Uncertainty over November state revenues

Today or tomorrow – when November’s revenue estimates are released – state policy makers will get another data point that will help us understand New Hampshire's budget position. But there's still some uncertainty about one significant source of tax revenue.

While revenues have begun to rebound across the country (see, for example, the National Council on State Legislatures report here ), the situation may be more complicated here in New Hampshire, where a recent budget change to the state’s Medicaid hospital disproportionate share program has thrown one important source of state revenues into flux.

November is historically the month when revenues generated from a tax on New Hampshire’s hospitals (the Medicaid Enhancement Tax or MET) are booked (estimated at $97 million.) But this year may be different.  In the long term, a pending lawsuit brought by a coalition of hospitals against the state may ultimately mean less revenues to the state (depending on the outcome of the case).  In the short term however, hospitals may seek extension for those MET payments until issues about the calculation of the taxbase (something called net patient service revenues) are resolved. This same uncertainty about the base against which the tax is calculated may also significantly lower the amount collected by the state.

The result? It’s possible that even though business tax receipts and other sources of revenues are rebounding, New Hampshire's budget picture may look slightly bleaker than anticipated.

(An earlier version of this post imprecisely referred to the pending lawsuit brought against the state as resulting in hospitals withholding tax payments.  While the outcome of the  lawsuit may result in lower revenues to the state,, hospitals' decisions in the short term to to seek extensions may temporarily result in additional shortfall in November revenues).