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March 22. 2013 10:58PM

Auto registration revenue is up, but why?

MANCHESTER - Some Granite State cities, including Manchester and Nashua, are seeing a spike in auto registration fee collections.

But whether that means pent-up consumer demand is becoming apparent in car dealer showrooms depends on whether you ask the tax collector or auto dealers.

The cities are collecting more in vehicle registration fees, but the car dealers say sales still haven't rebounded from the recession.

Manchester Budget Director Bill Saunders said the city expected to collect more in vehicle registration fees this year, and is doing better than expected.

"At the end of February, it was up $192,000 over last year at the same time," Saunders said. "We've increased the forecast; this year it was about $14 million in registrations forecast, now it looks like it will be about $14.375 million."

Nashua Treasurer David Fredette also reports an increase in registration fees, expecting to take in about $200,000 more in the fiscal year that ends in June compared to a year ago.

Since registration fees are highest when a car is new, and decline dramatically for vehicles on the road five years or longer, city leaders believe the higher registration fee collections means there are more new cars in Granite State driveways.

"From my observation it is definitely newer vehicles. Things were so bad, people were keeping vehicles a lot longer," Manchester Tax Collector Pat Harte said. "They are finally upgrading."

But the rebound isn't strong enough for the state's auto dealers.

New Hampshire Auto Dealers Association President Peter McNamara said that between 2011 and 2012, new vehicles sales rose about 5 percent. This year, the association sees sales up only about 1 percent over 2012.

"Despite the increases, as a nation we are probably buying two million less cars than in 2007," McNamara said.

While car sellers struggle to bring sales back to pre-recession sales levels, local government officials tend to compare things year-to-year.

Harte said after dropping dramatically for several years, year-to-year increases in registration fees are now being seen.

"Last year, we still felt things were very volatile and had no really strong sense of where things were going," Harte said. "We are growing confident that things are getting better - it feels solid looking at the statistics."

Manchester's city code and charter require that half of revenue surpluses must be allocated to a rainy day fund. Spending the surplus requires the votes of 10 of the city's 14 aldermen.

In his budget address, Mayor Ted Gatsas said he wants to use any extra money this year to help city departments pay severance benefits to retiring employees. The state hit the city with a $4 million increase in pension costs for next year.

Fears that surplus money might have to be used to pay for the winter of 2013 are dimming.

Manchester officials do not believe they will have to tap the revenue surplus to pay off the costs of plowing and sanding roads during the winter of 2012-13.

Saunders said the city Highway Department should be able to cover any shortfall in the snow removal budget by transferring money from other accounts.

In the meantime, though, auto dealers continue to watch consumer confidence. McNamara said the latest potential issue is public perception of the sequestration issue in Washington, which he says has the potential to considerably dampen consumers' inclination to spending money to replace the family car.


New Hampshire Union Leader correspondent Benjamin C. Klein contributed to this report. Bill Smith may be reached at wsmith@unionleader.com.


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