New Hampshire Budget Stalemate And Battle Becomes Local

CONCORD, NH — It's been nearly a month since the Gov. Chris Sununu, R-NH, vetoed a Committee of Conference Fiscal 2020-2021 budget proposal for the state of New Hampshire and the stalemate between the Democrats that control the House and state Senate, and a Republican governor, appears to be unchanged. But what has changed is the involvement municipal officials, stepping into the fray and taking sides, mostly due to their political party designations.

Officials from cities and towns historically have been critical of state government. Whenever there is a revenue problem at the local level, the state often gets blamed since local property taxes fund a large portion of the cost of municipal services. At the same time, some of those criticism are legitimate, too: Education funding and spending, in the wake of declining birthrates and enrollments, continue to persist; employee retirement and health care costs – which have been historically shared by the state and local governments – have been passed down to communities; massive tracts of land remain off the rolls in places like Concord; and the lack of comprehensive revenue sharing plans from line items like rooms and meals, too.

This is one of the reasons why Democrats put $200 million in new funds for municipalities and schools into the budget, essentially dangling it as "property tax relief." Part of the revenue for the new funds, which are funded across two years, was increasing business taxes retroactively, after they were cut slightly, to goose up the economy. The Democrat's local aid package isn't tethered to any requirement that cities and towns provide property tax relief – meaning spending could be increased with the new money, essentially creating "new normal" budget levels at the local level, with no way to pay for them in the future.

Sununu appeared to attempt to get out in front of the local funding issues by writing directly to community leaders in early July and offering to meet with them to discuss why he vetoed the budget and explain his "Roadmap to Common Ground" proposals. The meeting – which was closed to the press – was scheduled to be held at NHTI on July 19, and then was changed a few days before to the Statehouse.

Just before the meeting, nearly 30 local officials, many of the Democrats, including Jim Donchess, the mayor of Nashua, signed a letter to Sununu urging him to reconsider his veto.

"When you vetoed everything from funding for substance use disorder treatment to investments in local education to municipal aid you left the people of New Hampshire wondering what will happen to services and programs they depend on, and left communities across the state unable to plan for their future," the letter stated. "We need to have a budget now to make sure our communities have the resources they need for the year ahead. We are asking that you come to the negotiating table immediately, willing to accept legislators’ compromise budget for the good of our communities."

After Sununu's meeting, 50 local officials, including Republican Franklin Mayor Tony Guinta as well as alderman, city councilors, selectmen, town councilors, and budget committee members, many of them Republicans, wrote a letter to House Speaker Stephen Shurtleff, D-Penacook, and Senate President Donna Soucy, D-Manchester, urging them to work with the governor to craft a "true" compromise budget.

"We all agree – it is important for our cities and towns that the state passes a budget," the letter stated. "But we also agree that Governor Sununu's veto contained very important points … we believe that he is right to oppose a budget that leaves taxpayers on the hook for a nearly $100 million structural deficit … we cannot go back to those days. Further, in opposing destructive tax increases, Governor Sununu has ensured that our economy will continue to grow and boost property values and provide for healthier revenue returns to our communities."

One other interesting piece of the budget standoff is that some officials appear to be attempting to do too much at once. While things are good in New Hampshire – we're considered one of the most livable states, our schools and education systems are consistently ranked in the Top 5 of the nation, unemployment is a measly 2.6 percent, and wages are rising – there are problems. Opioids remains a crisis. So does mental health. The state is aging. And, there are the education funding and spending issues.

Both the governor's budget and the conference budgets address these issues at different levels. House and state Senate Democrats are working as a team but even they are beginning to admit that their major funding increases leave a deficit – and "new normal" line item spending – for the FY2022-2023 budget. In an interview with New Hampshire Journal, state Sen. Lou D'Allensandro, D-Manchester, whose new memoir has a partial title of "Lion of the New Hampshire Senate," admitted that the budget, while balanced, was not sustainable due to increased education funding.

Dueling community leaders, funded – but mixed – priorities, with no end to the stalemate in sight, doesn't leave anyone in a comfortable position even though officials backed a continuing resolution – to fund the budget, at current levels, through October. The continuing resolution is actually returning surpluses to the state coffers – about $700,000 a day – so much that they offset some of the business tax cuts and the funds for cities and towns. It remains to be seen though if this good budgetary news – in the wake of a budget stalemate – will continue.

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