Business News

Some good, some fatal flaws in the budget of NH House

The House crossover this week will take its most important vote before House Bill 1 and House Bill 2, or the state’s two-year operating budget for the next biennium beginning July 1.

The budget recommended by the House Finance Committee on a 14-11 vote almost down the party line is almost $1 billion more than the current biennial budget, which was virtually identical to the previous biennial budget and the revenue was far less than the revenue produced during state taxes. last two years.

So there is scope to increase the budget.

The House-proposed budget is also $227 million more in total spending than the government’s proposed budget. Chris Sununu proposed.

He proposed a total budget of $15.47 billion with general fund expenditures of $6.29 billion, while the House proposed $15.67 billion in total expenditures and general fund obligations of $6.37 billion.

However much as they have tried and often succeeded in areas, there is no significant bipartisan support for the two-bill package, as Democrats have said they will vote against it unless there is agreement on several key areas. Repeal of the interest and dividend tax, greater control over the Education Freedom Account program, and removal of the two-year limit on Medicaid expansion, which the Senate has voted to make permanent.

There are other issues, too, including the new education funding formula, Medicaid reimbursement rates, and more support for school construction aid and affordable housing.

While talks are ongoing and will probably continue into Thursday morning, agreement on partisan priorities will be difficult.

Just a reminder that the House is controlled by Republicans by a razor-thin margin, but that evaporated last week when some Republicans joined with Democrats to pass some important reproductive rights bills, and vaccines or other To eliminate other bills dealing with COVID-related issues the Parental Bill of Rights is not mentioned.

The budget presents its own problems for the House leadership as revealed late last week when House Finance Committee members Rep.

If anyone thought that all members of the Free State/Libertarian wing of the House were going to support this plan, they don’t know what this group is about.

That’s why Speaker of the House Sherman Packard wanted as much Democratic support as possible for this budget, it wasn’t enough just to get approval based on Republican votes for the package and send the House blueprint to the Senate.

There are many things for Democrats to like in the budget, such as a 12 percent pay raise for state employees, an increase in Medicaid reimbursement rates, leaving most of Sununu’s regulatory and licensing agencies to the cutting-room floor, and education. More money for funding, but that’s not to say there aren’t some significant flaws in this budget package whether you’re a Democrat or a Republican.

Let’s start with taxes. The budget package gives impetus to the abolition of interest and dividend tax.

The tax was estimated to generate $136 million this fiscal year and $52 million by the end of February, with more than half the revenue generated in the last three months of the fiscal year.

If you’re a Democrat, almost all revenue comes out of the pockets of the top 95 percent of state earners.

If you’re a Republican, you want to end the tax as soon as possible because it’s an income tax, so you can say there’s no income tax in the state.

But it is a stable revenue producer, somewhat less volatile than business taxes and you have to consider where you make up for the lost revenue.

Sununu and some Republicans wanted to eliminate the communications tax, which had been steadily going down with the loss of landlines and other aspects of the levy, but retain it to pay for changes to retirement benefits for Group II (law enforcement and firefighters). Was placed. ) which will cost approximately $50 million over the course of the biennial.

The biggest tax loophole is changes to the Education Trust Fund, which will receive about $450 million less in revenue this biennial, with money going to the general fund instead.

The loss comes from changing the percentage of business profit and enterprise taxes in the trust fund from 50 percent to 22.5 percent, which the sponsor of the change, House Finance Committee Chairman Rep. Ken Weiler, R-Kingston, said would be enough to fund the fund. It was originally intended to cover adequacy grants to school districts and per-pupil grants to charter schools. It would also have to cover EFA grants, which are projected to increase to $30 million per year for each year of the biennial, significantly higher than the $24 million being spent this biennial.

The change would mean the general fund would have to send about $42.6 million to the trust fund in the second year of the biennial year to meet its obligations, according to the legislative budget assistant’s surplus statement.

The trust fund used to run an annual deficit, but hasn’t for a half-dozen or so years and has instead produced a surplus of $250 million or more. With such a surplus, some school funding advocates would argue that the extra money should go to increasing state aid for public education.

The change moved school construction assistance, special education, court-ordered services and tuition and transportation to regional technical centers from the trust fund to the general fund where they would compete with every other need for money.

The change will also speed up the time when the EFA program will begin competing directly with public schools, including charter schools, for trust fund money.

This is when you will see attempts to drain public schools of money at the expense of tuition payments to the mostly religious, but private schools that are at the heart of the ETA program.

Another fatal flaw involves the new formula for funding education. Supporters said he tried to accelerate the movement of funds to poorer school districts faster than Sununu’s plan.

The plan does away with stabilization grants and replaces them with hold-loss funds that reduce 20 percent per biennially and less than half the amount of stabilization funding districts received.

The bill increases extraordinary need grants but removes fiscal capacity grants that do a better job of targeting aid to needy districts.

The end result isn’t pretty. For example, Berlin, Claremont, Charlestown, Epsom, Errol, Franklin, Hebron and Pittsfield, some of the state’s worst-affected school districts, receive the same amount as they received this biennial.

Many of those towns are those that filed the original Claremont lawsuit.

While those cities are not helped under the new funding plan, Amherst receives $3.3 million over the biennial, Bedford, $7.4 million; Bow, $1.8 million; Exeter, $3.4 million; Londonderry, $4.4 million; Merrimack $5.3 million; Newfields $450,000; Pelham, $3 million; Portsmouth, $400,000; Salem, $6.4 million; Stratham, $2 million and Windham, $5.2 million.

The largest cities also do well under the new plan as Concord receives an additional $5.1 million; Dover, $7.5 million; Manchester, $21 million, and Nashua, $17 million.

Some major changes to the formula are needed or there is likely to be a third lawsuit pending in the Superior Court system over education funding.

And like two years ago, many of the controversial bills in House Bill 2 have found their way into the House budget.

Two years ago the Senate included the bills in the budget and this year the House decided to do the same.

Will Republicans and Democrats come together and approve a budget on Thursday or will it be like 2017 when the House failed to pass a budget and the Senate almost got what it wanted.

And that’s a problem for Democrats because the party split is not very thin in the Senate and budget preparation is likely to be much smaller than the House’s proposals.

As Thursday approaches, it has become difficult for the MPs to think about many things.


Back to top button