By GARRY RAYNO, InDepthNH.org
In less than a week, you will either hear shouts of joy or moans from Senate budget writers.
The joy or despair will depend on April’s state revenues which will give budget writers a fairly accurate picture of the money the state has to spend over the next two fiscal years.
In terms of winnings, April is the trifecta for money flowing into the state’s coffers.
If April revenues follow historical trends, it will be the largest single month for the inflow of state dollars in any fiscal year. The current revenue plan developed by Department of Administrative officials projects the state will realize $809.1 million or four-fifth of the way to $1 billion in April.
The next biggest month is March at $379 million, which means the two months produce more than $1 billion of the $3.17 million in General and Education Trust Fund money the state projects to receive in fiscal year 2025 which ends June 30.
March revenues were slightly ahead of what was projected — $388 million — although there were plenty of warning signs that things may not be quite as rosy as it might look as total revenues at the fiscal year’s three-quarter mark were below estimates by $6.6 million which is pretty close.
The reason both months produce a significant portion of the general fund dollars is because of business taxes and when companies — depending on how they report — have to estimate what they owe for the state’s fiscal year ending June 30.
Businesses’ financial reporting reflects what companies’ bean counters see going forward based on what has happened the past few months.
If the business profits and business enterprise tax receipts are in the $268 million range, then things are OK, but if they are higher, break out the champagne, and if they are significantly lower, state agencies and higher education will be holding wakes for programs and employees.
Business tax returns have been running behind estimates and as of last month were $130 million below estimates for the year, or about 17 percent.
That is not a good sign and one of the reasons that the House Ways and Means Committee produced revenue estimates that were $514 million lower than Gov. Kelly Ayotte’s estimates, resulting in major reductions to state aid to the University System of New Hampshire, hundreds of millions of dollars in reductions at the Department of Health and Human Services and significant cuts to the departments of corrections, justice and resources and economic development, and the elimination of the Child Advocates Office, Arts Council, Lands and Tax Appeals Board, and the Human Rights Commission as well as tapping numerous dedicated funds for extra cash.
The sagging business tax revenues have been offset by several other areas such as interest payments on the mountain of cash the state accumulated in revenue surpluses and more importantly from the federal government for COVID relief and recovery, which is all going away, and from the Lottery Commission because of huge jackpots in several national games and from historic horse racing at charity casinos, which will also be going away to be replaced by the real thing — slot machines — which should produce even more money for the state, charities and the casino operators.
But if business taxes are not a solid foundation, the state will need greater returns elsewhere and that includes in areas such as rooms and meals taxes, tobacco and booze receipts and other tourism related activities like state parks and the motor speedway.
And much of the business activity and tourism related spending are dependent on things far beyond the state’s control and not many budget writers are saying it out loud.
What is happening in Washington will have more impact on New Hampshire’s revenues over the next two fiscal years than anything the state can effectuate.
The most recent polling being done ought to give New Hampshire budget writers pause.
Businesses like consistency so they may plan with some assurances for the future and their future needs.
And when they can’t, they don’t make investments in such things as new employees, machinery, plants, and technology.
When much of the tax revenue you receive is from multinational conglomerates like New Hampshire does, the impact stretches beyond the Granite State to far off places like Asia and Europe.
Putting tariffs on goods from almost every country and taking them off and repeating the pattern several more times does not erase the fear of many companies here in New Hampshire or anywhere else in the world.
Starting a trade war with China, the world’s last major manufacturer, will lead to empty shelves and higher prices.
And picking fights with two of the country’s biggest trade partners, not to mention next door neighbors, creates major problems for border states like New Hampshire.
Recession was not a word heard often before the return of President Donald Trump, but it is now.
His actions have resulted in uncertainty if not outright chaos and that is not going to help business tax returns here.
And polls indicate the majority of Americans no longer trust him with the nation’s economy, which has a ripple effect through the economy here and in the country.
Talk of annexing Canada to be the 51st State has put a damper on the number of Canadians vacationing in New Hampshire and the other New England states which hurts rooms and meals collections as well as the gas tax which helps to keep the roads in decent shape.
And various stories of Europeans being held for days at a border crossing or being picked up while walking the street and then eventually sent home or to a detention camp will not entice Europeans or South Americans or Asians to come to this country’s shores for college, to work or to vacation.
Many of the people sitting in limbo don’t come from “shithole countries” but from the ones that could help provide expertise and innovation.
Similarly cancelling hundreds if not thousands of college students’ visas caused problems for the students and the colleges they attend particularly in New England with its high density of higher educational institutions.
The cancellations came as many of the students were finishing their studies here or at the end of spring semester, making a return uncertain.
Many of the international students are here because their governments are paying or are from wealthy families who can afford to buy their child a Ferrari or a Lamborghini so they can drive around Durham for example.
But you won’t hear that for public consumption in Concord where Republicans have solid control. They won’t want to blame their leader for their misfortune and will say the problem was the other guy.
Putting politics aside, it is difficult to see how the Senate can come close to what the governor has for revenue estimates for the next two years.
But just splitting the difference with the House will bring in an additional $250 million, which would be enough to restore some of the draconian cuts, but not enough to satisfy those impacted or to prevent downshifting to local property taxes.
When your goal is to reduce revenues by cutting tax rates and eliminating taxes in order to reduce spending, and you accomplish that, the result may not be what you envisioned.
Garry Rayno may be reached at garry.rayno@yahoo.com.
Distant Dome by veteran journalist Garry Rayno explores a broader perspective on the State House and state happenings for InDepthNH.org. Over his three-decade career, Rayno covered the NH State House for the New Hampshire Union Leader and Foster’s Daily Democrat. During his career, his coverage spanned the news spectrum, from local planning, school and select boards, to national issues such as electric industry deregulation and Presidential primaries. Rayno lives with his wife Carolyn in New London.