Revision: Jan. 15, 2019, 9:03 a.m.
HB 482-FN-A - AS INTRODUCED
HOUSE BILL 482-FN-A
SPONSORS: Rep. Almy, Graf. 13; Rep. Martin, Hills. 23; Rep. Malloy, Rock. 23; Rep. Porter, Hills. 1; Rep. Hatch, Coos 6; Rep. Southworth, Straf. 20
COMMITTEE: Ways and Means
This bill establishes a process for transfers from the revenue stabilization reserve account when state revenues fall short of planned amounts, and adds contingent amendments of the rates of the business profits tax and business enterprise tax if the revenue stabilization reserve account would have a zero balance.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Nineteen
Be it Enacted by the Senate and House of Representatives in General Court convened:
III-a. In the event of unexpectedly large negative effects on state revenues, the following procedures shall be applied:
(a) In addition to the provisions in paragraph III, if by the end of the month of August, October, December, or May in any fiscal year, the total revenues deposited to the combined general fund and education trust fund during the prior 6 months fall below 95 percent of the official revenue plan for the fiscal year prepared by the department of administrative services, the comptroller and the legislative budget assistant shall appear before the fiscal committee of the general court and testify whether, in their opinion, if continued, this revenue reduction would make the total required expenditures from the combined general fund and education trust fund during the subsequent 3 months impossible without transfers from the revenue stabilization reserve account. The fiscal committee shall determine whether such a transfer is necessary, and the amount needed, and instruct the comptroller to transfer the sum approved to the general fund surplus account in appropriate monthly increments. This procedure shall be repeated until the revenue stabilization reserve account would have a zero balance or the fiscal committee determines that planned revenues and required expenditures have come into balance. In the first year of the biennial budget, the procedure will not take place in August.
(b) If, pursuant to subparagraph (a), the fiscal committee determines that the revenue stabilization reserve account will have a zero balance in less than 6 months and that spending reductions and expected future revenues cannot prevent it, the fiscal committee of the general court shall certify to the commissioner of the department of revenue administration, the secretary of state, and the office of legislative services of the effective amendment of the business profits tax rate to 8.5 percent and the business enterprise tax rate to 0.50 percent to be applicable in the first quarterly payment due 90 days or more after such certification.
IV. No available balance in the revenue stabilization reserve account shall be utilized for any purpose other than those authorized by paragraphs II [and], III, and III-a without the specific approval of 2/3 of each house of the general court and the governor.
77-A:2 Imposition of Tax. A tax is imposed at the rate of 8.5 percent upon the taxable business profits of every business organization.
77-E:2 Imposition of Tax. A tax is imposed at the rate of .50 percent upon the taxable enterprise value tax base of every business enterprise.
5 Applicability of Contingent Amendments. Sections 3 and 4 of this act, setting the rates of the business profits tax and the business enterprise tax, shall take effect on the day certified by the fiscal committee of the general court as provided in RSA 9:13-e, III-a.
I. Sections 3 and 4 of this act shall take effect as provided in section 5 of this act.
II. The remainder of this act shall take effect July 1, 2019.
HB 482-FN-A- FISCAL NOTE
FISCAL IMPACT: [ X ] State [ ] County [ ] Local [ ] None
Estimated Increase / (Decrease)
[ X ] General [ X ] Education [ ] Highway [ X ] Other - Revenue Stabilization Reserve Account
This bill utilizes the Revenue Stabilization Reserve Account to supplement the General Fund and Education Trust Fund if they fall below a specified amount. The bill also creates a contingency to increase the business profits tax rate to 8.5% and decrease the business enterprise tax rate to 0.50% if revenues in the Revenue Stabilization Reserve Account is zero.
The Department of Administrative Services states this bill would require additional financial analysis be prepared by the Department, which could be conducted with existing staff levels. The Department does note that this bill may be in conflict with RSA 124:14 and RSA 9 relative to certain actions that need to be taken if there is an anticipated shortfall in revenues.
The Department of Revenue Administration states it has no means to determine if the contingency regarding the business tax rates will occur or the fiscal year to determine the fiscal impact of this bill. Because the rate change may occur in the middle of a taxpayer’s tax year, the taxpayer may potentially be subject to different tax rates during the same tax year, each applicable to different activity. This may be a challenge for taxpayers to divide their activity between different rates, and would make it difficult for the Department’s audit division to audit a tax year, with different tax rates.
Department of Revenue Administration and Department of Administrative Services