State Revenues Continue Strong Despite Business Tax Shortfall

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Night view back of the State House

By GARRY RAYNO, InDepthNH.org

CONCORD — While state revenue sources continue to perform better than anticipated, business taxes for October were well below estimates.

And for the first time in many years, the rooms and meals tax provided more state revenue than did its two business taxes.

The rooms and meals tax was the levy most impacted by the pandemic, but has rebounded in recent months trending back toward its returns before the pandemic.

For the month of October, state revenues totaled $147.5 million, which is $16.6 million more than the budget plan for the 2022 fiscal year, and $8.4 million more than a year ago.

For the first third of the fiscal year, state revenues total $746.5 million, which is $71 million more than estimates, and $72.1 million more than a year ago.

Business taxes for October produced $26.4 million, which is $4.9 million less than estimates and $12.1 million less than a year ago.

According to the Department of Revenue Administration, the decrease in revenue compared to last fiscal year was due to a decrease in estimates and return payments, and an increase in refund requests.

Budget writers knew Senate Bill 3, which exempted businesses receiving federal payroll protection program money from state taxes, could impact future business tax returns when they approved the legislation earlier this year.

Some businesses paid business profits tax on the money prior to the change in law and that money has to be returned to the companies.

For the year, business taxes continue to perform better than estimates, producing $285.7 million, which is $44 million above estimates and $61.5 million more than a year ago.

The rooms and meals tax produced $28.4 million, which is $6 million more than estimates and $400,000 more than a year ago.

For the year to date, the levy has produced $125.9 million, which is $27.5 million more than plan and $8.2 million more than a year ago.

According to the DRA, October collections for September activity were up 17.4 percent for meals and 40.7 percent for rooms over a year ago.

The interest and dividends tax, which will begin to phase out next fiscal year, produced $13.8 million in October, which is $9.3 million more than anticipated and $8.2 million more than a year ago.

For the year the levy has produced $34.4 million, which is $6.7 million more than estimates, but $9.5 million less than a year ago.

According to DRA, the monthly increase in revenue is due to an increase in return and extension payments, which was not offset by an increase in refund payments.

Also significantly above estimates for the month were returns from the Lottery Commission, which benefited from an all-time Powerball jackpot high last month.

The commission produced $16.7 million for the month, which is $3.4 million more than estimates and $6.7 million more than a year ago.

Other revenue sources close to target for the month were the insurance, real estate transfer, and beer taxes, and court and security fees.

Below estimates for the month were the tobacco tax, $1.7 million below estimates, liquor revenues, $2.2 million below estimates, and the communications tax down $700,000.

The Highway Fund, which also experienced significant disruptions at the beginning of the pandemic, produced $21.1 million which was $200,000 more than estimates.

The Fish and Game Fund returned $800,000 for October, which is $100,000 over estimates.

Garry Rayno may be reached at garry.rayno@yahoo.com.

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