NH House, Senate Approve Continuing Resolutions On State Budget

CONCORD, NH — The House and state Senate approved a continuing budget resolution on Thursday to keep the state government open past the end of the fiscal year if and when a state budget compromise can't be reached. The continuing resolution was done to give Gov. Chris Sununu, R-NH, time to consider the conference committee budget and cover the state should he veto that budget. The continuing resolution – HJR 3 – was co-sponsored by state Rep. Douglas Ley, D-Jaffrey, and state Rep. Richard Hinch, R-NH, and will keep the state government open, at current levels, from July 1, through Oct. 1, 2019.

"The House and Senate have worked hard to build a balanced budget that addresses the concerns raised by the governor while tackling the important issues facing our state," noted Senate President Donna Soucy, D-Manchester, and Speaker of the House Steve Shurtleff, D-Concord, in a joint statement. "We are committed to ensuring that the citizens of New Hampshire and our dedicated state employees do not experience any interruption of programs or services. This continuing resolution, which the governor has assured us he will sign, allows the state to continue current budget spending levels for three months if Governor Sununu vetoes the budget."

Sununu said he was pleased to receive the continuing resolution legislation.

"We are committed to ensuring that the citizens of New Hampshire do not experience any interruption of programs and services while we continue to negotiate our next state budget," he said. "This continuing resolution will keep the current budget spending levels for the next three months, and I am pleased the Legislature is sending this to my desk."

The governor had promised to veto any budget with tax increases after both legislative bodies – controlled by Democrats – approved budgets with a new 5 percent capital gains tax and a 0.2 percent rolled back business tax break as well as half a billion dollars in new spending. He countered by unveiling a "roadmap to common ground" which proposed about two dozen areas that he said he was willing to compromise on.

Conference Committee Budgets Approved

On June 27, the state Senate approved, along party lines (14-10), the Committee of Conference Report on HB 1 and HB 2, the state's operating budget for FY2020-2021. The conference budget took out the capital gains tax but kept in other taxes – including the business tax rollbacks of from 7.7 to 7.9 percent in the business profits tax rate and 0.6 to 0.675 percent for the business enterprise tax. Those rollbacks to businesses amount to more than $90 million, according to Republicans. Other issues of concern for Republicans are a nagging structural deficit of $93.4 million at the end of FY2021 and the use of one-time funds for ongoing expenses.

"Should the economy take a downturn, the state will see a massive reduction in services and unprecedented layoffs – we cannot allow that to happen," Sununu added.

Democrats, however, disagreed, saying there was an urgent need for more spending for the opioid crisis, local aid, and other concerns. State Sen. Dan Feltes, D-Concord, said budget writers "negotiated in good faith" and address many of Sununu's concerns but "he keeps moving the goal post." Feltes said Democrats agreed to take out the capital gains loophole and paid family and medical leave insurance.

"Now it appears Governor Sununu is willing to veto a budget that has no new taxes, fully funds child protection and services for children in crisis, fully funds the waitlist for people with developmental disabilities, and provides over $200 million in property tax relief simply because the governor remains fixated on more giveaways for big, out-of-state businesses. New Hampshire deserves better than this reckless partisanship from Governor Sununu."

Holly Shulman, a spokeswoman for the New Hampshire Democratic Party, agreed with Feltes that Sununu was claiming he was working across the aisle but was offering "zero solutions" at the impasse.

"Sununu's veto would deny property tax relief, substance use disorder treatment, services for the developmentally disabled, and health care for Granite Staters who need it," she said. "We know that he's not serious about signing a budget, because he hasn't even hinted at what he would cut to pay for his tax breaks for corporations. Is it mental health funding? Is it substance use disorder treatment? What about his own pay raise?"

'Property Tax Relief' Or More Spending?

The conference committee budget though doesn't actually guarantee "property tax relief" to any community. What it does is offer millions of dollars more from the state to municipal and school budgets for local communities to do with how they please. That might be lowering or stabilizing property tax rates for two years. And, it might not.

Not unlike the FY2012 education stabilization grants – which added millions more to school budgets with small decreases annually across 25 years, to allow districts to work to address cost savings locally in the wake of declining enrollments – cities, towns, and school districts could just spend the extra money, call it the new "normal," and deliver no property tax "relief" at all.

As an example, Concord is slated to receive $1.3 million on the city side of the ledger with Penacook receiving $197,634 - about $750,000 annually each year, for two years. Concord schools will receive $2.2 million across two years while Penacook, which is in the Merrimack Valley School District, would receive $1.5 million.

The municipal side of the funding amounts to about a 2.5 percent tax increase so there is a possibility that property taxpayers in the city might not see in an increase – or would see a smaller increase – with that amount of money across two years. Any new business rollback tax increases could potentially trickle down to customers seeing higher costs – just as the property tax rates might stabilize consumer costs.

This year, the Concord School District increased spending by $1.5 million or around 2 percent to nearly $85 million for FY2020. Budget increases for SAU 8 have been in the 4 to 6 percent range during past years – so FY2020 is on the low side.

Unlike the municipal money, which is split 50-50 during FY2020-2021, the education aid is split at varying amounts. For Concord, Democrats in the Legislature are proposing awarding $666,616 for the FY2020 budget that has already been set and another $1.5 million for FY2021. In other words, if the school district raises taxes by more than 2 percent again next year, there will be no property tax relief.

Penacook's money for the Merrimack Valley School District is split in a similar fashion: $251,542 for the budget that has already been approved and $1.26 million for FY2021. The MVSD budget continues to increase by large proportions each year with Penacook residents paying higher property taxes than other Concord residents due to limited commercial and retail property tax revenue. So, it is an unknown whether or not there will be relief under the Democrat's plan.

Some Communities Will Even See Cuts

Seacoast communities, however, will see decreases under the plan.

Portsmouth's schools will receive $335,320 less in the Democrat's revenue sharing plan. Hampton schools will see $179,366 less and North Hampton will receive $78,418 less than it will in the previous budget, according to the documents.

Nashua is slated to receive $3.76 million for the municipal side and $5.16 million for the school district. Milford schools are scheduled to see a whopping $2.14 million more under the plan.

Most Patch communities will receive between $54,000 and $550,000 across two years for municipalities with schools receiving $72,000 to $683,000 more meaning that it's not much tax relief at all.

While there were enough votes to repeal the governor's veto of the death penalty, there are probably not enough to repeal a budget veto, since Democrats only have a four vote majority in the Senate – meaning they need two Republican votes.

Regardless of the final budget that is approved, it will be one of the most expensive in the history of New Hampshire.

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