Unpacking The State Budget: From Tax Reductions To Bridge Repairs
By now, debates over the big-ticket items in the New Hampshire state budget are well established.
There’s Gov. Chris Sununu’s push for a continued decrease in business taxes: a plan to bring the business profits tax from its present 7.7% to 7.5%, completing its arc from 8.5% in 2015.
There’s Sununu’s proposal to create a Department of Energy to centralize energy policy priorities that are currently spread among multiple agencies, and his preference for one-off school infrastructure funding as a way to reduce inequality.
And there are other, more controversial pieces added by the House last month. One would prevent Planned Parenthood from taking state money without first physically separating its abortion services. Another would ban “divisive concepts” relating to white supremacy and the concept of structural racism from being taught in New Hampshire schools and state-run workplaces.
But beyond the headline items, the budget is packed with smaller changes. House Bill 2, the policy trailer bill that accompanies the agency funding allocations, is running at 181 pages – and could grow longer. Some pieces were added by the governor as a shift in state resources; others by the House as a check on executive power.
(This story was originally published by New Hampshire Bulletin.)
Here are some of them.
A bevy of tax reductions
Under the budget, the state’s meals and rooms tax would decrease from 9% to 8.5%, along with the business taxes. But that’s not the only major change to taxation.
The budget phases out the interest and dividends tax, which taxes stockbrokers and investment fund owners, ending it entirely by 2027. It lowers business taxes. And it exempts some small businesses from paying the state’s business enterprise tax at all.
The budget bill would raise the threshold at which smaller businesses are taxed at that rate.
Currently, businesses that make $200,000 or more in profits or that have an “enterprise value tax base” of $100,000 or more must pay the business enterprise tax. The enterprise value tax base is determined by the amount the business pays on employee salaries and interest, meaning some small start-up businesses can pay the tax even before they’ve become profitable.
The new budget would increase both thresholds to $250,000, shielding a number of small businesses from that extra tax.
Unemployment fraud and waste
After concerns were raised by New Hampshire state officials over unemployment insurance fraud, the state budget aims to add tools to cut down on that fraud.
The budget gives the commissioner of New Hampshire’s Department of Employment Security, George Copadis, the ability to work with the U.S. Department of Labor and the National Association of State Workforce Agencies and participate in the “Integrity Data Hub.” That hub has one aim: to detect and reduce “fraud, waste, and abuse in the unemployment compensation system,” the budget bill states.
Officials at that state department and the FBI have warned about a spike in fraudulent unemployment claims: The number in New Hampshire totaled 10,000 in December, many the result of identity theft.
The Integrity Data Hub allows unemployment officials in participating states to compare data on unemployment insurance usage to identify duplicates and root out fraud.
New caps to the governor’s emergency powers
A central theme of tensions in the New Hampshire House for the past 14 months has been Sununu’s assertion of gubernatorial power at the outset of the COVID-19 pandemic.
For over a year, some Republican House members have loudly stated their desire to curb that power. The budget bill has given them a vehicle.
The budget passed by the House in early April contains a provision that allows a future governor to declare a state of emergency for 21 days and renew it once. But after that renewal, the bill states, the governor must consult with the Legislature.
If the Senate and House clerks determine that 50 percent or more of their chambers are incapacitated by the emergency, the governor can proceed and continue renewing that provision. Otherwise, the state of emergency must have legislative support, the bill states.
A refund of COVID-19 fees against restaurants and businesses
Tucked into the budget is a requirement that all state and local governments reverse any violations or fines issued against businesses during COVID-19 – a controversial change that could prompt pushback by Sununu.
The language would require that fines be refunded, whether issued by the Attorney General’s Office or a city or town.
“The state hereby recognizes that the issuance of multiple executive orders may have created undue hardship or confusion and contributed to the stressful environment for business operations, particularly small business entities,” the law states in its intro. “The penalties associated with violations of these orders, while issued in the interest of public health, should not unduly penalize law-abiding businesses.”
Some cities and towns had imposed mask mandates early on in the pandemic and added requirements that businesses enforce them with customers.
Meanwhile, the state Department of Justice has run a tip line and collected complaints from patrons or employees concerned about mask usage at certain businesses. After issuing multiple warnings for some businesses, the department has resorted to fines, many in the hundreds of dollars.
Closing the Sununu Youth Services Center for good
After a long-running effort by state lawmakers to wind down New Hampshire’s youth correctional facility, the Sununu Youth Services Center, the 2021 to 2022 budget may finally finish the job.
A provision in House Bill 2 would permanently close the center on July 1, 2022, closing off any future referrals and transferring those in the facility to “clinically appropriate alternative treatment” – or discharging them entirely.
