Could April’s sagging business tax revenue numbers put a dent in Gov. Kelly Ayotte’s hopes for a less painful budget?
On Friday, the state released its preliminary collection report, showing businesses paid $240.3 million — $27.2 million less than anticipated, and $44.3 million less than New Hampshire hauled in a year ago.
The revenue setback continues a troubling trend. So far in 2025, the Granite State is short of business tax projections by $156.3 million — or a little less than 15 percent — and trailing last year’s collections by $134.5 million.
Yet when contacted Monday, Ayotte’s office still expressed optimism ahead of Tuesday’s final public budget hearing before the Senate Finance Committee.
“Department of Revenue Commissioner (Lindsey) Stepp and the state’s chief economist, Brian Gottlob, continue to project a rebound in business taxes and overall revenue,” Ayotte spokesman John Corbett told NHJournal. “Even in a tight revenue environment, our state’s fiscal outlook remains strong, and Gov. Ayotte is optimistic that New Hampshire will remain an economic beacon for New England and the nation.”
Ongoing deliberations over the next two-year budget have been dominated by dueling revenue forecasts. In April, the GOP-controlled House signed off on a budget that spends $643 million less than Ayotte proposed, citing revenue projections that legislative budget analysts predict will be roughly $525 million less than the Ayotte administration’s calculations.
Stepp told the Senate Ways and Means Committee last week that the uncertain economic environment is creating a challenge for revenue projections.
“I will say that I have been doing revenue estimating with the department since about 2010, and this is the hardest revenue estimating that we’ve had to do,” she told lawmakers Wednesday. “I’m concerned in a way that I like to come in here really confident in my numbers and confident in where I think things are going, and at this point, the level of uncertainty has taken my confidence to probably the lowest level that it’s been.”
House Democrats have seized on the House GOP’s proposed budget cuts to accuse Republicans of “cruel politics.”
Some examples of belt-tightening measures opposed by Democrats include shutting off $52 million in payments to Medicaid providers over the next two years, slicing roughly $30 million from the University of New Hampshire’s current $96 million state allotment, and axing 150 state Department of Corrections positions ($34 million) over the next two years “for salaries and benefits to align with current prisoner counts.”
House Majority Leader Jason Osborne (R-Auburn) told NHJournal the lower-than-expected April business tax receipts “are why Republicans always allocate plenty to the revenue stabilization fund” and “will reduce unnecessary expenses in the next budget rather than dip further into the bank accounts of businesses that are clearly struggling.”
The House budget approved last month includes withdrawing roughly $149 million from the stabilization account, or rainy day fund, by the end of the 2025 fiscal year to help offset any shortfalls. Ayotte’s proposal projects using about $81 million in rainy day funds.
Meanwhile, Democrats continue to complain that businesses aren’t paying enough in taxes. They blame the tight budget on tax cuts on business profits, as well as ending the income tax on interest and dividends. Granite State Democrats tout a recent report from the left-leaning New Hampshire Fiscal Policy Institute that estimates tax cuts allowed business owners to keep around $1 billion in income that would have been taken by the state if not for GOP tax cuts.
“The chickens are coming home to roost,” House Democrats chirped in a recent social media post.
John Reynolds, NFIB-NH state director, doesn’t agree. He praised Ayotte and House lawmakers for resisting the urge to introduce new taxes.
“Gov. Ayotte and state lawmakers have already made Main Street a clear winner in this year’s budget negotiations by preserving small business tax relief,” he told NHJournal in a statement. “Since the state began reducing the BPT (business property tax) and BET (business enterprise tax) burden a decade ago, small businesses have had more money to grow their operations, invest in their workers, and keep pace with unprecedented financial headwinds.”
In March, the House defeated a Democrat-sponsored proposal to reintroduce the income and dividends tax and increase BPT and BET rates by a vote of 345-27.
Since 2020, according to the U.S. Bureau of Economic Analysis, New Hampshire has outperformed all other New England states each year in terms of gross domestic product growth.
“At the same time, revenues from the business taxes more than doubled and they now bring in nearly four times more revenue than any other general and education funding source,” Reynolds added. “When lawmakers had the opportunity to undo the reductions earlier this year, an overwhelming bipartisan majority voted to keep them. That speaks volumes about the economic benefits of responsible budgeting and Main Street tax relief.”
The deadline for the Senate to release its proposed budget is June 5.
