In the July revenue report to the State Emergency Board and Joint Fiscal Committee, state economists projected a slowdown in Vermont’s economic growth, despite the General Fund outperforming expectations, driven largely by personal and corporate income taxes. Revenues from these sources are expected to cool, stabilizing at an annual growth rate of just 1–2%. The presentation also flagged risks from federal policy changes that could affect the state’s economic outlook.

While the Transportation Fund met forecasts this year despite operating at a deficit, economists cautioned that rising tariffs and a slowing economy are likely to worsen the shortfall in the near term. As a result, next year’s legislative session will likely involve proposals intended to reduce the widening gap.

Among the proposals on the table is a retail delivery fee, which would be charged to customers for delivered goods. Retailers would be required to collect and remit the fee to the state, creating new bureaucracy and adding costs for delivery services essential in this rural state. This proposal and others are likely to resurface next year, even though the Transportation Fund already transfers tens of millions of dollars annually to the Education Fund, a practice that obscures the true cost of Vermont’s education system.

After years of challenging tax increases passed during economic growth periods, taxpayers now have little capacity to raise new revenue without worsening affordability. In the upcoming session, the Vermont Chamber will push for practical reforms that reduce costs without placing additional pressure on businesses.