30-04-2025
Senate tax expert: Our revenues will be much more than House, likely less than gov's
The senate leader who chairs the taxation panel predicted the State Senate would likely adopt revenue estimates 'significantly higher' than in the House-approved budget, but lower than those that Gov. Kelly Ayotte relied upon in writing her competing spending plan.
After three hours of public testimony from state and industry revenue experts, Sen. Tim Lang, R-Sanbornton, gave members of his Senate Ways and Means Committee some homework.
He gave them worksheets and instructed them to come back on May 7 and be ready to adopt final numbers that Senate budget writers can use to craft their own two-year budget plan later next month.
'Really what we heard in all the presentations was that after several years of record surpluses and overwhelming revenue returns, we're coming back to the normal level of growth in state taxes,' Lang said.
'That's something I think we can live with, and our colleagues can responsibly budget upon.'
The presentation from Revenue Commissioner Lindsey Stepp revealed how both Ayotte and the House could be so far apart on their revenue forecasts.
With each major tax under her authority, Stepp offered a 'low' and a 'high' range of predictive change for the two-year cycle that begins this June 30.
For example, with the two business taxes that provide more than half of the general tax and fee totals, Stepp said her low estimate would be that the 7.5% Business Profits Tax and .55% Business Enterprise Tax would go up by 2% each year.
The 'high' estimate is both taxes would bring in 8% more.
Through eight months, the two taxes brought in $134 million or 13.1% below the prior year and $156 million or 14.9% below forecast.
House took 'low' forecast, Ayotte took 'high'
Ayotte's revenues in total are $426.3 million less than in the House-approved budget for this year that ends June 30 and the next two years.
The 'low' range in Stepps' estimates were $456 million less than Ayotte's numbers.
Conversely, if you adopted the DRA's 'high' estimate than that total revenue is $21 million more than what Ayotte based her budget upon.
'We are at an inflexion point, we are coming down from those high business tax payments, but how the economy performs will determine how much growth we see for 2026 and 2027,' Stepp said.
She stressed that that her agency was better at 'looking in the rearview' and explaining business taxpayer behavior once it occurs than making scientific predictions about it.
That's because business owners make estimated payments three times a year and then with the last quarterly payment true up or true down their taxes based on actual profit or loss by the company, she said.
'There is no space for a love note on the estimated tax return to say, 'Hey, I am reducing my estimated payment due to X,'' Stepp said.
'We have our thumb in the air kind of feeling the way the wind is blowing.'
Lang said there are many contradictions in the tax performance that are specific to demographics and buyer habits in that industry.
In the case of hotel rentals that carry the 8.5% Room and Meals Tax, returns from the lower-end hotels have been slumping of late.
'That's because of inflation. What was once a $69-a-night room at Motel 6 is now an $89-a-night room and those families in that socioeconomic circumstance say, 'We can't afford it' or 'We're only staying two nights, not three,'' Lang said.
'The opposite is true of higher-end hotels; that market is surging.'
Ghost drop liquor sales a big W for state
Likewise, when it comes to alcohol sales compared to a decade ago, consumption of beer, wine and spirits are way down among consumers in their 20s.
But Lang credited State Liquor Commission Chairman Joe Mollica and his team with working to offset this trend by creating a land office business in the sale of high priced liquor and wines.
'These big ticket price bottles, when they have a ghost drop sale, high price, good discount but limited quantities, they don't stay on the shelves for long," Lang said. "It's amazing how successful this market offer has been, the commission is cleaning up whenever they put it out there.'
It's well known that the Trump administration tariffs on Canada have led to some decline in advance summer rental reservations here by residents of Quebec and Ontario.
'Again, it's looking like we could have a lose a little, gain a little. Yes, our border crossings are down already, but that could also mean we have less travel from New Hampshire into Canada. What we lose in foreign tourists could be made up in more stay vacations and spending by our own citizens,' Lang said.
'In the face of all that, the Airbnb and other short-term rental market folks are telling us they are still seeing a slight uptick.'
Mike Somers, president and CEO of the N.H. Lodging and Restaurant Association said summer bookings are what they were last year, in other words, 'kind of flat.'
'The Room and Meals Tax has been propped up for the past 12 to 18 months due to inflation, menu prices and room rates as well,' Somers said. 'This doesn't necessarily mean we are seeing the same sale growth.'
Somers said once hospitality venue owners see a softening market, they will lower their rates to keep or attract business from their competitors.
Weather remains a determining factor and another 2026 event the southern tier owners are looking forward for spinoff profit is next summer when Boston hosts seven soccer matches in the FIFA World Cup next June and July, Somers added.
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