There have been many in the N.H. House of Representatives like myself who have been fighting for a prudent budget that meets the needs of the state in a fiscally responsible manner. It has been our prudence and care in spending the people’s money over the years that makes N.H. unique among all states and one with a booming economy resulting in record state revenues, record low unemployment rates, budget surpluses, and the lowest number of people living below the poverty level.
The budget presented to the House and Senate for a vote on June 27 was anything but prudent. This budget was rejected unanimously by Republicans and supported unanimously by Democrats. We have seen this movie before when Democrats controlled the House, Senate, and governor’s office that produced the budgets of FY2008-09 and FY2010-11 based upon over-optimistic, and some would say fanciful, revenue estimates and spending well beyond our means which led to a $900 million structural deficit in the FY2012-13 budget. The voters of N.H. responded by voting in a Republican-controlled House and Senate with super-majorities to override any veto attempt by the Democrat governor as that structural problem was fixed without raising taxes.
Instead of following the approach of all so many great Republican structured budgets, this budget over projects revenues, increases taxes, and overspends. Let me start with what would have made this budget even worse. I will credit my Democrat friend Senator Finance Chair Lou D’Alessandro, who against the pressure from his own caucus, stripped out of the House budget a 5% capital gains tax and the .5% income tax to fund a mandatory family paid leave insurance program. I spoke passionately against the capital gains tax on the House floor calling it a tax on “risk-taking” as well as against making the family leave insurance mandatory with all wage earners having their incomes taxed whether they wanted this insurance or not.
On January 1, 2019, the business profits tax was lowered to 7.70% from $7.90% and the business enterprise tax was lowered to .600% from .675%. This budget reverses these cuts which creates havoc on companies large and small who have underpaid their quarterly payments. Many businesses have said to me these tax increases will prevent hiring more employees and re-investing in their companies, including possible expansions. This throwing of cold water on our robust economy is absolutely the wrong thing to do.
In the governor’s budget submitted to the House in February, he proposed spending the $200 million FY2019 revenue surplus, in part created by one time increases in revenues due to the federal tax changes, on increasing the rainy-day fund and spending this money on non-repeating one-time capital improvement efforts throughout the state. The Democrat passed FY2020-21 budget instead spends a good portion of this on new or expanded ongoing programs. It is estimated by many that this will lead to a structural deficit next budget cycle of $93.4 million. To make matters worse I have warned that revenue projections over the two years were artificially inflated by $75 million. The House Ways and Means Committee, which I am a senior member, came up with bipartisan revenue estimates in February. We updated them once again in late May. These revenues were approved by the full House less than a month before the Budget Conference Committee members added $75 million to these prudent estimates. I took to the House floor in the budget debate on June 27 to point out that these estimates are based upon the extreme high end of what the Department of Revenue Administration deemed as feasible. It was this type of wishful thinking that got us in trouble in those turbulent Democrat controlled years.
The proposed budget spends $1.5 billion or 13.3% more than the previous Republican structured FY2018-19 budget. This is an unprecedented increase in spending of taxpayer dollars in N.H., and it is unsustainable.
Governor Sununu recently said, “I have worked with Legislative leaders and found common ground on many issues and have met them more than halfway on many of their spending requests while also proposing a path forward that does not raise taxes.” Common ground includes education funding through stabilization grants; targeted Medicaid provider rates; allocated funding for a new Secure Psychiatric Unit; Department of Transportation fleet upgrade; $40 million in one-time capital grants to every municipality in N.H.; and increased funding for mental health services and child protection.
On June 27 the Legislature unanimously voted for a 90-day continuing resolution that keeps N.H. government going at current spending levels. Hopefully during that period, the Democrats will agree to a more prudent budget that will ensure the fiscal stability of the state that we are all lucky to have and be proud this is a centerpiece of the N.H. ethos. Simply put, we should not start emulating so many failed Democrat controlled near bankrupt states. Thank you, Governor Sununu, for your prudence.
Abrami is a Republican state representative from Stratham and serves on the House Ways and Means Committee.