The FY2016-17 New Hampshire Budget and Taxes
The governor released her budget for the biennium fiscal years 2016 and 2017 a month ago. The budget called for revenue $338 million more than the House Ways and Means Committee (HW&MC) estimates. On an apples to apples basis, a $100 million of the total is simply the governor’s more optimistic estimate of revenues from existing tax and fee rates. The other $238 million are revenues from new or increased taxes and fees she wishes to impose as well as the authorization of the expanded lottery game of KENO in which the governor estimates $26M in net revenue this coming biennium. All revenues shown are for the two year budget period.
The governor plan calls for increases of $2.2M from a wide variety of fish and game license fees, $960K in boating fees, $400K in environmental review fees, $163K in salt applicator fees, $880K in pesticide fees, $11.5M from closing loopholes with so called tax haven countries, $39.2M by increasing the cigarette tax $.21 per pack, a new tax on nicotine vapor products, and tax on premium cigars, a net $43.9M from business taxes by increasing the safe harbor from $75K to $100K and at the same time repeal the law that says the burden of proof is on the state and not the tax payer, $13M from a tax amnesty, $163K fees for salt applicator training, $900K increase in the insurance tax, $900K increase in the PUC tax, $96.6M increase in vehicle registration fees, and $1M increase in vanity plate fees.
The HW&MC was amenable to a lesser KENO bill which we had public hearings on. This would generate revenues of $12.1M and not the $26M. The House already has taken a position not to tax premium cigars and has tabled the tax haven bill. We did hear testimony on the pesticide fee increase in which the industry and farmers have agreed that this is workable. The salt applicator fee was deemed fine since it was not mandatory, the fish and game fee increases seem to be supported by most fish and game clubs, and HW&MC were supportive of the Insurance and PUC fee increases which are logical places to go to fund state homeland security which lost revenue due to the closing of Vermont Yankee. The majority of the HW&MC is concerned that no public hearings were had on the other tax and fee increases. The unanimous feeling of the HW&MC is that all new taxes or fees that appear in House Bill 2 (HB2) which comes over from the governor or that are placed in HB2 by the House or Senate should have a public hearing. Some may remember the LLC tax of four budgets ago. This was placed in HB2 and passed, at the time, in conference between the House and Senate. The governor should remember this since she supported the move as then Senate Majority Leader. This action created a firestorm which led to LLC tax repeal.
Even though Governor Hasson took the pledge against no broad based taxes, we in HW&MC were besieged with Democrat sponsored bills for every new tax possible including broad based taxes:
1. HB622 — Implementation of a state estate tax (otherwise known as an inheritance tax or death tax) – The HW&MC recommended Inexpedient to Legislate (ITL) and the House concurred.
2. HB634 — Implementation of a state capital gains tax. The HW&MC voted to retain the bill as a curtesy to the prime sponsor. There is little support for this idea.
3. HB673 — Implementation of a Sales and Use tax. The HW&MC voted to ITL this bill. The ITL is a vote that insures that our competitive advantage at our borders with Maine, Massachusetts, and Vermont will remain intact. The term the NH Advantage is real and not just a campaign slogan, with much data to back that up. The full House concurred and killed this bill.
4. HB680 — Implementation of a plan to increase the statewide property tax for education on those with more expensive homes. The HW&MC voted to ITL this bill. Besides a probable constitutional challenge and testimony that the mechanics to implement this would be expensive, this proposal plans to tax those who already pay a disproportionately high percentage of the education tax bill. The full House concurred and this idea was killed.
It is safe to say a vast majority of Republicans did not support these taxes and even many Democrats resisted the temptation.
Earlier in the year there was concern that FY2015 business revenues were lagging plan. Well for FY2015 February YTD the Business Profit tax and Business Enterprise tax actual revenue was $270.0M as compared to $269.8M which was plan. So as can be seen this is right on target. Total FY2015 February YTD actual revenue was $1,027.3M against plan of $992.8 or revenues are running $34.5M ahead of plan. The three revenue streams that are well above plan thus far are Room and Meals, Real Estate Transfer, as well as Tobacco. The three that are lagging the most are Interest & Dividends, Communications, and Lottery.
As I have indicated in the past, the HW&MC will review our revenue estimates again before the House budget is passed. Once we have a sense of March revenues we may adjust the number that House Finance has been utilizing. Remember the House and Senate estimates are the ones utilized the last two biennium’s and have proven to be quite accurate.
