. Tom, do you have information on how other states are doing with respect to revenue at the moment sort of where I know epidemiologically we're doing really well. And, and in terms of some economic factors we seem to be doing better than other states and I'm curious what revenue forecasters and other states are coming up with. I, I haven't done a deep dive into that we just been focused on this and this cycle was so time consuming because of all the non economic factors that we had to dig into. And how much information we had to sort through with tax in order to get things into the right year and the right bucket and all these things with deferrals that were happening and all that so I look forward to that NCSL I'm sure we'll have some time out soon and and we'll be able to look at that. I'd be interested both in terms of deferred personal income taxes to see. I suspect that was, you know, something that will show up elsewhere. Also, because I, you know, I just think when there's a lot of money like that around acquisition activity increases. And so that's what gives rise to those enormous, you know, lottery type when gains in income. But I don't have information on that. Thank you. Other questions anyone has. Well I'm sure we're going to be revisiting some. I just like to jump in. I'm thinking about all the volatility and I'm thinking about representative answers question about what other states are doing. And I'm wondering if you've seen any interesting models in terms of budgeting for such volatility. For example, have you seen other state. I was just talking about the fact that should revenues drop by a certain percentage this mechanism goes in, should they go up by a certain percentage, this kicks in. In other words, setting up various triggers or parameters or guardrails that allow for this volatility because what I'm thinking of if their instructions going to the executive branch to cut this amount or direct it shouldn't coming from the legislative branch that points to this and, and yet these are shifting sands as you said I'm just trying to think of proactive ways to prepare for that. The shifting sand and you know the quicksand upon which the current forecast is done is, is in a whole nother league of uncertainty from anything that you get in terms of normal year to year volatility that's occurring so so this, this situation is an elite by itself, because it's not being driven by economics it's being driven by a brand new virus that's, you know, that that that's, you know, some people said, we're not leading the tiger we're riding it. And, and so nobody really knows how it's going to play out, and that's going to determine, you know, revenues and everything else in terms of normal volatility, typically contingency planning is the way you, you accommodate risk like that. And so you would have, you know, you say, if, if there's this much more, here's where we're going to spend it. And if there's this much less, here's what we're going to do. And so you've got contingencies that can, you know, be baked into different degrees. In terms of, of, of how to recognize the fact that there is a lot of volatility, you don't, you know, assume best case, and you're just going to clean up so that when you get that there's, you know, there's been thought put into what you can do with it. That that isn't the baseline assumption. I see Steve Kline's on this call. I don't know if he's got information from any other states that he may want to comment on, you know, ways that that maybe there's increased volatility and what's done. Again, it's particular taxes, the income tax, the corporate tax, and a state tax are the ones that are most followed. So states that are relying on sales taxes, things like that, more heavily have a much sort of, you know, a flatter tax base and not so much volatility. Steve, do you want to say anything? Yeah, I would say the types of examples you've heard are capturing those extremes are putting the money over a certain amount might go to reserves or over a certain amount might go to, to a bond fund to the fund capital expenses other than doing it through bond it. So, you know, it's definitely a way to capture money like that not to create basic ventures. And we have done that, Steve. That's what we've done to our pension system. And we actually do that with the, in the event the estate tax ever again produces more money. Some of that goes to higher education colleges. So we have a number of little things in the law to do that. We had a good August for the state tax payments. We're having we're having a good August on a state tax. Other questions anyone has people a minute. Any other words of wisdom for us, Tom. You know, only that I, I think it's likely we're going to be revisiting some of these things soon. You know, just what's happening in in Washington can have huge impacts on on our futures, both in terms of health and economics and and then all the unknowns that exist about this are, you know, we're going to have to process new information, integrate that with, you know, what the impacts might be and then respond. So, I'm sure we'll be back at it in the not too distant future. And just like to announce to both committees since we've adopted a consensus revenue forecast next the 18th is when the governor will submit his budget and we'll meet together the two committees at one o'clock on to the 18th. And I want to say I appreciate your inviting us to join you because it's not generally we don't we're not part of the budget presentation but I think it would be helpful for us to hear it. So thank you. Tom, thank you. Thank you. Good to see everyone. Yep.