With Federal Relief Money Set To Flow To N.H., State Budget Talks May Shift
$1.5 billion in federal money will flow to New Hampshire under the federal coronavirus recovery plan championed by President Biden and passed by Congressional Democrats. The money comes in the middle of budget season in the New Hampshire State House, where Republican lawmakers and Gov. Chris Sununu hold all the cards. NHPR’s senior political reporter Josh Rogers spoke with All Things Considered host Peter Biello to talk about the current state of budget talks and the impact that this new federal money may have.
Peter Biello: So, Josh, one and a half billion: That's a lot of money.
Josh Rogers: It is. This money is the centerpiece of President Biden's plan to reinvigorate the economy, as the country hopefully exits the pandemic. New Hampshire's share is roughly $1.5 billion. That's obviously significant. To give you a sense of how significant: In this fiscal year, the share of the budget paid for with state-generated revenue is $1.67 billion dollars. So this is major. About $1 billion of the federal aid will flow to state government, and the rest will be divvied up between cities, counties and towns
Biello: What are the specific ways that this money is supposed to be used?
Rogers: Well, there are 151 pages of guidance that so far been issued by the U.S. Treasury Department. But, this plan was designed to get money spent on clearly approved uses: things like vaccine clinics and mental health treatment, payments to workers or businesses who have been harmed by the pandemic, replacing revenue loss due to the pandemic, as well as water, sewer and broadband infrastructure.
I expect we'll probably get more clarity about the limits of what states could do once money starts being spent. But there are a few prohibitions that have been spelled out: The money can't get plowed into state pension systems, can't be used to pay off legal settlements or to pay for tax cuts. But, since money is obviously fungible, some of this is a bit murky. And, tax cuts are definitely on the table in New Hampshire’s state budget talks.
Biello: Yes. Tax cuts. Cutting business taxes has been a big priority for the governor and Republican lawmakers this year. What's that going to mean on that front?
Rogers: I suspect we'll see. Those tax cuts are certainly happening on the business tax front. And so is a phase-out on the tax on interest and dividends. And with collections on state business taxes running roughly one third above projection, top Republicans in Concord say that they planned to cut taxes all along and that the state revenue is available to pay for them.
To give you a sense of how good things look on the revenue front right now, consider last fall when the thinking from Gov. Sununu and others was that the state could see a $350 million hole due to lost business tax revenue from the pandemic. Now, the thinking is, we're looking at a $150 million surplus on the business tax front. So the revenue situation on the state level is uneven, but overall, it's quite strong.
And with the new relief coming from D.C., there's more money floating around the budget process since I-don't-know-when.
Biello: Gov. Sununu has had a lot to say about budgetary matters recently. What is he saying about all this?
Rogers: He spoke this morning at a meeting of the New Hampshire Business and Industry Association, and the governor said tax cuts were coming and that the federal government could sue him if it didn't like it. As the governor can in such settings, he was doing a great deal of swaggering over the economy, over what he sees as New Hampshire's exceptionalist approach to government policy, and certainly, by implication, what he seems to see as his own exceptional leadership.
When it came to the federal relief, the governor's message was basically this. We don't need the money, but we'll take the money. Here’s Sununu:
Sununu: “We have recovered. We recovered a long time ago. I know President Biden calls his bill ‘the rescue plan.’ We don't need rescuing from Washington. Not one bit, frankly. We are there.”
Biello: That was Gov. Sununu speaking today to the state Business and Industry Association. But where are we with the next state budget plan? The governor's been critical of the House’s plan. The Senate is working on a proposal. Where are we, Josh?
Rogers: Well, that remains to be seen. We do know that tax cuts are coming. We know the Senate's in a position, based on state revenues, to spend more than the House chose to in its spending plan. We know that there's tension between the governor and a decent slug of Republicans in the State House over his criticism of some non-budgetary items in the spending plan: language about “divisive concepts,” as well as curbs on emergency powers.
But there are also some interesting and powerful political dynamics at play. Like, what is the governor going to do in 2022? His tone this morning, with respect to Washington, I guess you could say it didn't sound unlike a guy who might run for Senate, finding a way to get a conservative budget through and maybe also use a pile of federal money for infrastructure, opioids, mental health or child protection in ways that both address serious needs, but maybe also build a legacy. You know, it's not a bad place for any governor to find himself.
Biello: How much of that will rely on the state Senate, which is writing the budget now?
Rogers: In all likelihood, a lot. Gov. Sununu said, after the House budget passed, that he plans to work more closely with the Senate. But the political situation there is interesting, also. You have Senate President Chuck Morse, who for years has led the budget process for Republicans in the Senate. There's now increasing talk Morse could run for governor next year if Sununu opts to seek a U.S. Senate seat. He’s got a big political fundraiser tonight. The Senate budget will almost certainly spend more than the House plan. It could also send clues about Morse’s ambitions. I’ve been talking to people at the State House about this, and one Republican told me, ‘if the budget’s lean, Morse is leaning towards running for governor.’ We'll see.
Then there's obviously the biggest question of reaching agreement with the House, where Republicans hold a narrow but very conservative majority there. So there's really quite a bit to sort. It's odd in a budget year, to have so much money to spend by New Hampshire standards, but also lots and lots of politics around the budget that aren't exactly budgetary in nature.