N.H. fiscal health needs regular checkups.
Last month we heard this about the rooms and meals tax as well as the real estate transfer tax. The chair of the Senate Ways and Means Committee, Lou D'Allesandro of Manchester, held two days of public hearings to review the state's revenue situation. Commissioners and heads of departments that produce money for the state reported on their projections for the rest of the fiscal year that ends next June 30. Given that projections of revenue were made more than a year ago, we may have to make adjustments. Gasoline prices were much lower, and the current situation in the real estate market could not be fully anticipated. Some highlights looked at include:
* Rooms and meals tax: Dismal spring weather and fighter family budgets may have slowed restaurant spending and tourism in April, May and June. The result was $400,000 less revenue than last year but, more important, $3.5 million less than budgeted. At a tax rate of 8 percent, that means there was $43.75 million less spent than predicted in those three months at hotels and restaurants. For July, the first month of the new fiscal year, rooms and meals taxes produced $18.9 million, off by $1.1 million.
* Real estate transfer tax: This is a tax paid when you transfer real estate. It is the highest such tax in the country. This tax was off by $1.7 million in July from the budget projections of $18.2 million, a shortfall of nearly 10 percent.
* Liquor sales: Projection for July revenue to the state was $10.7 million. Actual revenue was $10 million, a shortfall of $700,000.
* Business profits and business enterprise taxes: Fortunately, they continue to grow strongly. The budget called for business taxes to produce $11.1 million in July. Actual results were $15.2 million, or 37 percent more than expected.
* Lottery and pari-mutuel revenue: All proceeds from the lotteries and scratch card sales go to the education trust fund. In the last fiscal year, this revenue source went over goal because of the $100 million-plus national lotteries that spur sales and thus profits.
Does that mean we can raise projections for the current fiscal year? Unlike the federal government, state government must operate within a balanced budget.
Constant changes in sectors of the economy affect revenue sources. The Ways and Means Committee got the information to determine if some adjustments in spending need to be made to keep revenue in balance with expenses. Meanwhile, state departments and agencies are preparing their budget plans for the next biennium, which begins next July 1. This long lead time is why regular review and evaluation of the state's financial health is critically important to avoid money problems down the road.
Bob Odell is a Republican state senator from Lempster.
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|Title Annotation:||STATE GOVERNMENT|
|Publication:||New Hampshire Business Review|
|Date:||Sep 1, 2006|
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