State ends fiscal 2014 with $5.8 million revenue surplus
CONCORD — In a preliminary report, the state ended the 2014 fiscal year with a $5.8 million revenue surplus for the $2.17 billion general fund budget.
After several months of concern over sliding revenues, June produced more money than state budget writers estimated by $5 million, although $1 million is because of a Justice Department settlement.
Gov. Maggie Hassan noted June revenues are on target as a result of a strengthening economy that has boosted some state taxes, although others continue to lag.
“We continue to see shortfalls in business taxes and the interest and dividend tax, which appear to be related, at least in part, to a number of changes in the state tax code in recent years, as well as to businesses beginning to apply various tax credits and carry forwards accrued during the recession,” said Hassan, who last month imposed a freeze on hiring, out-of-state travel and equipment purchases that use general funds.
Senate President Chuck Morse, R-Salem, noted good business enterprise tax returns mean businesses are creating jobs, and good rooms and meals tax recipients show the summer tourist season is off to a good start.
“With revenues on plan, it is imperative that state agencies are meeting their spending and lapse figures to ensure the budget remains balanced and spending does not exceed the revenues we’ve collected,” Morse said. He called for Hassan’s office to update the Joint Legislative Fiscal Committee at its meeting near the end of the month so budget writers can evaluate the state’s financial picture heading into the second year of the biennium.
The biennial budget lawmakers passed a year ago, assumes a $26 million surplus for the 2014 fiscal year which ended June 30 to have a balanced budget at the end of the biennium June 30, 2015.
The state collected $2.175 billion during fiscal year 2014 in unaudited figures released by the Department of Administrative Services Wednesday, showing a $5.8 million revenue surplus. The state collected $2.27 billion in general fund revenue in 2013, but that includes $47 million from a tobacco company settlement and federal nursing home money that is no longer included in the state’s general fund.
June is one of the largest months for business taxes payments, and state budget officials were concerned about recent returns. Business taxes produced $90.6 million in June, which is $800,000 less than estimates.For the fiscal year, business taxes totaled $553.6 million, which is $7.5 million below estimates, but $1.6 million more than a year ago.
The interest and dividends tax continues to be a concern said Administrative Services Commissioner Linda Hodgdon as it produced $12.1 million for the month, which is $1.6 million below estimates.
For the fiscal year, interest and dividend taxes produced $80.1 million, which is $16 million below estimates and $13.1 million less than collected in 2013.Budget officials believe changes made in the interest and dividends tax in 2012 are also having a significant impact on the levy. Lawmakers changed the state’s trust laws so that trusts established by an entity or person who gives up the right to the principal or what are called non-grantor trusts would be exempt from the interest and dividends tax.
Former Gov. John Lynch vetoed the bill but the Republican-controlled House and Senate overrode his veto.
For the 2014 fiscal year, the communications tax was also problematic, producing $3.8 million less than anticipated at $58.7 million. Collections were down in June by $300,000.
However, rooms and meals, tobacco and real estate transfer taxes were all at least $3 million more than budget writers anticipated, as were liquor commission profits.
In June the tobacco tax was up $4.5 million at $23.7 million, while the rooms and meals tax was up $1.3 million at $22.2 million.
Along with business and the interest and dividends taxes, the insurance, communications, real estate transfer taxes and lottery revenue were all below estimates for the month.
Administrative Services will release another revenue report for June at the end of the month that adjusts collections between the 2014 and 2015 fiscal years.