CONCORD, N.H. -- The chairman of New Hampshire’s Senate tax-writing committee said Monday he is cautiously optimistic the economy is on a gradual upswing but not at a pace allowing the state to spend at pre-recession rates.
Ways and Means Chairman Bob Odell, a Lempster Republican, estimates growth for each of the next two fiscal years will be 2 percent. But he doesn’t buy the estimates from hospital taxes that Democratic Gov. Maggie Hassan and the House used to build their budgets. Odell said they are millions of dollars too high, which could create a problem for the Senate in writing its budget.
The current budget, written by Republicans, cut state hospital aid for all but a handful of critical access hospitals. Hassan’s proposal would restore about half of the $200 million cut in the last two years -- but only if the hospital tax revenues come in much higher than Odell believes are realistic.
If the estimate is too high, Senate budget writers will be faced with either not giving the hospitals state aid or with making cuts elsewhere to provide the aid. The state is in a difficult position since it needs the hospitals to agree to be part of its managed care network for Medicaid clients to implement the system, but the hospitals are balking at the state’s low reimbursement levels for treating Medicaid patients. Hassan and lawmakers hope restoring some of the hospital aid will encourage the hospitals to join the state’s managed care network.
Odell’s committee is meeting May 14 to set the revenue estimates the Senate will use to write its version of the state budget for the next two years. The Senate votes on its budget June 6. The House and Senate then will try to negotiate a compromise before the new fiscal year begins on July 1.
In projecting future revenues for the next budget, Odell said his committee will come up with a base amount that does not include money not likely to be repeated, such as from lawsuits. He said he estimates so far this year the state is $21 million above projections. His committee could decide the base amount of money the state can expect to get each of the next two years is $2.3 billion, he said. Two percent growth would be only $44 million a year, he said.
On Monday, the Senate committee heard an update from its tax collecting agency, which reported healthy receipts from the two largest business taxes.
Lindsey Stepp, a financial analyst at the Department of Revenue Administration, said receipts from the tax on hotel room rentals and restaurant meals also is coming in stronger than expected. She attributed that to a snowy ski and snowmobile season that brought tourists to New Hampshire.
New Hampshire’s year-to-date tax collections were $48 million above projections in April, a big month for business tax filings. The receipts from business taxes were $18 million above estimates. The state also received $21 million from a settlement of litigation with tobacco manufacturers and counted $6 million from a lawsuit over gasoline additive MTBE.
That pushed the state $34 million ahead of projections for the fiscal year ending June 30 and all but ended talk of Hassan needing to raid funds with dedicated funding sources to balance the budget for the year. Instead, both Hassan and Odell believe New Hampshire will end the fiscal year with a small surplus that could go into a savings account. New Hampshire only has about $9 million in savings.