New Hampshire's House and Senate negotiators have finished their work on the next two-year state budget.
Democratic leaders say the plan meets the needs of the people, and should meet the needs of Gov. Chris Sununu, who laid out his preferences and potential red lines last week.
Divided government isn’t new in Concord, nor are partisan tugs of war over state budgets.
NHPR’s Josh Rogers joins All Things Considered Host Peter Biello to discuss what’s in the package, and where the budget process may go from here. Listen below or scroll down to read the story.
(This transcript has been lightly edited for clarity.)
So let’s start with the big picture: what’s significant in this budget policy-wise?
One major item is the additional $138 million for state school aid. That’s a big deal, and money districts have been clamoring for. It will help pay for full-day kindergarten and address property wealth disparities, benefiting places like Berlin and Newport, both of which will get significant help. A few communities will see reductions under the plan, including Portsmouth and Hanover. But overall, districts will get more money, which wasn’t something Gov. Sununu proposed in his budget.
But it appears the Governor got his way on another big item: paid family leave. He said he’d veto the budget if it included a mandatory paid leave program he called an income tax.
Yes, this was a significant point of friction, and a significant concession from Democrats. But lawmakers did set keep some money in the budget for a leave program in the event the politics on this issue change during the next two years. But right now that seems mostly a face-saving measure. And Democrats hope, or are at least arguing, that their concession on this front should trigger Sununu to accept the budget. Why don’t we take a listen to Senate Major Dan Feltes, who’ has been the Senate’s point person on paid leave:
“He threatened to veto the entire state budget over his opposition to paid family and medical leave, and so this take that off the table and now governor Sununu should sign the budget,” said Feltes.
So paid leave is out, but what about differences over business taxes?
Those differences over taxes remain in full effect. What Sununu wants is lawmakers to honor the reductions now underway under current law, which depending on how a business pays its taxes would put the business profits tax at 7.7 percent. Democrats want the 7.9 percent rate which was in effect until December to be restored. Yesterday, the governor said he might be open to agreeing to forgo further rate reductions slated to take effect in 2021, but Sununu was also very firm when it came to insisting that the business profits tax goes no higher than 7.7 percent.
“I would veto the budget if you raise taxes to 7.9 percent and again, I’m trying to throw all my cards on the table and show everybody in a very transparent way that what the red lines that we can’t cross, what the people of NH will not accept. They will not accept they will not accept tax increases,” said Sununu.
Is it your sense that the people of New Hampshire have drawn the line on taxes as brightly as the governor claims?
The governor won election championing business tax cuts. Democrats, who control the legislature, won by criticizing these cuts. So make of that what you will. But keep in mind the Business Profits Tax, or BPT, is a tax most businesses in New Hampshire don’t pay. Democrats believe many of the businesses that do pay are interested in more than simply tax rates: this budget also includes other tax policy changes, including conformity with the federal tax code, and other technical changes that senators like Senate Finance Chairman Lou D’Alessandro think businesses want at least as much as a lower rate Sununu is stressing.
“He is fixated on a very, very limited portion, and the business community supports the 7.9, lowest in New England…what the business community supports is the tax reform we’ve done, and they are adamant, and I am sure they are on the phone talking to him about that,” says D’Allesando.
Business tax rates caused the last budget veto in New Hampshire, when Maggie Hassan was governor and Republicans ran the legislature. Will they trigger another?
It’s a real possibility, and if you recall that, the state went into a continuing resolution and a couple of months later we had a budget. Some Republicans I’ve talked to think a continuing resolution would be fine. But the next step is for the full House and Senate to vote on the budget next week. Then we’ll see how divided government plays out.