Vermont’s budget basics

According to the National Association of State Budget Officers (NASBO), Vermont’s total expenditures in fiscal year (FY) 2021 were $7.3 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2021 were $2.7 trillion, ranging from $4.7 billion in Wyoming to $512.8 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Vermont’s combined state and local direct general expenditures were $7.8 billion in FY 2019 (the most recent year census data were available), or $12,551 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $10,161.

Vermont’s largest spending areas per capita were elementary and secondary education ($3,490) and public welfare ($2,985). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Vermont’s combined state and local general revenues were $7.7 billion in FY 2019, or $12,284 per capita. National per capita general revenues were $10,563. Vermont uses all major state and local taxes. After federal transfers, Vermont’s largest sources of per capita revenue were property taxes ($2,938) and charges ($1,476), such as state university tuition and highway tolls.

Vermont’s politics

Governor Phil Scott, a Republican, was elected in 2020 with 67 percent of the vote. The next gubernatorial election is in 2022 because Vermont governors serve two-year terms. (New Hampshire is the only other state where governors serve two-year instead of four-year terms.)

Vermont has a divided government. Democrats control both the House of Representatives (92 Democrats to 45 Republicans and 12 independents) and Senate (21 Democrats to 7 Republicans and 2 independents). The entire legislature is up for election in 2022 because both representatives and senators serve two-year terms.

Vermont’s budget institutions, rules, and constraints

Vermont uses an annual budget. The legislature is not required to pass a balanced budget, the governor is not required to sign one, and deficits may be carried over into the following year. However, the state has budget rules that require lawmakers to balance revenues and expenditures. Vermont does not have any tax and expenditure limits. The state does limit total authorized debt and debt service incurred by the state.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Vermont’s current budget

Governor Scott released his FY 2023 budget proposal and gave his state of the state address in January 2022. The FY 2023 budget was enacted in June 2022.

Vermont enacted its FY 2022 budget in June 2021. The enacted budget included $7.4 billion in total spending and $1.8 billion in general fund spending. According to the governor, the general fund total is a 6 percent increase over the previous fiscal year. in June 2021. The enacted budget included $7.4 billion in total spending and $1.8 billion in general fund spending. According to the governor, the general fund total is a 6 percent increase over the previous fiscal year.

Under the American Rescue Plan, Vermont will receive $1 billion in direct state fiscal aid and $142 million in local government aid from the federal government. As of January 2022, Vermont had spent part of its ARP funds on capital construction and broadband expansion.

According to NASBO, Vermont’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:

• FY 2021: $1.6 billion/$7.3 billion

• FY 2020: $1.5 billion/$6.2 billion

• FY 2019: $1.6 billion/$5.8 billion

For more on Vermont’s budget, see

• the Vermont Agency of Administration,
• the Vermont Office of the State Treasurer, and
• the Vermont Legislative Joint Fiscal Office.

Vermont’s economic trends

Vermont’s per capita income (per the Bureau of Economic Analysis) was $59,704 in 2021, ranking 23rd among the states. It was below both the national average of $63,444 and the New England regional average of $76,651. The state’s median household income (five-year estimate) was $63,477 in 2020, ranking 23rd among the states and below the national average of $64,994. Vermont’s poverty rate was 10.8 percent in 2020 (five-year estimate), below the national rate of 12.8 percent.

Although Vermont’s averages tell a story about the entire state, Vermont is composed of diverse localities. For example, the city of Rutland’s median household income was $48,182, and its poverty rate was 13.1 percent; the city of South Burlington’s median household income was $76,227, and its poverty rate was 6.5 percent.

Vermont’s unemployment rate has historically been below the national average, particularly following the Great Recession, and in recent years it has been among the lowest in the country. (See how COVID-19 is affecting state employment and earnings data.)

Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. However, Vermont does not currently have enough information available for the Bureau of Labor Statistics to break down its unemployment rate by race. (This is preliminary data. See the 2020 data for a more detailed breakdown of state unemployment rates by race and ethnicity.)

The major industries that contributed the most to Vermont’s gross domestic product (GDP) in 2020 were finance, government, social services (i.e. health and education), professional services, and manufacturing. Government and social services contributed more to Vermont’s GDP than they did to the nation’s and region’s GDP, while finance, professional services, and manufacturing were less important to Vermont than they were to the nation and region in 2020.

Looking at more specific industries, among those that accounted for at least one percent of Vermont’s GDP in 2019, accommodation produced far more for the state than for the nation, contributing 3.2 percent to Vermont’s GDP and 0.9 percent to the nation’s. Other industries that overperformed in Vermont relative to national averages in 2019 were state and local government, retail, education, and hospitals.

Vermont’s demographics

As of July 2020, Vermont’s population was 623,347. That was down 0.4 percent from 2010. For comparison, the nation’s population experienced 6.5 percent growth over the same period. The Urban Institute estimates the state’s population will increase 2.2 percent between 2010 and 2030, less than the nation’s estimated growth rate of 16 percent.

Additional resources

• The State and Local Finance Initiative’s Backgrounders explain the tax and spending issues highlighted in these briefs.
• The State Economic Monitor presents updated data and customized visualizations of state economic indicators.
• State and Local Finance Data: Exploring the Census of Governments allow users to sort, customize, and download the Census of Governments State and Local Finance series data featured in these summaries.
• The State Tax and Economic Review series provides quarterly reports on state tax collections and underlying economic trends in all 50 states.
• The Urban Institute’s State Tax Data Subscriptions provide access to up-to-date revenue data in all 50 states.