By GARRY RAYNO, Distant Dome
This week the state will release revenue numbers for the first month of the new fiscal year which began July 1.
The numbers are likely to indicate if the state continues to scoot by as it did in the recently completed fiscal 2026 budget, with an unaudited revenue surplus of $182 million which largely was the result of a tax amnesty program that was expected to produce $5 million to $8 million but instead produced $104 million as the slackers took advantage of the opportunity to reduce their owed interest and penalty payments while they paid off their neglected obligations.
The Lottery Commission was also responsible for generating an extra $58 million in “easy money” for the Education Trust Fund, while the state’s investment of federal COVID funds and past revenue surpluses helped generate interest payments that were about $27 million more than anticipated.
The insurance premium tax generated $30 million in revenue beyond what budget writers anticipated mostly due to the increases in insurance premiums.
If the state is as lucky this fiscal year is questionable as the amnesty money won’t be repeated, and the large nationwide gambling jackpots and the additional video horse racing machines may not be so lucrative in the coming year.
The one new revenue source in the biennium budget was video slot machines, but that was a bit of a bust as the launch was months late and the installation of new machines slower than anticipated.
Budget writers predicted the state would have revenues of $3.12 billion for fiscal 2026 and $3.245 billion in fiscal 2027.
That is an increase of $125 million, which is less than the revenue surplus this year, which had some big one-time money figures to pad the bottom line.
One of the big questions the July revenue figures might reveal is the state of business taxes. For the last several years business taxes have been trending down as they were much of last year.
But a decent rebound at the end of the 2026 fiscal year resulted in businesses taxes crossing the unaudited finish line with a surplus of $13 million on returns or $1.14 billion.
Last winter was an exceptional year for the skiing industry and other winter sports, but it was not enough to produce a surplus in the tax that captures those activities. The rooms and meals tax was $2.6 million below estimates on returns of $348.4 million.
That is why revenue estimating is such a tricky business at times.
All of these numbers would look much different if Republican lawmakers and governors did not approve major cuts to the state’s two business taxes, the business profits tax and the business enterprise tax.
A decade ago, lawmakers began trimming the rates almost yearly and that lowered what the state could have collected by more than $1 billion. Eliminating the interest and dividends tax also reduced revenues by $183 million annually which the state collected in fiscal year 2025.
The state collected $3.33 billion in fiscal year 2024. Business taxes that year were $1.26 billion compared to this past year at $1.14 billion.
A hundred million here, and a hundred million there adds up over time.
Crafting might be too good a word for it, but budget writers had a very difficult time putting together the current state budget because there was not enough revenue to continue all the programs and activities the state funded in the previous biennium.
Something had to give beyond the quick money grab through tax amnesty and the significant increase in multiple fees that also helped to balance the current budget.
When there isn’t enough money to pay for everything many people agree are essential, lawmakers do what they also do, which is cut higher education drastically and punt.
Punting usually means back-of-the budget, across-the-board reductions in state agency budgets.
Budget writers instituted $112.7 million in back-of-the-budget cuts across 11 state agencies, with the Department of Health and Human Services responsible for $51 million, which was the highest such request in 30 years.
The cuts were to be split evenly in each fiscal year at $25.5 million.
At one time, the department’s budget used to be about half of the state’s budget but now is not as large a percentage.
What this budget cutting technique does is give agencies money on paper so that the critical or popular programs do not appear to be reduced if you look at the line item.
But at the same time telling agency officials you can’t spend it all, and where you cut is up to you because as lawmakers we don’t want to have to make the really hard decisions that will impact the lives of the state’s most vulnerable citizens.
They were willing to approve Gov. Kelly Ayotte’s proposal to have single moms pay a percentage of the health care premium for her child or children and to have everyone on Medicaid pay more in co-pays for services.
This at a time when the federal government is imposing strict work requirements that many of those needing the medical services will not be able to meet.
The lawmakers were not willing to make many reductions in the Supplemental Nutrition Assistance Program (SNAP) or what was once known as food stamps, while the federal government will be paying less of the administrative costs for the program beginning in this fiscal year that budget writers did not account for in their budget.
That means in order to pay for the administrative costs, the state will have to reduce benefits, which is something that received a great deal of negative attention during the long federal government shutdown last year.
Although 10 other agencies do not have to report to the Joint Legislative Fiscal Committee what they are doing to meet their forced reductions, the DHHS does have to report to Fiscal how they made their cuts, after the fact to avoid public input or hearings that might cause negative press.
In its report on the 2026 budget cuts, DHHS explained it reduced its budget by a total of $39.1 million, which included the $25.5 million requirement. The department also noted the reduction would mean the state would not receive $7.4 million in federal funds, which is what happens with federal matching funds when the state does not put up its share.
Of the nearly $40 million in reductions, three-fourths of it came from “prior year encumbrances,” which means money that was appropriated for the 2025 fiscal year to the department that was not spent.
That is a one-time reduction that will be impossible to repeat in the current fiscal year as the department faces reductions in federal money for many programs and services.
About one-quarter of the reductions came from behavioral and public health services, food assistance, family supports, and other health-related programs, according to a report by the NH Fiscal Policy Institute.
Although some of the funding is not significant, two programs related to family assistance were impacted by the cuts.
One of the single largest reductions for the Division for Children, Youth and Families was a $1 million cut for the Healthy Families America Initiative, which returned spending to the 2025 level or a 12 percent decrease for this fiscal year.
The program uses a home visit model to support new parents and child development, connect families with community resources and strengthen economic stability, according to the report.
The aim is to have families receive the support they need early, so down the road avoidable and more expensive services are not needed.
Similarly $900,000 was reduced from the Division of Public Health’s Home Visiting Formula Grant, a 71 percent reduction in its fiscal year 2026 appropriation.
The Home Visiting Program is voluntary and provides at-home visits to expectant and new parents, reflecting characteristics of the Healthy Families America model, seeking to improve health outcomes, enhance economic stability, and prevent child abuse and neglect.
This is another program that will save the state money in the future because of a small investment early in a child’s development.
The impact may be small to the state overall, but not to the families involved.
If these are the programs deemed reducible by department officials, what will happen this year when they face $25.5 million in service reductions with real money on the table?
Just imagine if that $1 billion of lost revenue was available today instead of lining the pockets of stockholders and CEOs of multinational conglomerates who benefit the most from the rate cuts.
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 and their two rescue dogs.