By GARRY RAYNO, InDepthNH.org
CONCORD — With the 2025 fiscal year half over, the state faces a revenue deficit large enough to wipe out last fiscal year’s surplus and end the biennium in red ink.
Welcome to the corner office new Gov. Kelly Ayotte.
December revenue returns were $20.4 million below estimates, dragged down by business tax collections which were $23.4 million below estimates returning $167 million instead of the projected $190.4 million.
For the year to date, business taxes, which helped fuel large surpluses in the past few bienniums, are $83.7 million below estimates at $456.8 million, and $83.3 million below last year’s returns.
A larger concern for budget writers is that about two-thirds of business tax revenue is obtained in the second half of the fiscal year, which could put the revenue deficit for that levy alone at about $250 million if current trends hold.
The state ended the 2024 fiscal year with a surplus which will be known when the state’s Comprehensive Financial Report is released soon.
The revenue surplus was estimated to be $111 million for fiscal 2024 so you can see the issue facing budget writers in the coming months trying to both craft a budget for the new biennium and make up for a likely deficit in the current biennium.
The Department of Revenue Administration said the lower figure for business taxes in December can be attributed to “a decrease in corporation estimates.”
Refunds to businesses were down this fiscal year in December compared to 2024, from $35 million to $23 million, but the total for the 2025 fiscal year to date, $79.6 million is within $10 million of the refunds for all of 2024 at $89.8 million.
Other state levies significantly below estimates were the tobacco tax at $2.3 million on returns of $16.5 million and revenues from the Liquor Commission at $4.4 million on returns of $14.3 million.
For the month of December the state had $289.8 million in revenues while budget writers anticipated revenues of $310.2 million. State levies produced $299.5 million last fiscal year in December.
For the year to date, state revenues are $1.17 billion, which is $41.2 million below estimates and $96.1 million below what was produced in fiscal 2024.
Offsetting the deficits, the rooms and meals, interest and dividends (which was repealed Jan. 1), and insurance taxes had surpluses of more than $1 million as did the returns for the lottery commission.
Under the breakdown between general funds and Education Trust Fund, general funds total $828 million for the first half of fiscal 2024, a revenue surplus of $12.6 million, while the Education Trust Fund totals $343.4 million, a deficit of $53.8 million.
The rooms and meals tax, which is the second biggest producer after business taxes for the state, produced $25.4 million, which is $2.9 million more than estimates.
The DRA said those figures reflect an increase of 8.5 percent in taxable meals and an increase in hotel activity of 5.2 percent.
For the year to date, the levy has produced $187.8 million, which is $5.9 million more than estimates and $7.1 million more than a year ago.
The interest and dividends tax produced $36.8 million for the first half of the fiscal year, which is $11.6 million above estimates, but $6.3 million less than a year ago.
The levy will produce no more money going forward as it is repealed.
The Highway Fund — largely the gas tax and vehicle registration — produced $21.4 million in December, which is $1.3 million more than estimates and $2.6 million more than a year ago.
For the year to date, the Highway Fund produced $70 million, which is $5.3 million more than estimates and $9 million more than a year ago.
The Fish and Game Fund met its estimate of $500,000 in December, which is $100,000 more than a year ago.
For the year to date, the fund has produced $14.3 million, which is $200,000 below estimates and $300,000 less than a year ago.
Ayotte will give her first budget address in the middle of February, which kicks off the budget work in the legislature.
Garry Rayno may be reached at garry.rayno@yahoo.com.
