Senate sets budget revenue targets below Ayotte's, frustrating governor

Yahoo

08-05-2025

Senate Ways and Means Chairman Tim Lang, a Sanbornton Republican (left), speaks to Sen. Keith Murphy, a Manchester Republican, after a Ways and Means Committee hearing, May 7, 2025. (Photo by Ethan DeWitt/New Hampshire Bulletin)
As the Legislature crafts the next two-year budget, one question has driven a wedge between House Republicans and Gov. Kelly Ayotte: How much revenue will the state raise in taxes?
This week, Senate Republicans drew the governor's criticism, too.
The parties have dueling projections. In February, Ayotte presented an optimistic portrait, one that assumed state businesses would overcome a recent slump in earnings and rebound over the next two fiscal years. In April, the House took a less rosy approach, estimating far fewer business tax collections and passing a budget that slashed Ayotte's spending proposals by $643 million.
Now, as the budget moves to the Senate, the Senate Ways and Means Committee has recommended a middle ground. On Wednesday, the committee endorsed a series of revenue projections that would put estimated revenues somewhere between the governor's and the House's assumptions for the next two years.
Ayotte is not satisfied.
'I disagree with that vote,' she said at a press conference Wednesday, reacting to the Senate's projections. 'And I also will tell you this: I don't understand why Republicans are joining with Democrats who want to put us in a position to raise taxes instead of adopting, I think, what would be a more accurate revenue picture for the state.'
The Senate committee's overall revenue estimate for the next budget biennium is about $6.1 billion — $228.1 million higher than the House Ways and Means estimate, but $172.1 million lower than Ayotte's budget, according to numbers from the Legislative Budget Assistant. Much of that difference is driven by disagreements over business taxes.
The calculations could allow the Senate Finance Committee to restore some, though not all, of the budget cuts imposed by the House. But as businesses nationwide fret about the effects of President Donald Trump's evolving tariffs, some state Democrats are questioning whether the Senate's new projections are themselves too optimistic.
Sen. Tim Lang, a Sanbornton Republican and the chairman of the Senate Ways and Means Committee, acknowledged that New Hampshire businesses could be affected by the tariffs and other economic headwinds. But he said he believes those hurdles will merely dampen growth, not stop it, and that businesses will begin a path to recovery by the new year.
'When you look at what we heard from the industries across the board was that there's not a recession happening. No one's lowering their number,' Lang said in an interview Wednesday. He argued that because inflation has dropped, and interest rates are lower, companies and consumers are in decent financial shape.
Lang also said he is not worried about the tariffs long term. 'The general consensus of the committee was that'll play itself out by the end of this year. So it'll affect the first half of the first year (of the two year budget), but after that, we'll see the growth.'
But Sen. Cindy Rosenwald, a Nashua Democrat and ranking member of the Ways and Means Committee, is doubtful.
'Consumer confidence is down, GDP shrunk in the first quarter,' Rosenwald said in an interview. 'I'm not hearing businesses saying 'we're doing a great job.' April (state) revenues were off, pretty substantially.'
Speaking to reporters in her office at a regularly scheduled press availability, Ayotte did not hide her frustration with the projected numbers. She said the rosier numbers in her budget are still realistic, and urged the Senate to use those.
Ayotte's revenues were set in February, before Trump imposed an aggressive series of tariffs on China, which in some cases exceed 100%. But Ayotte said she met with Commissioner Lindsey Stepp of the Department of Revenue Administration and economist Brian Gottlob just after the House passed its budget, on April 25, and that they had said her revenue projections were still sound, even with the tariffs.
'They assured me they're still comfortable with my revenue estimates, and they believe that in the next biennium, we will see a rebound on our business revenue,' she said.
The Senate Ways and Means Committee's revenue recommendations will now guide the chamber's budget writing process. The Finance Committee, which heard nine hours of public testimony Tuesday, must make its recommended changes to the budget in time for the chamber to vote for the budget on June 5.
Members of Ways and Means set predictions for each category of state revenue Wednesday. In most cases, they predicted slightly more revenue than their House counterparts did in March.
Senators set the meals and rooms tax estimate higher than the House's, with Lang saying representatives of the hospitality industry said they are not seeing a decline in bookings.
They also quibbled over alcohol sales. Lang argued to the committee that liquor revenues would be higher than the House had predicted, in part due to increasing interest in mocktails.
'We see the (New Hampshire Liquor Commission) moving more towards providing those things in the store for people that are coming in and buying both alcohol for one part of the family, and the other thing,' he said.
Sen. Keith Murphy, a Manchester Republican who owns the bar Murphy's Taproom, disagreed, noting that liquor sales have dipped recently as fewer Americans drink.
'I have seen in the younger generation, it's just a catastrophic drop off,' Murphy said. 'It's hard to be upset with people for not drinking as much, right? It's good from a health perspective, but I am very concerned the revenues the state derives from alcohol consumption is going to not recover any time soon.'
The revenue projections could force the Senate Finance Committee to make tough decisions over which programs in Ayotte's budget they restore, and which they allow to be reduced or cut.
On Wednesday, Ayotte named a number of programs she hopes will stay.
'I can tell you one that's on the top of my list, which is restoring the 3% cut to providers of Medicaid,' Ayotte said. '… (For) the providers across the board, that's a very important core issue when we think about serving our most vulnerable population.'