After much work by the House, Senate, and governor an extraordinary budget was passed on June 24.
With revenues at all-time highs in FY2021, this was the year to reduce tax rates. Our business tax revenues have been soaring after a series of business tax rate cuts the last several years aiding in creating a business-friendly environment resulting in more business activity.
Not only have a significant number of good-paying jobs been created through these actions, but these actions have resulted in significant revenue growth amazingly all during the year of COVID. With this formula working, this budget reduces the business profits tax (BPT) rate from 7.7% to 7.6% and the business enterprise tax (BET) rate from .60% to .55%. To help small businesses the gross revenue threshold was raised from $50K to $92K before filing a BPT tax return is required. This means that 30,000 small businesses are now exempt from the BPT.
For families, the meals and rooms tax rate will be reduced from 9.0% to 8.5%. In addition, the 5.0% interest and dividends tax will be reduced by one percent per year over five years until the tax is eliminated. This will especially help those who are retired living off investment income. All of these tax reductions were supported by the House Ways and Means Committee of which I am vice-chair.
As far as relief to property taxpayers, in FY2023, $100.0M will be transferred from the general fund to the education trust fund to pay for a $100.0M reduction in the state-wide education property tax (SWEPT). The amount of SWEPT revenue collected annually from property taxpayers is $363.1M. In FY2023 only $263.1M will be collected from the property taxpayers with the remaining $100.0M made up from the general fund, thus what goes to the schools remains untouched. The impact is that the SWEPT portion of a property taxpayer’s tax rate will be reduced by 27.5%.
Other positives for property taxpayers going forward includes the changing of how meals and rooms taxes are allocated to cities and towns. Statutes state that 40% should be going to municipalities. However, every budget cycle this number is reduced to a much lower percentage. For instance, last budget cycle the percent that went to municipalities was 18%. To permanently increase this amount and to make it more predictable, we created the Meals and Rooms Municipal Revenue Fund in which 30% of meals and rooms tax revenue will be allocated each year. This is a 12% or $50.0M budget increase in allocation to city and towns that will hopefully reduce their property tax rates. Among other things, this budget provides $83.3M in estimated aid to municipalities by fully funding highway block grants at $69.7M over the biennium and appropriating $13.6M in state aid for municipal bridge projects.
As far as education funding this budget corrects the education funding formula to ensure schools are not hurt by the COVID enrollment drop, providing $67.0M in additional aid as well as providing an additional $17.5M in each year for free or reduced cost meals for eligible students. This budget provides full funding of full-time kindergarten and fully funds aid to all public charter schools. In addition, this budget provides $82.0M for school building aid, $67.2M to fully fund special education aid, $18.0M to fully fund career and technical education (CTE) tuition and transportation aid to school districts, and $1.5M for the NH Robotics Education Development program. The NH Community College System and the NH University System are level-funded at $56.0M and $88.5M per year respectively. Of significance is the establishment of Education Freedom Savings Accounts to increase education choice allowing parents to find the right fit for their child regardless of financial means.
As far as health and human services, more will be appropriated than spent the last biennium. The Sununu Youth Center will be closed replaced by community centers dealing with troubled youth locally. This budget appropriates $30.0M for a secure 24-bed secure psychiatric facility to be attached to the New Hampshire Hospital saving millions in operating costs a year. In addition, this budget provides $8.0M that will be allocated for mobile crisis units and community mental health programs, provides an additional $29.1M to our county nursing homes, and fully funds the Developmental Disability waitlist by providing $335.0M in general funds matched by $330.0 in federal funds over the biennium.
There are many other positives from this budget. N.H. has proven time and time again that we can reduce taxes and still fund essential services. We rank the best, or near the best, year after year in all important categories of success as a state. Just last week it was announced that N.H. ranked number two among states for the well-being of its children and number one when it comes to the number of children living above the federal poverty level. I proudly voted yes on this budget.