State finishes year with record, $280 million revenue surplus
Jul. 6—Record and near-record returns from taxes on business, real estate and tobacco helped produce a $280 million revenue surplus for the state budget year that ended last week.
The taxes and fees that support state-financed programs and aid to public education totaled a net $2.9 billion, which was 10.5% more than expected, according to an unaudited report of state revenues.
Compared to the previous year, state revenues were up $350 million.
The revenue numbers do not include $31 million that was received by the state this year but was applied to the previous year's books because tax filing deadlines were extended because of COVID-19.
"Thanks to our pro-growth, pro-jobs policies, New Hampshire brought in over $1 billion in business tax revenues for the first time in history," Gov. Chris Sununu said in a statement.
Former Senate Finance Committee chairman Lou D'Allesandro, D-Manchester, said recently that the Legislature, under Republican control, allowed the state to amass too large a surplus, some of which should have been spent to increase aid to schools and to encourage communities to lower property taxes.
"Rather than capitalize on that success and continue to support New Hampshire's economy, Republicans have decided to play Robin Hood in reverse," D'Allesandro said.
"Cuts to our public education system will benefit our most property rich towns while leaving the property poor towns behind."
GOP legislative leaders said the new budget also included the first $100 million cut in the statewide property tax that communities pay to support spending for schools. The state is using part of this year's current surplus to make that payment for communities in 2023.
Only hospitality tax down
The state's two main business taxes on corporate profits and general activity brought in $196 million — 27% more than forecast.
Other taxes and state activity contributing to the large surplus included:
— the real estate transfer tax on all property transactions, which came in $44 million or 28% over expectations, as both the number of sales and the average price of real estate increased dramatically in the past six months;
— the tobacco tax, which turned into a cash cow after Massachusetts outlawed the sale of menthol or flavored cigarettes, bringing in nearly $49 million, 25% above forecast;
— lottery sales, which generated $144 million for local schools — $34 million or 34% more than projected — on the back of many record-breaking Powerball and Mega Millions jackpots.
The only tax that did not come close to predictions was the 9% tax on restaurant meals and hotel rooms, which continued to be suppressed by COVID-19.
Revenue for the year was $321 million, which was $66 million or 17% lower than hoped.
"This revenue report put an exclamation point on New Hampshire's recovery," said Greg Moore, director of the the state chapter of Americans for Prosperity.
"Clearly, we've weathered the pandemic and stepped right back into the economic boom we saw before COVID hit. Moreover, with the tax relief in the state budget, we are poised to take an even bigger step forward. There's a huge up arrow right now on New Hampshire."
Over the next five years, the budget repeals the state's 5% tax on unearned income or interest and dividends.
