July 2009 is the first month of New Hampshire’s fiscal year 2010 (FY2010). Although it may be too early to tell how state revenues will accumulate in the next eleven months, the early returns are not encouraging. Unrestricted revenue for the General and Education Funds received during July totaled $93.6 million, which was below prior year by $4.7 million. That is 5% less than for July 2008. Two revenue sources – real estate transfer tax receipts, and the meals and rooms tax – should be in their high collection months right now, and these are performing below expectations.
It is difficult to judge the overall annual revenue picture with only one month’s data, especially in July. That’s because the state’s major revenue sources, like the business profits and business enterprise taxes, (that account for about one quarter of unrestricted revenue), have their largest collection months at the end of each quarter. The interest and dividends tax also has larger end of the quarter collections. So we will have to wait until the data comes in for September 2009 to properly judge the trend in business taxes and taxes on interest and dividends.
Real estate transfer tax receipts, and the meals and rooms tax, however, should be in their high collection months right now but are underperforming relative to the legislative plan, which called for increases in receipts relative to fiscal year 2009.
Real estate transfer tax receipts should be about twenty percent higher than the average monthly collection in the months of July through October, as real estate sales are higher in these months. But July 2009 receipts were only $9 million, off by $2.5 million compared to $11.5 million collected in July 2008. At the height of the housing bubble the real estate transfer tax brought $160 million to state coffers, but the July 2009 data suggests that the forecast of $85 million for FY2010 may still be too optimistic.
The meals and rooms tax also has some of its best months in the summer, from July through October. July 2009 tax receipts were $19.1 million, down $1 million from July 2008. State budget writers forecast $251.1 million for FY2010, which includes increasing the tax rate from 8% to 9% and extending the tax to campgrounds. If the July 2009 number is representative of the rest of the year, meals and rooms would fall several million dollars short of the forecast for FY2010.
The July 2009 state revenue report can be found here.
Has there ever been a study to determine how a broad based tax might be levied to be "revenue neutral? That is transferring the burden from the property owner and more evenly distributing it through out the state.
The property tax creates tension among communities and prevents a regional approach to economic development among many other unintended consequences.
Posted by: Patricia Sherman FAIA | Oct 30, 2009 at 06:40 AM