By PAULA TRACY, InDepthNH.org
CONCORD – Gov. Chris Sununu is proposing the largest pay increase in almost 50 years for all state workers, a major change in the formula for school district aid targeting the poorest communities, and no new taxes as part of his pitch for a new, two-year budget.
Sununu gave an overview Tuesday in his budget address of what he would like to see in the next two years to a joint session of the state House and Senate but acknowledged it’s a team effort to come to an agreement by July 1.
“Good luck. It’s not going to be easy. We’re going to get this thing done,” Sununu concluded.
Budget writing comes at a very good time financially when the state is flush with cash.
He is offering a budget that is up 12 percent, and $3.7 billion over the current spending.
In Fiscal Year 2022, there was a $253 million operating surplus. In the fiscal year 2023, there is a $330 million operating surplus.
Of that $580 million, only about $265 million has been allocated through legislation including the utility relief bill and local pension funds.
The governor is also proposing $224 million in one-time funding for affordable housing in the Invest NH fund; $50 million for the new men’s prison in Concord of which $10 million will come from the surplus and is not anticipating new revenues over the biennium.
If revenues remain flat he can achieve all that he has laid out in his 30-page budget summary.
The House will have its own budget bill and so will the Senate and the three will have to reconcile.
Every state department will see a budget increase of about 12 percent on average, which includes wage hikes.
Perhaps the biggest news was for state employees and local communities struggling to pay for schools with the little tax base.
STATE EMPLOYEES
All 10,000 state employees would see a 10 percent raise in July and an additional 2 percent raise next July, which has been through the collective bargaining process, under the governor’s budget.
In all it means an increase of $100 million spent over the biennium.
Currently, there is a vacancy rate in state jobs at 20 percent.
“This budget changes that,” he said.
Rich Gulla, president of the State Employees’ SEA/SEIU Local 1984 strongly supported the focus the governor’s budget has on workforce retention.
“We are looking forward to supporting the historic and meaningful raise for state employees in Governor Sununu’s budget every step of the way,” Gulla said. “We have survived the global pandemic together, and we are very thankful that the Granite Stater’s tireless and steadfast efforts are being recognized in this budget. We also wholeheartedly agree with Gov. Sununu that New Hampshire’s workforce runs the most efficient government in the country. It is a fact in which we should all share the pride and profound respect.”
SCHOOL FUNDING AID
Sununu is proposing a reform in the way the state funds schools.
He said the current formula is “overly complicated and fundamentally imbalanced, creating an unspent surplus each year.”
Traditionally there have been three portions of the state formula for adequacy grants: a base rate, free and reduced lunch rates, and stabilization grants.
The problem with the stabilization grants has been that they are based from outdated data on enrollment and property value data, staffers argue.
What Sununu is proposing is reducing and eliminating the stabilization grants and replacing it with a new formula.
Under the plan, no community would lose money in the base.
“We start by increasing both base aid and free and reduced lunch by approximately 25 and 30 percent respectively over just this biennium,” he said.
Currently, every two years the state adjusts the grants for inflation to the CPI but this plan would adjust every single year by going up automatically 2 percent as a floor.
“Overall, New Hampshire schools will see an additional $200 million over the next two years – and an additional $1 billion over the next 10 years – all with a priority towards school districts that need the aid the most,” Sununu said.
The changes, he said will also have the effect of increasing funding to charter schools and doubling the opportunity for “our very successful Education Freedom Accounts…We have an obligation and opportunity to give families the ability and freedom to chart their own path forward.”
The plan, similar to a bill under legislative consideration looks to change the formula in some cases to allow more children who are homeless and being bullied in their current schools to apply for their families to apply for the grant to go to another school.
STREAMLINE LICENSING
Sununu is proposing cutting a bunch of red tape with a major overhaul of the professional licensing requirements, by centralizing the Office of Professional Licensing and Certification and making it easier particularly for those from out of state who want to move here to do business. It will be a type of reciprocity similar to a driver’s license from another state.
Specifically, it looks to remove 34 outdated licenses from the state government and eliminate 14 regulatory boards and almost 700 statutory provisions.
MEDICAID RATE INCREASE
To help the state’s medical system which has had to deal with a pandemic the past three years and is struggling with costs and vacancies, Sununu called for Medicaid rate increases for services at 3 percent.
CUT TAXES
The 7 percent tax on two-way communication could be eliminated under the governor’s budget.
It is a tax that Sununu calls “regressive” because it disproportionately impacts those who are least able to pay. If eliminated from his budget it would reduce revenues by $28.6 million.
NO MONEY FOR A GONDOLA OR A TRAMWAY BUT $1M TO STUDY MOUNT WASHINGTON STATE PARK ENVIRONMENT
Sununu offered no funds for a replacement of the Cannon Mountain Aerial Tramway but there is a Senate Bill, SB 55 which seeks $25 million in surplus for a tram. The governor prefers a gondola.
