By GARRY RAYNO, Distant Dome
For over a decade, the mantra has been no new taxes or increases in rates.
The real plan has been cut taxes and that has been what Republican majorities in the Legislature have been doing with the blessing of former Gov. Chris Sununu and current Gov. Kelly Ayotte, who in her State-of-the-State address received a knowingly cheap applause line with her call for no new or increased taxes.
Over the past 10 years Republican majorities have merrily reduced state taxes and eliminated the state’s one levy that taxes wealth, the interest and dividends tax.
The reduced taxes do not benefit everyone, in fact they almost uniformly benefit a small portion of the state’s population while they reduce the state’s capacity for good governance.
The taxes cut were the business profits tax, which is largely paid by multinational corporations, and the business enterprise tax, which is largely paid by large corporations and not small businesses or mom and pop operations.
The interest and dividends tax, which was paid by the top 10 percent of the state’s wealth holders, was eliminated, tossing away more than $150 million a year.
The New Hampshire Fiscal Policy Institute estimated the tax reductions over the last decade eliminated more than $1billion in revenue that could have flowed into the university and community college systems so the state’s young people and their parents would not have to pay the next to highest in-state tuition in the country or public schools so everyone’s property taxes could be lower.
The GOP lawmakers also cut the rooms and meals tax by .5 percent, which saves you pennies on the meal you had at the local dinner and maybe a little more at the bistros and high end establishments, but who goes to those? Oh yeah, the wealthy.
There are many places the state could have invested that money including education, elementary, secondary and post secondary; healthcare for the poor so they do not have to pay premiums and higher co-pays as they do this fiscal year and next; special education offsets for local communities; revenue sharing with cities and towns, and again paying a share of the retirement costs for teachers, municipal and county workers, police and firefighters.
Instead a lot of that burden has been shifted to the local property taxes.
And it could have been used for needed municipal infrastructure, i.e. water and sewer which is the real barrier to additional housing not zoning and planning regulations.
New affordable housing cannot be built if the town’s sewer system is at capacity or the water system is barely meeting demand in summer months.
Improvements to those systems are very expensive and the question is who should pay for it: those already on the system, the developer or the entire community.
This is the slumming down of the state which has been going on for the last decade as the education systems, the cities, towns, school districts and counties know too well. The only thing not “slumming down” are the housing prices which continue to rise.
And state residents are going to see a very appreciable change in the coming years to the state’s transportation infrastructure.
While the gas tax was increased in 2014 by 4.2 cents to 22.2 cents per gallon, it was not made permanent, and was increased to finish the I-93 expansion project from Salem to Manchester.
Along with the gas tax, the state — with the help of former US Rep. Annie McLane Kuster — took out a Transportation Infrastructure Finance and Innovation Act (TIFIA) $200 million, low-interest loan so funding of the local betterment and bridges programs could go forward at their current levels while the transportation money was vacuumed up for the expansion.
The state only had to pay the interest on the loan for 10 years but this fiscal year the state had to begin paying it off which is about $23 million annually.
The other revenue source for transportation is tolls and they have not been raised since 2007.
Increasing tolls was discussed during the Governor’s Advisory Commission on Intermodal Transportation meetings last year but was ultimately rejected as a way of funding the state’s Ten Year Transportation Improvement Plan.
Ayotte sent the plan the commissioners approved to the legislature without any changes.
That plan has been described as “fiscally constrained” for a number of reasons including the flat funding of federal highway funds under the “One Big Beautiful Bill” passed by Congress last year.
But the state has another problem which is it does not have the cash to match federal funds for projects and has been using Turnpike credits for maintaining the federal turnpike system.
But transportation officials note with a flat revenue stream for turnpikes, the payback of the TIFIA loan and the gas tax increase about to end unless lawmakers act in the next couple years, they face a significant shortfall not just out into the future but in the coming years to match the available federal funds.
In the Commission’s transmission letter to the governor, they note $300 million in federally funded projects had to be deleted from the 10-year plan because the state cannot come up with its needed match.
Also some turnpike projects were initially removed from the plan as well including three very large projects in Manchester and in Bow and Concord that have been on the table for years, but the state has not been able to fund them because it lacks revenue.
Despite this, the commission, which is composed of the five executive councilors and the DOT Commissioner, voted to return the two Manchester projects to the plan that had been deleted.
The $157 million project would widen the Exit 6 area or the Amoskeag Bridge exit on I-293 and and the $75 million would expand Exit 7 on the same highway.
The commission voted not to return the Bow through Concord I-93, I-89 expansion project costing about $500 million to the 10-year plan.
That caused District 2 Executive Councilor Karen Liot Hill, D-Lebanon, to file a minority report on the state’s 10-year plan.
The plan the commission approved is $400 million more than the revenues to support it, even without the Bow-Concord project.
“In my view, this action raises two significant concerns: lack of fiscal responsibility and unfair treatment of equally important communities,” Hill wrote in her minority report.
“Restoring one Turnpike System project while leaving another similarly situated project unfunded raises serious concerns about equity, consistency, and regional fairness,” she wrote, and she might have added partisan to the list as she is the only Democrat on the council and Concord is in her heavily Democratic district.
According to the governor’s transmission letter to the legislature she wrote “The proposed strategies for the Draft Ten Year Plan included a focus on maintenance and preservation of the existing road and bridge network, continuing to invest in core system and mandated programs (e.g. paving, bridges, safety, culverts, etc.), continuing locally managed projects already in the Ten Year Plan, and then proposing the delay and/or removal of Department managed and Turnpike capital projects with the anticipated projected revenue to be available.”
In other words, that local road with all the potholes is not likely to make the list so it is another set of ball joints and another set of tires before the state can find the money.
All this hold-the-line-on-taxes and no-new-taxes can last only so long before the state looks more like Arkansas than Vermont or Maine.
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.