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Wednesday, April 4, 2012

State revenue is $30 million short of where it was expected to be through March

CONCORD – With three months left in the fiscal year, state taxes and fees have brought in $30 million less than had been expected, Gov. John Lynch administration officials reported Tuesday.

But if the private, acute care hospitals pay up the $36 million owed under a contested state Medicaid Enhancement Tax, the state coffers would be $6 million in the black, administrative services commissioner Linda Hodgdon said.

Through March, the state has taken in $1.61 billion when $1.64 billion was counted upon.

March is an important month because it is one of the three biggest for receipts from the state two main taxes on corporate profits and business activity.

For the month, the two taxes generated $80.4 million when legislative budget writers and Lynch had been counting on $82 million.

Hodgdon pointed out that from July 1 through March, the taxes have taken in $14.9 million more than forecast.

Budget cuts to auditors in the Department of Revenue have affected returns as those business tax notices declined 76 percent last month compared to the same period a year earlier, Hodgdon said.

The acute care hospitals noted they had been overcharged by nearly $50 million in the 5.5 percent MET; the Obama administration upheld a $35 million penalty against the state dating back to a 2004 audit.

But federal officials backed up the Lynch administration tax assessments this year and last month the state received $4.6 million in owed payments from unidentified hospitals.

The state’s tax on cigarettes is much less rosier.

For the year, collections are off $11 million. For the first time, Hodgdon identified that loss in tax money, $9.2 million, that can be blamed on the Republican-led Legislature that cut this tax for the first time in history a year ago.

Rep. Susan Almy, D-Lebanon, said Democrats in the minority had warned the GOP that the tax cut would hurt the state budget.

“The loss is due entirely to the decision to lower our rate 10 cents a pack,” said Almy, former chairwoman of the House Ways and Means Committee. “Democrats warned at the time that this would produce a loss of somewhere between $11 and $17 million a year. There is one quarter left in the year in which to lose more.”

House Speaker William O’Brien, R-Mont Vernon, had championed the tax cut as a way to ignite the sale of cigarettes for convenience stores and supermarkets along the borders of New England states where those taxes have gone up in recent years.

Kevin Landrigan can reached at 321-7040 or; also check out Kevin Landrigan (@KLandrigan) on Twitter and don’t forget The Telegraph’s new, interactive live feed at