2021 fiscal year revenues off to surprisingly good start

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NH State House Dome. Photo/Paula Tracy

CONCORD, NH — COVID-19 continues to impact state revenues, both positively and negatively, as the numbers are in for the first month of the 2021 fiscal year.

State revenues are $25.4 million more than budget writers predicted for July, fueled by both business, and interest and dividends taxes, three levies impacted by the economic slowdown from the coronavirus pandemic.

However, the federal and state governments delayed the deadlines for filing both personal income and business taxes.

The business profits and enterprise taxes produced $20.5 million in July, $17.8 million more than anticipated and $16.6 million more than a year ago.

The Department of Revenue Administration said returns, extensions and estimated payments were up for the month, but offset by an increase in refund requests. The agency said that is due to the extended federal filing date of July 15 instead of April 15.

The DRA gives a similar explanation for the increase in interest and dividends tax receipts which were $16 million more than anticipated at $17 million, and $15.7 million more than a year ago.

Those two revenues more than offset the impact the COVID-19 pandemic had on the rooms and meals tax, which is the state’s second biggest revenue producer behind business taxes.

Rooms and meals revenues were $12.1 million below estimates, producing $24 million instead of the projected $36.1 million.

Last year’s levy raised $34.3 million during the first month of the 2020 fiscal year.

The rooms and meals collection for July reflect June activity, which the DRA said was down 55 percent for hotels and 24 percent for restaurants over the same period last year.

The tobacco tax continues to outperform expectations as it has since the beginning of the year when Massachusetts banned menthol cigarettes.

The levy raised $20.4 million for July, $3.1 million more than the budget plan.

The insurance tax was up slightly as was the beer tax for July, but all other revenue raisers — the communications, and real estate transfer taxes, securities revenues and court fines and fees were all slightly below estimates.

Liquor revenues are on plan producing $6.6 million for the month.

Revenues for July totaled $133.3 million, while the budget plan projected $107.9 million would be collected in July which is not a large month for state revenues.

Also, the highway and fish and game funds did better than budget writers anticipated in July.

The highway fund which is generally car registrations and the gas tax revenues received $21.8 million, ahead of plan by $1.4 million.

The fish and game fund received $2.4 million, $1.5 million more than anticipated.

The business and interest and dividends taxes collected in July may be adjusted in the state’s final audit to be allocated to the prior fiscal year, making an increase in business tax rates less likely. The 2020-2021 fiscal budget plan calls for increasing business tax rates to the calendar 2018 level if state revenues are 6 percent or more below the budget plan.

In adjusted but unaudited figures released at the end of July, fiscal year 2020 revenues were about $144 million below the budget plan.

Earlier this summer, the House Ways and Means Committee estimated the revenue shortfall would be from $125 million to $199 million for the 2020 fiscal year and from $230 million to $395 million for fiscal year 2021.

Last month, Sununu said his office believes the shortfall would be $182 million for fiscal year 2020 and $355 for 2021.

Contact Garry Rayno at garry.rayno@yahoo.com.