By GARRY RAYNO, Distant Dome
“And if she acts that way
It’s ’cause you’ve had your day
Don’t put her down, you helped put her there”
This Hazel Dickens song is about a woman mistreated by a judgmental man as she longs for his attention.
She may not look the best and sometimes her behavior is not perfect, but “She hangs around/Playing her clown/While her soul is aching inside.”
In her way, she is similar to the budget proposal the Republican Majority on the House Finance Committee approved Thursday without any support from committee Democrats.
In broad terms, the very people who had to make the decisions for the draconian cuts in the proposed budget are the ones who helped put the committee in its awkward position.
Let’s begin with the obvious, the multitude of rate cuts for the business profits and enterprise taxes which began a decade ago.
The business profits tax rate in that time was 8.5 percent, the highest in New England, and is now 7.5 percent.
The business enterprise tax rate was cut from .75 percent to .55 percent, and the threshold for paying the tax was raised to its current limit or $298,000 of gross receipts from all activities, or an enterprise value tax base of more than $298,000, freeing all those businesses below that threshold from having to file or pay a tax.
For the current 2025 fiscal year the business profits tax is anticipated to produce $881.3 million and the business enterprise tax $377.7 million, although combined they are about $130 million short at the end of March.
A report by the NH Fiscal Policy Institute released last week indicates that over the last decade the rate cuts have reduced state revenues by between $795 million to $1.17 billion.
Business organizations asked the state to reduce the rates in 2015 to be more competitive with surrounding states, but did not actively seek further reductions, but certainly did not turn them down.
And last year, lawmakers ended the interest and dividends tax which the year before produced $184 million.
The bulk of the business profits tax is paid by large multinational conglomerates and the vast majority of the interest and dividends tax is paid by the wealthiest top 10 percent of the state’s citizens.
In 2021, the rooms and meals tax (the state’s second largest tax source) rate was reduced from 9 percent to 8.5 percent.
Revenue from the rooms and meals tax not only funds general state government but some flows to tourism promotion and while once 40 percent was the benchmark, from 2023, 30 percent goes to revenue sharing with cities and towns based on population.
We’ll return to those two areas later.
Together that is a lot of money that could be providing additional services to the poor, infirm and disabled not to mention public education aid or special education services.
And at the same time, business taxes have been slowing down as have other sources of money for the state like the tobacco tax, revenues from liquor and beer sales, and real estate transactions.
Being Republicans, increasing tax rates or new taxes never was a consideration, but to make up some of the revenue shortfall, House Finance decided to increase every fee imaginable from motor vehicles to fish and game licenses, from the Department of Transportation to the Department of Environmental Services, and even the fee to bury a body at the state veterans’ cemetery is raised from $350 to $450.
They drained the renewable energy fund to add to the general fund and took a 5 percent administrative fee from all dedicated funds and even adjusted the percentage of key revenues that goes into the Education Trust Fund.
And they suspended the revenue sharing from the rooms and meals tax for a year, which means your property tax will have to pick up the $30 million now free to cover other state expenses.
Also suspended is the school building aid program except for “the tail,” and most of the money for tourism and travel promotion, something that could have helped the hospitality industry as Canadians cancel their New Hampshire vacations.
The student loan payback program to entice nurses and other medical workers to go to the North Country or other rural, poorly served areas was also suspended as was the opioid abatement program and Planned Parenthood funding, all to save money for other state expenses deemed more important.
The committee also removed the opt out provision for cities and towns that did not want Keno in their communities, another strike to local control to go along with the statewide cap on school district budgets that is in the budget package.
And to future increase state revenue the committee approved the change over from historic horse racing on video terminals to full-fledged slot machines at the charity gaming facilities around the state.
Looking at the overall numbers, the budget approved by the finance committee Thursday the House will vote on this coming Thursday, spends $16.2 billion over the two-year biennium from all revenue sources, and $5.6 billion in general funds including the Education Trust Fund.
Gov. Kelly Ayotte’s budget proposal spends $15.9 billion in total funds, and $6.2 billion in general funds.
In the current biennium, the state budget spends $15 billion in total funds and $6.24 billion in general funds.
The budget the House Finance Committee approved, despite the draconian cuts, is estimated to have a $113 million surplus which will go into the rainy day fund at the end of the next biennium, which budget writers believe will help offset some of the $149 million the House budget draws down from that fund to balance the budget.
And even with the budget challenges, Republican budget writers increased spending on the Education Freedom Account program by $30 million more than the governor, and increased state aid to charter schools by $20 million more than the governor.
Public schools receive almost no additional money the first year of the biennium and about $27 million in the second year for special education services, something long overdue.
Given the grave outlook for revenues, it would have been more fiscally responsible to put off expanding the EFA program or funding new charter schools, or even the special education increase, but Republican lawmakers did not and instead decided to charge premiums to parents of children in the Medicaid program and to those in the Medicaid expansion or Granite Advantage plan of no more than 5 percent of their earnings, and to institute co-pays for medications.
House budget writers decided to recoup $52.5 million by reducing Medicaid reimbursements to providers by 3 percent just a year after increasing provider rates.
They cut spending on developmentally disabled services and mental health care and expect the Department of Health and Human Services to find cuts worth $23 million in each of the two years of the next biennium.
They also want to sell Tirrell House and the Philbrook Center which serves as transitional housing for those leaving the New Hampshire Hospital, the lack of which has kept people in the facility for longer than necessary and prevented new patients from entering so they are boarded in hospital emergency rooms, which raises private insurance premiums.
The University System of New Hampshire took a 4 percent cut in Ayotte’s budget, but Republican budget writers decided to reduce state aid by $40 million a year, but then added $15 million a year from the state college education savings program run by Fidelity which used to provide scholarships for low-income students through the Governor’s Scholarship Program.
They cut hundreds of vacant positions across state government as well as eliminated hundreds more of unfunded positions.
And the proposed budget would eliminate many boards and agencies such as the State Council for the Arts, and the state match for federal funding for the arts, the Housing Appeal Board, the Human Rights Commission, the Tax and Lands Appeal Board and the Children’s Advocate.
Who is going to take over the oversight responsibilities?
None of the members of the House Finance Committee like what they had to do, but remember, as the song says “Don’t put her down, you helped put her there,” as all those GOP tax cuts come home to roost.
Garry Rayno may be reached at garry.rayno@yahoo.com.
Distant Dome by veteran journalist Garry Rayno explores a broader perspective on the State House and state happenings for InDepthNH.org. Over his three-decade career, Rayno covered the NH State House for the New Hampshire Union Leader and Foster’s Daily Democrat. During his career, his coverage spanned the news spectrum, from local planning, school and select boards, to national issues such as electric industry deregulation and Presidential primaries. Rayno lives with his wife Carolyn in New London.