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State Revenues on Target, But Concerns Linger

September 6, 2017 Common Cents

With revenues collected for the first two months of State fiscal year (SFY) 2018, certain revenue sources appear to be matching the State’s revenue plan while others, including key revenue generators, appear to be flagging.

On a cash basis, revenue for the General and Education Trust Funds was $1.4 million below plan during the month of August. The Real Estate Transfer Tax, which has been robust in recent years, fell short of plan by the largest dollar amount of any other source at $1.9 million. Tobacco Tax revenues fell short by $1.4 million, but earlier than anticipated receipts from the Utility Property Tax bolstered revenues by $1.2 million in August. The Meals and Rentals Tax, which has been a reliable source of revenue growth in recent years, matched its planned amount. This follows July revenues in which Meals and Rentals Tax and Real Estate Transfer Tax revenues did not deviate significantly from plan, and Tobacco Tax revenues were $0.8 million higher than planned.

Bar chart percent changes in revenue for select tax sources and funds

July and August are not major months for New Hampshire’s two primary business taxes, the Business Profits Tax and the Business Enterprise Tax, but the $6.0 million surplus in July revenues over plan was driven in part by anomalies in these two business taxes, which were a combined $6.2 million over plan. August business tax receipts were $0.2 million above plan, and the combined July and August surplus above plan for all General and Education Trust Fund revenue fell to $4.6 million.

Relative to the revenues during July and August of SFY 2017, total growth for the first two months combined of SFY 2018 was 1.3 percent, or $3.1 million higher. The two primary business taxes were $0.6 million (1.6 percent) below the same period in SFY 2017, while Meals and Rental Tax revenue was $2.5 million (3.9 percent) higher. Real Estate Transfer Tax revenue was down $0.2 million (0.7 percent), suggesting weaker home sales during this summer than last.

Bar chart dollar changes in revenue for select tax sources and funds

The SFY 2018 revenues were pushed above SFY 2017 by some surprising sources; the Tobacco Tax, which is likely to be a declining source of revenue in the long term, added $4.5 million (12.9 percent) over last year, while the Communication Services Tax, which has been on a precipitous decline since a SFY 2012 change to its tax base, was $1.6 million (27.1 percent) higher than last year. While the State is fortunate to have collected these additional revenues from these sources, legislators should not rely on these sources for continued overall revenue growth.

These mixed revenue figures match the trend visible in the preliminary accrual for SFY 2017, which showed essentially no growth in General and Education Trust Fund tax and transfer revenues between SFY 2016 and SFY 2017. While revenues were still above plan for SFY 2017, projecting forward with no growth between the two fiscal years does not inspire confidence when the costs of providing key State services are likely to continue to rise.

If revenue holds to the State plan, however, that still may not be enough to cover costs. The Legislature committed the State to paying for $1,100 in additional adequacy grant aid per full-day kindergarten pupil in school districts and chartered public schools starting in SFY 2019, paid for from the Education Trust Fund. The Legislature planned this additional aid to be funded with Keno gaming legalization revenue, but did not leave substantial additional planned revenue in the Education Trust Fund during the State Budget process to provide support if Keno revenues are insufficient. Additionally, any legislation during the 2018 Legislative Session that has a financial impact and does not have a new, amended, or dedicated funding source would need surplus revenues to be financed.

September’s revenue numbers will provide additional insights, particularly regarding the two primary business taxes. July and August revenue collections for the General and Education Trust Funds were projected to bring in $230.3 million according to the State’s plan, while September’s plan alone is $241.7 million. The quarterly payments for the two business taxes are projected to contribute $113.1 million in September, compared to the combined July and August collections of $30.4 million; as such, September’s number will provide the best early indicator of the performance of these two key revenue sources during the SFYs 2018-2019 State Budget.

For more information on the State’s revenue sources, see NHFPI’s Revenue in Review resource.

 

 

State Revenues on Target, But Concerns Linger (PDF)

 

 

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New Data Show Food Insecurity Levels Declining Prior to the COVID-19 Crisis

10 Sep 2020

tree with coins

According to data released on September 9 by the United States Department of Agriculture, food insecurity levels in New Hampshire continued to decline during 2019, prior to the onset of the ongoing COVID-19 crisis. The report outlines the trends of reduced food insecurity in the nation and in New Hampshire, declining from the higher levels resulting from the Great Recession of 2007 to 2009. The overall improvements to the state economy through 2019, along with the effectiveness of key nutritional aid programs, did contribute to lower levels of food insecurity, although the benefits of the economic recovery did not reach all Granite Staters in an equal or timely manner. Although food insecurity levels declined through the years preceding 2020, the current crisis facing Granite Staters is not reflected in these 2019 data. The recent economic pressures on many individuals and families with lower incomes in New Hampshire have been severe, and current levels of food insecurity are very likely to be substantially higher.