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Thursday, July 3, 2014

State of NH ends budget year with $5.8 million surplus from taxes, fees

CONCORD – A surprising recovery from business taxes, robust tourism and a tobacco tax windfall produced a $5.8 million surplus from state taxes and fees for the budget year that ended Monday, according to state officials.

The amount of surplus revenue only equals three-tenths of 1 percent of the $2.2 billion that comes in to finance state spending and aid to local school districts. ...

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CONCORD – A surprising recovery from business taxes, robust tourism and a tobacco tax windfall produced a $5.8 million surplus from state taxes and fees for the budget year that ended Monday, according to state officials.

The amount of surplus revenue only equals three-tenths of 1 percent of the $2.2 billion that comes in to finance state spending and aid to local school districts.

Earlier this week, Gov. Maggie Hassan and state Senate leaders sent out cautionary words about the good news.

That’s because the two-year state budget assumed that the state last Monday would end with a $26 million surplus.

This was why Hassan last month got a legislative budget oversight panel to approve an immediate freeze on non-essential hiring, equipment purchases and out-of-state travel.

“We must continue working together in a fiscally responsible manner in order to ensure that we protect the state’s budget, but the preliminary data reinforces that the bipartisan progress we have made on our shared priorities is keeping New Hampshire’s economy moving in the right direction,” Hassan said in a statement Tuesday.

Wednesday’s report was on taxes and fees brought in on a cash basis; in three weeks, the state puts out a revised final revenue report for the year that adjusts all revenues based on accounting principles.

While most state budget observers were expecting June revenues to come under the monthly forecast, they exceeded it by $5 million, or 2.3 percent.

The biggest concern had been business taxes that were off by $11.4 million in April; June returns often follow that trend, since it’s the month when many large firms make the year’s final quarterly payment.

“We’re consulting with Revenue Commissioner John Beardmore to determine why this didn’t follow April’s trend, but we’ll sure take it,” said Administrative Services Commissioner Linda Hodgdon.

In June, the tax on cigarettes and other tobacco products netted $23.7 million, or $4.5 million more than had been forecast.

This 23 percent jump above what had been expected, however, will go down in the coming weeks, Hodgdon said.

Hodgdon said Beardmore’s agency has determined that $2 million of that surplus tobacco tax income will not be counted in the year that ended Monday but instead will be attributed to sales in the new year.

The biggest worrisome signs for state coffers are taxes on interest and dividends and on telecommunication sales.

The investment tax for the year was off $16 million or 16 percent.

Hassan attributed much of that to a tax break for trust owners approved by the Republican-led Legislature in 2012. Then-Gov. John Lynch vetoed that bill but lawmakers overrode him.

The communications tax was off $4 million a year and this was the second year in which it under-performed.

State officials say much of the shortfall was the result of a tax break for the cellular phone industry lawmakers granted in 2011.

As for the spending side, Hassan has said she doubts whether agencies would meet the target of returning $50 million in unspent money to the treasury.

On Tuesday, Senate President Chuck Morse, R-Salem, called for the Legislative Fiscal Committee to get an update this month on how well state agencies met those spending targets.

Those final spending numbers won’t be known until private auditors review and the state’s books officially close in September.

Kevin Landrigan can reached at 321-7040 or klandrigan@nashuatelegraph.com. Also, follow Landrigan on Twitter (@Klandrigan).