N.H. Panel: Tax Estimate Too High
Concord — The Senate’s tax writing committee told the chamber’s budget writers yesterday they have less money to produce a two-year spending plan for New Hampshire than the House or governor used in writing their plans.
The Ways and Means Committee’s base estimates are $62 million less than the House from state taxes and $150 million less than what Gov. Maggie Hassan’s used to write her budget. Hassan included $80 million from a fee to license a single casino in her budget but neither the Senate nor House estimates count on gambling money.
The Senate passed a bill to license a casino, but the House has not voted on it. A vote could come as early as May 22. The House has never passed a casino bill. Senate Republican leaders say they will cut spending rather than raise taxes if a casino isn’t legalized.
Yesterday’s committee action sets the stage for the Senate Finance Committee to begin making spending decisions next week. The Senate is scheduled to vote June 6 on its version of the state budget for the two years beginning July 1. The House and Senate have until July 1 to negotiate a compromise.
In addition to the $62 million difference in base tax receipts, the Senate committee also estimates the state will get $107 million less from a hospital tax on net patient revenues and instead will take in about the same money. Hassan and the House assumed hospitals would pay more in taxes because some of the money would come back to them in state aid.
Hospital aid is expected to be one of the major differences to be discussed when the two chambers meet next month to negotiate a compromise budget. The tax revenue was parceled out in the current budget to support general state spending, reimburse medical providers in the Medicaid program and provide aid to hospitals to offset the costs of caring for the poor. In the current budget, the state limited the hospital aid to smaller, rural hospitals and gave no aid to the larger hospitals.
Ten of the largest hospital then sued the state over its Medicaid rates. Hassan and the House argued that if the hospital tax produced the higher revenue, aid would be available for the larger hospitals.
Senate Finance Chairman Chuck Morse said that unless the state finds a way to support the larger hospitals, they will have no reason to grow in New Hampshire.
“I don’t see any incentive for hospitals to stay in the state,” said Morse, R-Salem.
Ways and Means Chairman Bob Odell pointed out that the state has never had the money Hassan and the House counted on for hospital aid.
“It’s not like we’re losing money,” said Odell, R-Lempster.
But both said the gap will have to be dealt with in the Senate budget.
Some revenues included in the House budget are still awaiting action by the Senate Finance Committee. For example, Hassan and the House delayed implementing business tax breaks worth $13 million and increased tax auditing to bring in an estimated $26 million.
They also took $3 million from a land conservation fund and count on about $6 million from expanding Medicaid under the federal health care overhaul law.
The Senate tax committee also isn’t accepting a 20 cent increase in the tobacco tax that Hassan and the House included. That is worth $40 million. The committee did accept a 10 cent scheduled increase in the tax.
“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 later in a statement.
The overall revenue differences are relatively small when looking at the total tax receipts each expects. Hassan’s revenue estimates are almost $5 billion; the House projects $4.4 billion in receipts; and the Senate estimates receiving $4.3 billion.