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Governor Offers Compromise Budget Plan

July 23, 2015 Common Cents

Earlier today, Governor Maggie Hassan put forward a new proposal in an attempt to reach a compromise over New Hampshire’s FY 2016-2017 budget.  The proposal appears to use the spending levels included in the version of the budget she had vetoed on June 25 as a starting point, but calls for additional funding for several key priorities, such as substance abuse treatment , travel and tourism promotion, higher education, and the previously agreed upon contract for state employees.

At the same time, the proposal would make numerous changes in tax policy, some of which would lower the amount of revenue collected during the FY16-17 biennium, others of which would increase it.  In particular, the proposal would reduce the rate of the business profits tax (BPT) to 7.9 percent, as sought by the legislature, but, rather than phasing the reduction in over time, would institute it in full beginning in tax year 2016.  The proposal also seems to account for further reductions in the amount of revenue the BPT yields arising from a possible future compromise on provisions included in HB 550 – often referred to as the “Planet Fitness tax break” – which the Governor vetoed earlier this week.  The proposal would not reduce the rate of the business enterprise tax (BET), as the legislature’s budget plan would do, but would instead raise the threshold at which businesses begin to owe the tax.

Conversely, the proposal would revive several of the tax policy recommendations included in the Governor’s original budget plan and intended to bolster state revenues.  These include an increase in the tobacco tax from $1.78 to $1.99 per pack, higher motor vehicle registration fees, and restoration of the requirement that taxpayers should be able to document deductions taken, as part of the BPT, for reasonable compensation.

While the Governor has championed the reauthorization of the New Hampshire Health Protection Program and included provisions in her original budget plan to make the program permanent, the proposal she offered today does not attempt to remove or modify the program’s current expiration date of December 31, 2016.  Rather, the proposal would provide new funds to permit additional data collection related to the program.

At present, both the House of Representatives and the Senate are next scheduled to meet on Wednesday, September 16, to consider possible veto overrides, including, presumably, those of HB 1 and HB 2.  In announcing her proposal, the Governor urged legislators to work towards a compromise plan that could be approved on that date.

 

 

 

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Unsettled Business Tax Revenues Push Surplus Upward, Offer Limited Insight for the Future

7 Dec 2018

tree with coins

The fortunes of State revenues continue to rise and fall with New Hampshire’s two primary business taxes, which provided positive signs for near-term revenue but have not shown these levels are sustainable. While the two business taxes remained healthy, other revenue sources were relatively flat overall, leaving the State with a revenue surplus entirely dependent on the two business taxes. The lack of growth in other revenue sources combined with the uncertainty around business taxes creates an environment in which it will be very difficult to accurately project revenues for the new State Budget biennium.