The center has come under harsh scrutiny in recent years, first for the use of restraints against children that the state’s Office of the Child Advocate brought to light in an exhaustive report in 2018, and lately with the prosecution of six former staff members accused of rape at the facility in the 1990s.
Lawmakers had been phasing out funding as the center’s population dropped. But the budget would set up a commission to facilitate the closure, allocate $2 million to get the job done, and set aside an additional $500,000 to help the center’s employees find work.
A closer eye on Medicaid payments
The budget also includes a requirement that the commissioner of the Department of Health and Human Services file a regular report on the actual cost of payments made in the Medicaid system for the next two years – and how that compares with the estimated costs.
The requirement comes as New Hampshire’s Medicaid system has seen a major increase in usage during the COVID-19 pandemic – about $8.1 million more than had been planned for.
Putting off merging community colleges and universities
The House dismantled a prominent piece of Sununu’s budget last month when it removed the governor’s plan to merge the Community College System with the University System of New Hampshire
Sununu had argued the transformational plan would lead to efficiencies; critics had worried it would translate to cuts.
The House demurred on following through with the plan, instead taking it out of the budget and putting it to a study commission instead. More time was needed to fine tune the arrangement, House Republicans argued.
New databases for animal records, prescription drugs
The budget would create a new state database for animal records, run by the Department of Agriculture, Markets, and Food.
That includes certificates of transfer for dogs and cats, which will remain in the database for four years.
The database would help the Department of Agriculture enforce the ban on bringing any dog, cat, or ferret under 8 weeks old into the state for the purpose of a transfer – with the exception of shelters.
The database would also easily demonstrate whether dogs, cats, and ferrets had been properly vaccinated for infectious diseases.
And the budget would move an existing database to monitor prescription drugs under the supervision of the Department of Health and Human Services. The system would replace the present system run by the Office of Professional Licensure and Certification.
New Hampshire was one of the last states to establish a prescription drug monitoring program back in 2014.
The system requires prescribers and dispensers to join and log the dates of prescriptions, the number of days of medication that were supplied, and the number of refills, as well as the patient’s name, address, date of birth, and phone number. That information would be accessible only by those in the system already, the language states, and not subject to public records requests.
Meanwhile, the Office of Professional Licensure and Certification could see a boost to its enforcement of prescription violations. The proposed budget includes a new director of enforcement and two pharmacy investigators, tasked with carrying out investigations and compliance of pharmacies with the state’s rules.
The director and investigators must be appointed by the governor with the approval of the Executive Council.
Tobacco and alcohol licenses
One piece of the budget bill would make it easier for businesses that sell alcohol to also sell cigarettes. The budget bill would allow those who hold alcohol licenses to extend their license to include tobacco for $6.
The bill would also add e-cigarettes to the existing tobacco license.
That change comes as tobacco sales have taken off during the pandemic, particularly in the wake of Massachusetts’s ban on flavored cigarettes. Since July 2020, the state has raked in $18.5 million in tobacco tax, $2.3 million more than expected, according to the state’s revenue estimates from March.
A body camera fund for police officers
Following an effort to establish body-worn cameras in New Hampshire police departments – and the recent findings of a commission convened in the wake of the 2020 murder of George Floyd – this year’s budget includes a fund to assist with that.
Included in House Bill 2 is $1 million to allow the Department of Safety to match a police department’s efforts to acquire the cameras and related storage equipment.
The House’s version of a budget also includes a commission to study how to create a state entity to review officer misconduct complaints. That’s a significant downgrade from Sununu’s original proposal to create the review board in this budget biennium.
Liability for those who obstruct highways
People who damage New Hampshire’s highways could be facing major fines if a provision of the budget makes it through. The bill imposes “strict liability” for any person who might “place any obstruction in a highway, or cause any defect, insufficiency, or want of repair of a highway which renders it unsuitable for public travel.”
Strict liability means that if a person were found by a court to have caused the destruction, they would be responsible for the full costs of repairing, including the labor, material, and equipment involved, as well as any damages that the state has to pay to someone injured.
$20 million for red-listed bridges
The budget includes $20 million to go to the Department of Transportation to allow it to tackle the “red listed” bridges in the state.
That list, which comprises bridges that the department deems the biggest priority for repair, numbered 118 at the start of 2021, according to the Department of Transportation.
New Hampshire has made a dent in its red list of bridges in recent years; back in 2015, the list was at 143. But the “yellow list” of bridges – one priority level down – is steadily increasing, from 781 in 2009 to 894 in 2020, department numbers indicate.
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