While the final state of New Hampshire’s finances for FY 2015 will not be known for a few more months, the latest information on revenue collections provides a positive sign.
On July 2, the Department of Administrative Services released its last monthly Revenue Focus for the recently completed fiscal year, which ended June 30. After a disappointing FY 2014, during which General and Education Fund revenues declined slightly, collections grew by 4 percent in FY 2015, roughly the same pace as in FY 2013.
The following data visualization is designed to help you understand the data. Within each tab, you can hover over each data point to view additional context. On the right side are seven radio buttons, which allow you to further investigate revenue trends by specific tax type or by total collections.
Below the visualization are a few of our insights after examining the data.
(To view data in full screen mode or on a mobile device, click here.)
Budget negotiators might have a bit more revenue to work with than previously expected.
In June, members of the budget conference committee estimated that baseline General and Education Fund revenues for FY 2015 would be $2.26 billion, which is only $2.3 million less than what was reported by the Department of Administrative Services. While these figures will likely not be the final numbers, if we assume they are and that the conference committee’s projections on growth for each revenue stream are correct, then the General and Education funds will have an additional $5 million over the FY 2016-FY 2017 biennium.
Moreover, a few projections agreed upon by the conference committee might be too pessimistic. For example, the committee forecasts that meals and rooms collections will grow by 5 percent in FY 2016. For context, meals and rooms collections grew by 3.8 percent in FY 2013, 5.4 percent in FY 2014, and 7.3 percent in FY 2015. Additionally, collections were about 9 percent higher in the final quarter of FY 2015 (April, May, and June) compared to the final quarter of FY 2014. The New Hampshire economy is quite stable, according to indicators such as employment and wages, and with gas prices a good deal lower compared to previous summers, the Granite State is experiencing a record influx of visitors. Hence, the chances of a measurable deceleration appears small.
The same could be said for the committee’s take on the real estate transfer tax. For FY 2016, the committee projects the collections will grow by 2.6 percent, from $115.3 million to $118.3 million. Yet, collections grew by around 8 percent in both FY 2014 and FY 2015, even after accounting for an anomalous large transaction that transpired in November 2014. In addition, various real estate metrics reveal that New Hampshire’s housing market is gaining momentum. According to the New Hampshire Association of Realtors, closed sales are up by 5 percent, while the median sales price has grown by 7 percent when comparing the first five months of calendar years 2015 and 2014. Moreover, according to the latest report by RE/MAX INTEGRA New England, this positive trend should persist in the near-term, as they are seeing “heightened consumer demand reflected by strong growth in pending sales.”
Given everything mentioned above, it is reasonable that meals and rooms collections will grow by at least 6 percent in FY 2016, which the Senate assumed in late May when they passed their version of the budget. Likewise, assuming 6 percent growth for the real estate transfer tax also appears sensible, given that collections have risen by about 8 percent in each of the last two fiscal years and housing market conditions are solid. These two assumptions in conjunction with the rest of the conference committee projections implies that General and Education Fund revenues over the biennium would be about $19 million higher than the conference committee’s projections ($4.64 billion vs $4.62 billion).
The New Hampshire economy is faring reasonably well.
Besides financing government operations, state revenue collections can also be seen as a sign of how the economy is performing. While not every revenue stream is driven by economic conditions, business taxes, the meals and rooms tax, and the real estate transfer tax are tied closely to the economy. In FY 2015, business taxes grew by 2.5 percent, a modest clip, while meals and rooms and real estate transfer taxes each advanced robustly. Consequently, the New Hampshire economy – at worst — is expanding at a moderate rate.
Economic data appear to confirm this. According to estimates from the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages (QCEW), nonfarm payrolls in New Hampshire grew by about 1.3 percent in 2014. While below the U.S. (2 percent) and New England (1.4 percent) averages, the New Hampshire economy nevertheless created close to 8,000 net new jobs last year. Moreover, job growth in New Hampshire would likely be higher if it were not for labor shortages in specific industries, as a recent New Hampshire Business Review article describes. (Note: NHFPI chose to use the QCEW data series over the more well-known Current Employment Statistics (CES) survey. While less timely, the QCEW data is more accurate, evident in the fact that the CES data is revised annually to align better with the QCEW data).
Furthermore, initial claims for unemployment benefits, a proxy for layoffs, are at their lowest level since 2001, an indication that few companies in New Hampshire are struggling to the point that they have to trim payroll. Finally, both personal income and real GDP, when adjusted for the size of the population or on a per capita basis, grew faster in New Hampshire than the national average in 2014.