New Hampshire Budget Updates

By Kary Jencks and Karen Kelly, NH Citizen's Alliance

Over the past several weeks, we have been referring you to the NH Fiscal Policy Institute for more explanation of the impact of the budget proposals. This week, we have explanation from Kary Jencks and Karen Kelly from NH Citizen’s Alliance explaining the Alliance’s analysis of the budget.


Reduction of Business Tax Cuts:

·        As of 5/26/15 The Senate Finance Committee has voted to cut business taxes to the benefit of big business and the detriment of NH’s majority of businesses: small businesses and working families.

·        While the cuts were not as severe as originally proposed, these cuts represent serious cuts - $14 million to NH’s largest source of revenue!

·        This first cut for 2017 is just the first phase.  When fully phased in the loss of revenue will be more than $80 million per biennium.

·        Business taxes provide one quarter of the State’s total revenue.  When we are slashing important programs for the people of the state, why would we also cut revenues even further, if not to benefit big businesses.

·        Supporters of cutting business taxes believe that doing so will bring job growth.  In a report on NHPR on 5/27/15 Republican Senators who passed the cut said that they believe that by the next budget in 2 years NH    will see revenues from business increase beyond the $14 million due to businesses coming into the state. 

·        Supporters of the cut believe that it will make NH more business friendly.  However, businesses who oppose these cuts have done the math and realized that the difference to them is minor and would not make a difference in their decision to do business in NH or not.  There are far more impactful issues that determine the business climate – such as cost of energy.

·        Granite Staters need to hold law makers accountable.  There have been at least 11 previous tax cuts to business since 2011.  Do we have evidence that business growth has increased?  We cannot let one more big tax cut to big business go unnoticed. 

·        NH Health Protection Program (NH’s Medicaid Expansion):

·        This program for people under 133% of the federal poverty level (FPL) – more than 38,000 Granite Stater - must be reauthorized by 12/31/16 or it will go away.  The Senate is talking about leaving the reauthorization to the next session in the busy year of 2016.  If it is not reauthorized everyone under 100% of the FPL will lose their health care with no choice but emergency room visits since they do not even get the discounts that are available to those between 100-138% FPL.  That means cost goes up again for everyone. 

·        The NHHPP has been working.  Emergency room visits for the uninsured have gone down which means there is much less cost shifting which impacts premiums for everyone else.

·        If the NHHPP is not reauthorized NOW then it will be back to square one with NH insures having to scramble to have plans in the marketplace and available for both  marketplace and NHHPP users.

·        Opponents of reauthorization cite their fear that the federal government will renege and that NH would have to pay more than the 10% required beginning 2017 which would cost the state $12 million.  There is no basis for this fear.  Furthermore, the reduction in business tax passed in the Senate Finance Committee cuts $14 million revenue which is more than the $12 million that is needed to keep the NHHPP going.

·        The return on NH’s investment in 2017 of $12 million gains the state $200 million in federal funds in the latter half of fiscal year 2017 alone


·        So far the budget process is allocating funds to the University System of NH at funds 22% LESS THAN the amount allocated in 2010-11.

·        NH is continuing with both short and long term trends that are nearly the worst in the nation for supporting public higher education. 

·        Our young people are finding less expensive options for education out of state and then are not coming back. 

·        This lack of support for education contributes to an exodus of our young people leaving the state – creating a brain drain and accentuating the coming silver tsunami.  This aging of the people of NH impacts the state’s needs and expenses across the board and even impacts our property tax issues as we need to address elderly population needs.  

·        Do we have a revenue problem or a spending problem?

·        Many agree that we have a revenue problem and that cuts to spending mean cuts to essential services.  These loss or lack of services result in further decline in the wellbeing of our residents and generally cost the state – all of us – more and more.  For example, NH has a heroin problem as well as other drug, alcohol and mental health needs for which we do not support adequate services.  This lack impacts individuals’ ability to live productive lives as contributing citizens, fills our prisons and more. Thus this decision NOT to provide effective services is penny wise, pound foolish. 

·        A revenue problem at the state level generally results in more burden on the local level and higher property tax because, not even considering needed social concerns, the infrastructure needs of roads and bridges, as well as the information highway and economic infrastructure must be paid for somehow.

Economic Dollars and “Sense”

·        NH has been unsuccessful in having revenue growth to the state stay anywhere near to the same pace as the growth of personal income in the state.  While personal income has been growing at 2.4%, tax revenue to the State has only grown at .7%.  These two numbers should be much closer together.

·        NH has a regressive tax system.  Those Granite Staters who make the lowest 20% of income pay a much higher share of their family income into State Revenue at 8.4%.  Those at the top 1% of personal income pay only 2.6% of their family income into State Revenue. 

·        NH has the 3rd lowest level of taxation in the country at 8.2% of family income. The national percentage is 10.3%.  We also give the least to education….

·        Many believe that NH’s budget process is too short sighted with each legislature making short term decisions without a big picture vision.

·        Those who believe we have a spending problem say that NH must live within our means.  If you were trying to live within your means would you be likely to decide to reduce your income when you are already having trouble paying the bills?  That does not make economic sense. 


·        NH Lawmakers take pride in NH being a tourist destination.  However, the cuts that impact the people of the state impact our ability to support the tourism industry.  It is the people of NH who support the industries – work in the hotels and restaurants, clear the trails, work in the ski areas.  If they are not healthy, productive and earning a living wage their ability to be an asset to our natural environment will suffer.

·        The mid-term elections of 2014 taught the people of NH that every vote counts.  We saw unprecedented re-counts with wins and losses as little as one vote apart.  It’s time to hold law makers accountable and tell them that you are watching and that you vote. 

·        Legislators have told us that just 6 phone calls on an issue can change their mind. 

·        Legislators have told us that your concise personal story told to them, in person, is meaningful and is harder to say no to than the pressure of paid lobbyist. 


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