NH Budget Compromise Reached

A budget compromise has been reached between legislative Republicans and Democrats, as well as Gov. Maggie Hassan, D-Exeter, which basically preserves most everything everyone wanted, according to press reports.

Back in February, Hassan proposed an $11.5 billion budget which contained a 6.4 percent spending increase which most agreed by nearly everyone to be dead-on-arrival, since Republicans controlled the House and the Senate.

Some, including many liberty Republicans, wanted no budget increase at all, but they didn’t have the votes to sustain and contain spending. Other moderate and some conservative Republicans, however, eventually approved a $11.3 billion budget that preserved new fees as well as most of the spending that the governor wanted but also included new business tax cuts and removed raises for state employees, noting that 99 percent of what the governor asked for was in their budget.

Hassan vetoed the budget in June, and the Legislature approved a continuing resolution to fund the state government, at the previous level, until a compromise could be reached.

Republicans came back earlier this summer, after the governor signed the capital portion of the budget, and offered to put the state employee pay raises back into the budget. Hassan thanked the leaders for the proposal but ultimately rejected the proposal.

But as pressure began to mount on all involved, and a possible re-election announcement or U.S. Senate run announcement before the New Hampshire Democrat Convention this weekend, Hassan and the Democrats relinquished on their one sticking point – the business tax cuts – and Republicans also wiggled a bit by allowing a revenue trigger to be placed on the cuts.

“From the outset, my central concern about the Committee of Conference budget was that it included unpaid-for corporate tax cuts that would create a hole in future budgets, and over the last few months, we have worked with Republican leadership to address that issue,” Hassan said in a statement. “This agreement puts in place a trigger, ensuring revenues are at levels that would at least sustain the current budget before additional tax cuts go into effect. It will also allow the next legislature to determine what spending or revenue offsets should be made to pay for the second round of tax cuts – before they go into effect. While this agreement is not perfect and does not include everything that either side wants, it is a fiscally responsible, bipartisan, compromise path forward that includes business tax cuts while ensuring long-term fiscal responsibility and safeguarding our ability to support critical economic priorities.”

Democratic leaders in the state Senate said they would back the compromise.

“This is a good, hard-earned compromise,” said state Sen. Jeff Woodburn, D-Dalton. “Throughout the entire budget process, Senate Democrats have fought for a fiscally responsible budget that supports critical economic priorities for New Hampshire’s families and businesses such as combating the heroin crisis, higher education, roads and bridges, and health care. This bipartisan compromise allows us to cut business taxes while supporting these critical priorities, protecting our long-term financial outlook, and maintaining our commitment to our dedicated state employees.”

Republican leaders in the Senate also praised the compromise.

“This budget is a responsible budget that includes essential business tax reductions, protects taxpayers as there are no tax increases, but also meets the needs of our state’s most vulnerable citizens by fully funding critical service agencies, including substance abuse, mental health, developmental disabilities, and home health care,” said Senate President Chuck Morse, R-Salem. “Coming to terms on this budget with the Governor will enable the Legislature to override the veto during session tomorrow, which means our fiscally responsible budget will be enacted and will begin working for the state of New Hampshire.”

Senate Majority Leader Jeb Bradley, R-Wolfeboro, said the particulars came to fruition after “lengthy discussions” with Hassan and House leadership.

“The business tax reductions will be on an accelerated schedule and with revenue triggers that we believe are achievable over the next two years,” he noted.

The Business and Industry Association and the SEA/SEIU 1984, the state employee’s union, were also both pleased with the compromise.

“We applaud the governor and the Legislature for continuing to work together to arrive at this point,” said Richard Gulla, the president of the union. “We were confident that, in the end, ideology would take a back seat to this common sense approach that benefits NH citizens by preserving critical public services, while also serving the interests of our economy … While we are happy with this forward movement and support the compromise, we remain concerned about other outstanding issues. We look forward to continuing to work with our legislators to find reasonable solutions that are fiscally conservative and protect the state’s long-term financial outlook and ability to support critical priorities for New Hampshire’s families and businesses.”

BIA President Jim Roche noted, “New Hampshire employers not only have to struggle with some of the highest business tax rates in the country, but they are also having to contend with sky-high electricity costs, high healthcare and workers’ compensation rates, and other business challenges. While modest, any initiative that reduces costs to business, such as the tax reductions in the budget compromise, is welcome relief to New Hampshire businesses of all sizes. The ‘triggers’ for the second round of tax cuts are unfortunate, but we’re confident state revenues will meet the agreed-upon targets.”

Lastly, New Hampshire Republican State Committee Chairwoman Jennifer Horn, lashed out at the governor for “endlessly demonizing the Legislature’s fiscally responsible budget” in the first place.

“It is embarrassing that Governor Hassan has been forced to pressure her fellow Democrats in the Legislature to override her own veto of the state budget,” she said. “Instead of playing partisan games and bringing Washington, DC-style gridlock to New Hampshire, Governor Hassan should have worked across the aisle during the normal session instead of putting New Hampshire through months of fiscal uncertainty and depriving critical state services of necessary funding increases. Unfortunately, New Hampshire has paid the price for the governor’s failed leadership and politically motivated decision to veto the budget. A New Hampshire governor accepting the override of a budget veto is unprecedented, and Governor Hassan has been forced to do so just so that she can announce her plans to run for United States Senate.”