Senate revenue forecasts higher than House's, but well below Ayotte estimate

Yahoo

07-05-2025

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Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience.
Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience. Generate Key Takeaways
The Senate panel in charge of tax and fee legislation forecasts rosier revenue growth for the next two years but more than $260 million less than what Gov. Kelly Ayotte had estimated in presenting her spending plan last February.
Ayotte told reporters she stands behind the estimates of her experts and said she couldn't understand why Republicans on the Senate Ways and Means Committee were 'working with Democrats' in a manner that could force a state tax increase to support needed services.
'I disagree with that vote and I also will tell you this, I don't know why Republicans are working with Democrats, putting us in a position to raise taxes,' Ayotte said.
Democratic members of the Senate Ways and Means Committee were less optimistic about future revenue growth and Ayotte said the reason is political.
'It is pretty ironic the Democrats are trying to masquerade as fiscal conservatives on revenues,' Ayotte said.
'They want to raise taxes and to have Republicans join Democrats on the revenue numbers doesn't make any sense to me.'
Ayotte said she remains just as certain her revenue numbers will prove more accurate as she did in first putting them together three months ago.
'At the end of the day, the budget that passes, the lady who has to manage all this is me,' Ayotte added.
The Senate Ways and Means Committee estimates were $228.1 million more than what the House's counterpart panel had come up with to help produce a House-approved budget in March.
But Ayotte's numbers were higher nearly across the board, $42 million more in the current year that ends June 30, $37.5 million next year and $183 million more in the last year of the next budget cycle that concludes June 30, 2027.
Chairman Tim Lang, R-Sanbornton, came to the committee after huddling with Ayotte's staff on the numbers and had suggested in several cases higher figures than what his committee settled upon.
'The issue is where we think the economy is going,' said Lang, adding he believes growth will be slower next year but should ramp back up in the second year. 'I do think it's going to be improving in 2027.'
Senate Deputy Democratic Leader Cindy Rosenwald of Nashua said she was much more pessimistic, particularly in the short term.
'The economy has shrunk in the first quarter, consumer confidence has slipped and we're likely to see supply chain problems in the next few months,' Rosenwald said.
'I think the chances for recession are much higher than they were a year ago.'
Senate Dems view "extreme uncertainty"
Sen. Donovan Fenton, D-Keene, the owner of an automotive sales business, said at one point revenue growth will be on the 'low end," with tariffs, higher prices and an economic slowdown all combining to confound experts about the future.
'I think there is extreme uncertainty,' Fenton said.
Sen. Keith Murphy, R-Manchester, the owner of a restaurant and conference center, said he agreed the future was cloudy.
'I don't talk to anyone at my businesses that says the economy is going to be surging,' Murphy said.
As a former House member, Murphy recalled Democrats in control of the Legislature in 2008 forecast huge revenue growth that didn't come to pass.
An $800 million budget deficit at that time led to layoffs, deep spending cuts, an ill-fated LLC Tax that was later repealed and many higher fees to balance the books.
'I was here in 2010 when we came out of a big, big hole. I don't want to see a repeat of that. I'd rather be surprised that more revenues came in than we had expected,' Murphy said.
The biggest rift between Ayotte's team and the Senate's numbers were in expected returns from the state's two main business taxes — the 7.5% Business Profits Tax and .55% Business Enterprise Tax — that generate about 40% of main taxes that support the budget.
Revenue Commissioner Lindsey Stepp had estimated a range of business tax growth between 2 and 8% for each of the next two years.
Ayotte took the higher number with the blessing of Stepp and Brian Gottlob, the state's chief economist who works with the Department of Employment Security.
The House budget had relied on the lower range while the Senate prediction falls somewhere in the middle which means it calls for bringing in $160 million less than Ayotte had forecast.
Ayotte's estimates were not all higher than the Senate.
After meeting with Lottery Executive Director Charles McIntyre, Lang convinced his panel to raise the estimate for legal wagering profits $35 million in each year over Ayotte's estimate.
Lang said the growing popularity of historic horse racing machine playing, the returns from the opening of a mega-charity casino in Nashua and one to come in Salem, and a future legalization of slot machine gambling all justify raising this forecast.
What's Next: The Senate Finance Committee will use these higher revenue estimates to restore some but not all of the cuts in state spending contained in the House-approved budget.
Prospects: A House-Senate conference committee on the budget will decide what the final revenue forecast is with the benefit of reviewing receipts that come in during May and some of June. In the past, the final revenue numbers on occasion have come in even higher than what the governor, House or Senate had settled upon.
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