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May 14. 2013 8:53PM

Senate revenue estimates for budget well below House’s

CONCORD — The Senate Ways and Means Committee Tuesday adopted revenues $168.2 million less than the House spends in the next state operating budget.

In base general fund levies, the Senate estimates are $61.4 million less than the House and $149.5 million less than Gov. Maggie Hassan’s proposed budget, which includes $80 million in licensing fees for a casino, which the House and Senate do not.

“This base amount reflects revenues that have actually come in since the governor and the House had their turn with the budget and the fact our committee anticipates only modest growth in state revenues over the next two years,” said Ways and Means Committee chair Sen. Bob Odell, R-Lempster.

The biggest difference between the House and Senate is $40 million in tobacco taxes. The House approved increasing the tax by 20 cents a pack, but the Senate has yet to act on it and is likely to vote it down as Senate Republican leaders have said it is dead on arrival A 10-cent a pack increase automatically goes into effect this summer if tobacco tax collections are below projection for the current biennium, which they will be.

The Senate revenues for business taxes are considerably higher than the House, but much lower for rooms and meals and real estate transfer taxes.

“For the next biennium, the Senate comes out $92.4 million ahead of the House in business taxes,” Odell said. “However, we do project lower, more conservative totals in other traditional revenue categories based on strong returns over the last few months of the current fiscal year.”

The Senate estimates also do not include a number of adjustments included in the House budget such as revenue generated by more auditors at the Department of Revenue Administration, which is $26 million over the biennium.

And the House and Hassan suspended several business tax credits approved last year but did not go into effect until fiscal year 2014 that total $13 million.

“At a time when the business climate in New Hampshire appears to be improving, Senate Ways and Means did not believe relying on millions in new taxes on businesses and consumers was the way to balance the budget,” Odell said.

The Senate has not decided to transfer $3 million from the Land and Community Heritage Investment Program to the general fund as the House proposes.

The majority of the difference — $107 million — is from the Medicaid Enhancement Tax (MET) that hospitals pay on net patient receipts.

The Senate reduction in the MET could mean the state’s largest hospitals will not see reimbursement for uncompensated care reinstatement after a two-year hiatus in the current operating budget.

In the current budget, budget writers continued the program, which combines state and federal dollars to offset unpaid bills for the small rural or critical care hospitals but not for the state’s largest hospitals.

Under both Gov. Hassan’s and the House’s budget proposals, the program would be reinstated but the hospitals would have to pay more than they currently do for the MET.

The House and Gov. Hassan assumed a 5 percent increase in the MET over what was expected this fiscal year, but to date hospitals have paid $34 million less than budget writers anticipated.

The Senate decided to use what has been collected this year as the MET base with a 2 percent increase in each year of the biennium.

“It is not like we are losing money, but it does create an anticipated gap in spending that Finance is going to have to deal with,” Odell said.

The $107 million reduction would mean a total loss of $214 million for the Department of Health and Human Services budget when matching federal money is included.

Finance Committee chair Sen. Chuck Morse, R-Salem, said the problem will cause hospitals to leave the state. “Hospitals will have no incentive to stay in the state,” he said.

The Senate Finance Committee begins deciding on its proposed budget next week. The Senate has to vote on its budget by June 6.

grayno@unionleader.com


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