The Department of Natural and Cultural Resources sought funding for a study of the environment at the top of Mount Washington and the governor’s budget earmarks $1 million for that purpose.
CAPITAL BUDGET
The governor is proposing a capital budget of $129 million which will all be financed at about 3 percent rather than funded by cash. The economy has remained strong and rates are at acceptable levels with the state enjoying an AA+ rating, officials said.
NATIONAL IMPLICATIONS
Sununu, a Republican, has said he is considering a run for President of the United States.
His budget message had a bit of the same national message he is trying to convey, that New Hampshire is a leader and that his experience could make him an effective national leader in Washington.
“This budget reminds businesses across this country that New Hampshire remains a hub of innovation. Here in the Granite State, we listen to and work with the businesses that are the bedrock of our communities.”
He also said, “Washington is broken. They cannot balance a budget, and they can barely manage to fund the government — but that’s not how we do it in New Hampshire. Our citizens demand accountability and transparency — and that’s what we are going to continue to deliver.”
APPLAUSE LINES
Sununu’s 30-minute remarks received applause for the phasing out and elimination of the state interest and dividends tax, a commission to create a statue on State House grounds for the late teacher astronaut Christa McAuliffe with a $500,000 budgeted amount, overhaul and deregulation of the Office for Professional Licensure and Certification and increasing the rainy day fund for the future by $180 million.
After the address, Senate President Jeb Bradley, R-Wolfeboro, called it Sununu’s “business friendly” budget that is consistent with the past six years of his governance and said the details will be worked out over the next few months.
“Look, the governor has done a great job in three budgets managing state affairs, making New Hampshire more competitive for business, lowering taxes, balancing our budget, restoring the rainy day fund, encouraging the economy to grow and this budget is no different. I think it is great. We are going to try to address education funding and move up adequacy. I think that will be property tax relief across the board. I think his effort to streamline OPLC is going to make a huge difference in terms of trying to attract professionals, particularly health care professionals to come to New Hampshire and work here,” Bradley said.
“I think it is a great start and we are looking forward to what the House sends us, and the Senate will obviously have its prints on the budget, too.”
House Democratic Leader Rep. Matt Wilhelm, D-Manchester, released the following statement:
“Granite Staters deserve a budget that puts their needs first – not one filled with partisan policy priorities as we saw last session. Today’s budget address included opportunities for collaboration like investing in our workforce and addressing New Hampshire’s affordable housing shortage.
“However, the continued insistence on downshifting costs to our municipalities, providing tax cuts to the wealthy and multi-national corporations, and sending public dollars to private, religious, and homeschools must be addressed. Today was an important first step in the process. House Democrats look forward to working with the Governor and our colleagues to craft a budget that gives all Granite Staters an opportunity to succeed.”
The Senate Democratic Caucus issued the following statement:
“We are pleased with some of the initiatives that Governor Sununu announced today in his budget address, like the raises for state employees. It is unfortunate though that many of the rest of the Governor’s priorities are so out of touch with the true needs of Granite Staters. The people of New Hampshire want fully funded public education, protections for reproductive health care freedom, and the prioritization of economic relief for everyday New Hampshire citizens.
“Over the course of the next few months, Senate Democrats will work with our colleagues across the aisle to ensure that efforts to address our skyrocketing property taxes are reflected in the actual lowering of property tax bills. Further, although the Governor failed to mention it, we know that our residents are facing astronomical electricity costs that are hurting their bottom lines and our economy. Our Caucus is painfully aware that Granite Staters are being hit from all sides with higher costs and we pledge to work on evidence based solutions, while also protecting our fragile environment and Granite Staters’ wallets.
“Senate Democrats will work to pass a clean budget in the best interest of all Granite Staters, free of the political ploys that we have seen in the past under Republican leadership – a budget that reflects the Governor’s calls for bipartisanship,” the Senate Democratic Caucus said.
Amplify New Hampshire, a nonprofit founded to keep Granite Staters informed, reacted to the budget address.
The group’s NH Executive Director Craig Brown said, “Governor Sununu’s budget priorities make it crystal clear that he is motivated by partisan political interests that will help his Republican presidential campaign at the expense of New Hampshire.
“Governor Sununu’s budget continues to give massive tax breaks to the wealthy and large corporations and downshift costs to cities and towns instead of helping hardworking Granite Staters deal with rising costs. His budget shows us his priority is to appeal to national Republican donors and special interests that will fund his presidential campaign.”
“Now, enough is enough. Republicans in the legislature need to stop being co-conspirators in this Sununu grift and stand up for their constituents instead. While the Governor is off selling himself to national special interests, someone needs to be looking out for New Hampshire. We will be watching and ready to hold them all accountable.”