By GARRY RAYNO, InDepthNH.org
CONCORD — Democratic leaders on Friday said Gov. Chris Sununu ought to be thanking the Biden administration and the state’s Democratic Congressional delegation for shoring up his proposed budget with $445 million in federal funds.
That is the estimate New Hampshire state government would receive under the latest pandemic relief package currently making its way through Congress.
As you might expect, Democratic leaders in a press conference had concerns about Sununu’s proposed $13.8 billion, two-year budget the House Finance Committee begins to refine next week.
They all said the “devil is in the details” which will not be known until House Bill 2 is released next week, which contains the changes in law needed to implement the budget.
Of major concern to Democrats is downshifting of state costs to local property taxpayers, although Sununu said in his budget address the day before there is no downshifting in his budget and instead there is additional money for cities and towns.
They were also concerned about the tax cuts he proposes, using $30 million of the state’s rainy-day fund to balance the budget, education funding and the mental health system especially children’s emergency services.
House Minority Leader Renny Cushing, D-Hampton, said Democrats in the House and Senate are united.
“Our commitment is to stop downshifting onto the local communities,” Cushing said. “We want to force the governor to have a conversation about tax relief for property taxpayers. Property taxes are the largest broad-based tax we impose on New Hampshire citizens.”
He and Rep. Mary Jane Wallner, D-Concord, the ranking member on the finance committee, both were concerned Sununu’s budget proposal does not include the additional $138 million in new state education aid included in the current biennium budget which ends June 30.
“Last year the governor went around the state with Publishers Clearing House, large-sized checks,” Cushing said, “that Democrats provided in the budget.”
The governor will not be making a tour this time, Cushing said, and if he does he will be delivering bills instead of checks.
Senate Minority Leader Donna Soucy, D-Manchester, said she was pleased Sununu took up her suggestion to increase the threshold for filing and paying the business enterprise tax.
Increasing the threshold from $107,000 to $250,000 is expected to free 30,000 small businesses from having to file a return or pay the tax.
But Soucy did question if Sununu would continue the $40 million in revenue sharing with cities and towns Democrats included in the current budget.
Sununu proposed lifting the cap on the rooms and meals tax revenue that goes to cities and towns, which is projected to provide about $15 million in additional money.
Soucy was particularly concerned about Sununu’s proposal to merge the university and community college systems.
“So much work has been done over the last 10 years to have greater communication between the two systems,” Soucy said. “It is unclear if that will be maintained in the merger process.”
Sununu said the merger is intended to be seamless for students so they can utilize different campus offerings to obtain the degree they seek.
He also said with declining enrollment both due to the pandemic and demographics, it makes sense to have all 11 institutions in the two systems working together and not competing with one another.
Wallner said while cutting the rooms and meals tax from 9 to 8.5 percent would save someone five cents on a $10 sandwich, it would reduce state revenue by $12 million to $13 million.
The state’s child-care budget is about $11 million, she noted.
Wallner was also concerned about Sununu’s plan to phase out the interest and dividends tax over five years saying it provides $200 million every biennium. “That is a huge hole going out into the future,” she said, noting there are no details about how he plans to eliminate the tax. “We really need a lot more information.”
Sen. Cindy Rosenwald, D-Nashua, who is on the Senate Finance Committee, was concerned about mental health services.
She noted there are a record number of children waiting in hospital emergency rooms around the state for in-patient psychiatric beds.
According to National Alliance of Mental Illness NH there were 44 children and 41 adults in hospital emergency rooms waiting for in-patient psychiatric beds earlier this week.
Rosenwald said the governor talked about increasing the resources for mental health care after a crisis has occurred.
“We pay a very high rate for those beds,” she noted.
Boarding mental health patients in crisis in hospital emergency rooms has been an ongoing issue for years. The state upped the reimbursement rates for hospitals in order to increase capacity and converted the Philbrook Center on the New Hampshire Hospital grounds into a receiving facility to help reduce the emergency room waits.
Rosenwald was also concerned about Sununu’s plan to use $30 million in surplus Education Trust Fund money for capital projects.
She said that is the wrong way to address the education funding issues.
“You’re struggling to pay your mortgage on your house,” she said, “and we’re offering to help you build a patio.”
Rosenwald said using $30 million from the rainy-day fund to help balance this biennium’s budget will draw down the state’s savings account below the $100 million threshold bond rating agencies like to see.
That could raise the cost of borrowing, not only for the state, but for cities, towns and school districts, she noted.
Currently the rainy-day fund is at its legal limit of $115.5 million.
She said his budget proposal does not return the rainy-day fund money during the next biennium.
Sununu did not mention using rainy-day fund money during his budget address, but he did propose doubling the cap on the rainy-day fund from 5 to 10 percent of revenues as a way to better prepare for the future in light of the coronavirus pandemic that upended the state a year ago.
During his budget address, he touted his administration’s management of the budget to prevent a significant deficit at the end of the biennium in June. He predicted it would be less than $50 million when this spring projections were $350 million.
One of the things he said he ordered was a hiring freeze along with eliminating spending on non-essential services.
On Friday, Sununu issued executive order 84 which lifts the hiring freeze.
Sununu’s proposed $13.8 billion operating budget represents a 5.6 percent increase over the current budget ending June 30.
In general and educational fund spending, Sununu’s proposed budget would spend $5.45 billion, a $41 million decrease from the current spending plan.
“Unlike other states across the country, which are now raising taxes on businesses, taxing out-of-state workers, or enacting draconian budget cuts to cover their massive deficits,” Sununu said. “New Hampshire managed to mitigate the worst financial impacts of the pandemic without raising taxes.”
Sununu and his budget team will present his proposal to the House Finance Committee at 2:30 p.m. Wednesday in a remote meeting.
Garry Rayno may be reached at firstname.lastname@example.org.