This post is a corrected version of a post originally published on May 14, 2013 and reflects revised totals from the Office of the Legislative Budget Assistant.
The Senate Ways and Means Committee is recommending revenue estimates that are at least $61 million lower than the House. The committee met Tuesday to prepare figures for Senate budget writers to use in preparing their version of the FY 2014-15 state budget.
Depending on how the Senate decides to allocate Medicaid Enhancement Tax (MET) revenue, the $61 million gap could grow wider still. This, in turn, likely jeopardizes efforts to restore funding for critical priorities, such as higher education and services for the mentally ill and developmentally disabled.
All told, the Senate Ways and Means Committee projects that General and Education Fund Revenue will amount to $4.35 billion over the course of FY 2014-15 – this excludes the Medicaid Enhancement Tax (MET) but includes the impact of likely policy changes.
This sum is approximately $61.4 million less than the $4.41 billion the House expects the state would collect from similar sources under its version of the budget.
The gap arises both from differences in the House’s and Senate’s forecasts for existing tax and revenue sources in the next two years and differences in the revenue-related policies that they seek to enact through the budget.
With regard to baseline revenue projections, the Senate anticipates that New Hampshire’s current tax and revenue system will yield approximately $2.177 billion in FY 2014 and $2.218 billion in FY 2015, reflecting aggregate growth rates of 0.4 percent and 1.9 percent respectively. On a biennial basis, the Senate’s baseline projections are actually $53 million more than the House’s, due largely to a more optimistic outlook for business tax collections.
However, at the present time, it appears that the Senate will not follow the House’s lead in adopting a set of policy changes, such as raising the tobacco tax, augmenting the Department of Revenue Administration’s enforcement capacity or suspending several business tax breaks, that would yield as much as $90 million in the coming biennium.
What’s more, the revenue projections agreed upon by Senate Ways & Means allocate $21.5 million in tobacco settlement payments to the current fiscal year, FY 2013, rather than to FY 2014, as the House had elected to do. Finally, Senate Ways & Means did not count upon any license fee revenue from legalizing casino gambling in setting its estimates.
Of note, while the preceding figures do not reflect the impact of the Medicaid Enhancement Tax (MET), it seems likely that once that revenue source is taken into account, the differences between the House and the Senate will, at best, remain at $61 million and may even become larger.
That is, Senate Ways and Means anticipates that gross MET revenue will be $375 million for FY14-15, a sum that is $107.2 million less than the House projects. How that gross revenue will be distributed to providers, the General fund, and to uncompensated care payments will be left to the Senate Finance Committee to decide, but given the differences in projections, it will be impossible for Finance to match the House’s distributions in all three of these categories.
Should Finance choose to reduce the amount of MET flowing into the General Fund below roughly $73 million – the amount the House dedicates to that purpose in each of the next two fiscal years – then the overall General and Education Fund revenue gap between the two chambers will widen further.