Merry Christmas, New Hampshire.
The strong economy has brought gifts for all the girls and boys of the Granite State. It has been dropping jobs and money like Santa dropping misfit toys.
The New Hampshire Department of Employment Security reported on Monday that the state’s unemployment rate fell to 2.5 percent in November. The state added 16,570 jobs from November 2017 to November 2018. From October to November, the state added 1,170 jobs.
The national unemployment rate in November was 3.7 percent, a full 1.2 percentage points higher than New Hampshire’s.
The government sector is being showered with gifts too.
The Department of Administrative Services reported that total state revenues in November were above budget by $3.8 million (3.5 percent) and above the prior year by $2.8 million (2.6 percent).
The department reported that business tax revenues for November “totaled $16.2 million, which were $5.6 million (52.8%) above plan and $1.1 million (7.3%) above prior year.” Year to date, “business tax collections are above plan by $63.8 million (37.6%) and $43.9 million (23.2%) above the prior year.”
From state fiscal year 2016, when the first round of state business tax cuts took effect, to the end of fiscal year 2018, business tax revenue exceeded expectations by $319.5 million, as we reported in the fall. With business tax revenues coming in $63.8 million above plan so far this year, the total in unanticipated business tax revenue since the tax cuts took effect has reached $383.3 million.
That’s effectively found money. New Hampshire’s business tax cuts are not solely responsible for this windfall. The Tax Policy Center, a joint project of the Brookings Institution and the Urban Institute, reported on Monday that U.S. states enjoyed a significant revenue boost in fiscal year 2018. The 7.8 percent increase in state revenue came primarily from individual income and business taxes and is thought to have been driven in large part by the federal tax cuts.
As we prepare to enter 2019, a state budget year, there will be some pressure to repeal the business tax cuts. Those cuts will be portrayed as a giveaway to wealthy businesses. In fact, they contributed to a long period of economic growth that created thousands of jobs and sent state revenue soaring.