Economists Jeff Carr, right, and Tom Kavet brief the Emergency Board on the forecast for state revenues at the Statehouse in Montpelier on Friday, January 16, 2026. Photo by Glenn Russell/VTDigger Updated 5:05 p.m. MONTPELIER — The economists tasked with diagnosing Vermont’s fiscal health every six months kept their top-line revenue estimates almost unchanged in a new report to a panel of lawmakers and Gov. Phil Scott on Friday. At the same time, Tom Kavet and Jeff Carr told the state’s Emergency Board, there are numerous economic uncertainties that could impact state leaders’ budget building process in the coming months, many of which are a direct result of policy changes over the past year by the Trump administration. Scott will present his budget proposal for the upcoming fiscal year to legislators next week. The governor’s administration will need to take Friday’s report into account when finalizing that spending plan over the coming days. The economists pointed to the president’s “on again, off again tariffs,” changes to health care tax policy mandated by last year’s federal tax and spending bill and how federal immigration restrictions could hinder the badly needed development of Vermont’s workforce. “There’s a lot of uncertainty still. And so, there’s a lot of risk,” Kavet said. Friday’s report details revenue collections and pressures over the first half of the 2026 fiscal year, which started in July 2025. It also projects how state coffers will fare over the 2027 fiscal year, which will start in July, and for several years beyond that. Current-year revenue collections varied less than 1% from the economists’ previous estimates, which they presented in July 2025, Kavet and Carr said. Across the state government’s three major pots of money — the General Fund, Education Fund and Transportation Fund — this fiscal year’s revenue so far came in about $8 million below last July’s projections. Vermont’s current state budget totals about $9 billion.  Meanwhile, the economists made less than one percentage point’s worth of changes to their past revenue projections for future fiscal years through 2029. Over the past six months, corporate tax revenue was down versus expectations. The economists said there was not a straightforward explanation why because corporate tax receipts are typically volatile. Regardless, that drop was offset by higher-than-expected receipts from personal income taxes, according to the report. Revenue from the state taxes on restaurant meals and hotel rooms was also slightly down over past estimates — a decrease accompanied by a drop in foreign tourism to Vermont, especially from Canada. The economists said tariffs on Canadian goods and “demeaning and offensive U.S. government rhetoric” were largely to blame. Lagging revenue from the Vermont Lottery had a small negative impact on the state’s Education Fund, where the gambling revenue is deposited. Meanwhile, the state’s Transportation Fund saw a small benefit from better-than-expected revenue from the sales of new vehicles, known as the purchase and use tax. One major source of uncertainty, looking ahead, is a provision in Trump’s 2025 federal tax and spending law that is set to whittle down a long-standing mechanism the state uses to raise additional funds for Medicaid services by taxing hospitals, the economists said. The mandated decline in the state’s “provider tax” rate starting in 2027 will ultimately mean less money for the state’s General Fund, they said.  Legislative leaders and Scott had expressed concern in the leadup to Friday’s presentation that the economists would report a substantial downgrade in their revenue estimates. Though Friday’s news largely kept the status quo — “holding the line,” the report said — lawmakers will still face a challenging budget-building cycle in the coming months. Amanda Wheeler, a spokesperson for Scott’s office, said in a statement Friday that the economists’ report was a “revenue downgrade” that the governor had “been anticipating for a while as we see the federal pandemic era funding going away.” The budget Scott presents to lawmakers on Tuesday “will reflect the current economic realities by living within our means,” Wheeler said. After Scott presents his budget, the House will take up his proposals and develop its own version of a spending plan. Rep. Robin Scheu, D-Middlebury, who chairs the budget-writing House Appropriations Committee, presented a somewhat more optimistic framing of the economists’ findings on Friday. “We’re talking $8 million in a $9 billion budget. You know, you wouldn’t even notice it on a normal-sized graph — they had to enlarge the graph to show it,” Scheu said in an interview, referring to materials handed out during the presentation. “Really, the news wasn’t as bad as it could have been considering all the chaos that has happened with Washington,” she added. Read the story on VTDigger here: Vermont’s top economists say state revenue is steady as tight budget cycle nears. ...read more read less