State revenues down $22 million in April
Business and interest and dividend tax changes in 2012 reduce state revenue this fiscal year officials say.
By GARRY RAYNO
State House Bureau, Union Leader
CONCORD — Business and interest and dividends tax breaks approved two years ago are helping to paint a bleak state revenue picture.
State revenues are down $22 million in April when the state collects significant money from the business enterprise and business profits taxes, and from the interest and dividend tax.
“A rough month,” said Linda Hodgdon, Administrative Services Commission. “Concerning, yes, very much so.”
For April, state revenues totaled $262.7 million, down 7.6 percent from budget writer estimates, and down $42.3 million from last April. For the year to date, the state has raised $1.94 billion, which is $4 million more than estimates for the year, but $24 million less than a year ago.
Business taxes returned $87.4 million for April, down $11.4 million from estimates and $5.1 million from a year ago. For the year to date, business taxes are down $7.1 million. Business tax changes made during the 2012 session that increased the time business have to write off loses, changed the threshold for paying the business enterprise tax, and increased tax credits are having an impact on returns and are expected to impact June returns as well, Hodgdon said.
Changes made in the interest and dividends tax in 2012 is also having a significant impact on that levy, she noted. Lawmakers changed the state’s trust laws so that trusts established by an entity or person who gives up the right to the principal or what are called non-grantor trusts would be exempt from the interest and dividends tax.
Former Gov. John Lynch vetoed the bill saying, “I remain concerned about the potential fiscal impact and unintended consequences of the provisions amending our trust laws. The proposed tax policy changes lack clarity, have not been fully examined and may be unfair to some taxpayers.”
The interest and dividends tax produced $31.8 million in April, $9.2 million below estimates or 22 percent, which Hodgdon said has never happened before. For the year the tax has produced $68.2 million, which is $13.6 million below expectations.
Together the business and interest and dividends tax returns “are a huge hit,” Hodgdon said. She conceded the state may end the year below revenue estimates. The biennial budget assumes a $26 million surplus at the end of the 2014 fiscal year to have a balanced budget at the end of the biennium June 30, 2015.
On the positive side, the rooms and meals tax — the state’s second biggest revenue producer — and the securities tax are both above estimates for the year and for the month.
Although the number of real estate units sold is off 1 percent from March, the sale prices are up and the real estate transfer tax is slightly ahead for the month, and for the year.
Thursday, Senate President Chuck Morse, R-Salem, said, “This shortfall creates a further complication as the legislature works to address the Medicaid Enhancement Tax, our inadequate rainy day fund, and credit watches issued by Moody’s and Standard & Poor’s.” He called for state agency heads to reevaluate their budgets and take steps to meet their targets.
Gov. Maggie Hassan said the state must continue efforts to promote economic growth while managing the state budget.
“State agencies remain focused on meeting all budget targets and increasing efficiency in order to protect taxpayer dollars,” Hassan said.“By working together, I know that we can resolve these challenges, build on the bipartisan progress that we have made and keep New Hampshire’s economy moving forward.”
June is another large revenue collection month for state coffers.