State revenue sets stage for governor’s decisions
While Gov. Maggie Hassan has been in the corner office for nine months, you can be sure the revenue received by the state in the last three months is very important to her. She operated during her first six months in office with a budget that was passed by the Legislature and accepted by Gov. John Lynch back in June 2011.
The state’s revenue for the first three months of the new two year budget cycle, which began on July 1, could set the stage for decisions by the governor on spending and stir policy debates in the Legislature about the state’s financial situation for the biennium that ends on June 30, 2015.
The results are in. And the governor should be pleased. As chair of the Senate Ways and Means Committee, I helped set the revenue projections and I certainly am happy with revenue received so far.
Here is a summary for the first quarter of the fiscal year. The revenue plan called for $408 million to come in but the actual amount was $435 million. That is $27 million over projections or about seven percent.
Through the recession we faced many months, quarters and years when revenue fell short of estimates causing Gov. Lynch to take action through executive orders to impose spending cuts on state government. At times, he had to turn to the Legislature to change laws to make sure that spending was in balance with reduced revenue. I certainly did not agree with all the decisions made by Gov. Lynch or the Legislature, such as the bonding of school building aid to local communities, but I respect the job that was done. Those were very tough days for everyone but state government, led by the governor, did what had to be done to balance our budgets over those tough recession years.
Gov. Hassan will not want take for granted that the revenue over the next year and three quarters will be seven percent over projections. State revenue depends upon a healthy business environment and a growing economy, some stability and predictability about fiscal policy in Washington and a world economy that does not negatively impact our national and regional economies. That is a lot to ask for.
Here are highlights of how tax revenues were against budget plans. Business taxes were up 8.7 percent, meals and rentals taxes were up nearly 4.7 percent, liquor profits up 7.43 percent, interest and dividends taxes were up 3.3 percent and the real estate transfer tax was up a whopping 16 percent.
The state communications tax was off 11.3 percent. Some believe legislators under-estimated the impact of passing a law last year prohibiting the taxation of internet access. Legislators knew there was a cost to passing the prohibition but felt that there had never been legislative intent to tax the internet so past tax collections on internet access was a mistake. Overall, the governor and the Legislature, with the results in for one-eighth of the biennium, can be a bit more optimistic about sticking with the current budget in a “steady as you go” mode.
Bob Odell, a Republican, is the New Hampshire senator representing Antrim, Bennington and Francestown, among other towns.