5 Things You Need to Know About the Stalled State Budget

Thanks to Gov. Sununu’s veto of HB1 and HB2 (not an uncommon occurrence these days) New Hampshire is now entering its third week without a budget for the 2019-2020 biennium. The good news? There appears to be some movement towards a compromise. The bad news? If posturing and gamesmanship emanating from the governor’s office could somehow be converted into snow, we’d by plowing six foot drifts of the stuff in 100 degree heat.

Here are 5 things you should know about the current budget impasse.

1. State agencies will continue to provide services and won’t shut down. To avoid a state government shutdown in the event of the budget being vetoed by the governor, the House and Senate passed a joint continuing budget resolution. This temporary extension of the previous budget ensures state agencies can continue to operate while negotiations take place.

2. The deadline to reach an agreement is October 1. That’s when the continuing budget resolution expires. Worth noting is that historically when other governors have vetoed the legislature’s final budget, a compromise has ALWAYS been reached well before the deadline.

3. The governor’s veto puts many New Hampshire communities in a bind. Without knowing precisely how much funding to expect from Concord, it’s impossible for communities to know whether to adjust local tax rates up or down. While the vetoed House and Senate budget included property tax relief in the form of revenue sharing dollars and well as new funding to help property-poor communities with their public school funding crisis, the continuing resolution includes none of this money. In fact, the public school funding crisis in many cities and towns will only get worse because the current school funding law remains in effect. Under this law, passed by the 2012 legislature, education stabilization grants are scheduled to be reduced another 4%. When you add it all up, it means that unless the governor doesn’t have a change of heart, many communities will be forced to send out tax bills that could have been much lower without the veto.

4. Contrary to what you may have been hearing, the final budget sent to the governor was a balanced budget. It does not (as the governor claimed in a private conference with municipal officials that legislators were not invited to) contain a “$93 million dollar structural deficit”. The New Hampshire Constitution requires the legislature to deliver a balanced budget to the governor. That’s exactly what the legislature delivered.

5. A state budget is a reflection of the the values and priorities of the people who put it together. The budget that the legislature sent to the governor was the first state budget in over 30 years to aggressively take on long-term problem issues like public school funding, declining mental health services, and lack of income security for working families. Rather than kick these issues down the road, we faced them head-on. In the end, we delivered a balanced budget that not only addressed them, but we did it without the need to implement a broad-based sales or income tax. For the governor, the main problem is the way we did it. The budget he vetoed would have generated needed revenue by freezing business tax rates at 2018 levels, halting reductions taking effect this year and in 2021 under current law. Ironically, many people in the business community believe that structural changes in the vetoed budget would be more beneficial to New Hampshire businesses than another round of tax cuts, which mostly benefit out-of-state corporations.

While some level of compromise will be needed to end the impasse, here’s the bottom line: any “compromise” budget that takes money away from our schools and communities and keeps shuffling it off to out-of-state corporations will not be getting my vote.

It’s just that simple.

For more information on the stalled state budget, listen to The Exchange on NHPR.