New Hampshire budget deal strikes balance on business taxes
A comprise $13 billion New Hampshire budget crafted this week after a nearly two-month battle avoided a tax increase and establishes a plan to decrease future business taxes.
Republican Gov. Chris Sununu and the Democratic-controlled legislature forged the revised budget plan following a nearly two-month battle that would trigger a drop in the business tax rate in 2021 if revenues are more than 6% over projections for the 2020 fiscal year. Sununu vetoed a Democratic-backed fiscal plan before the June 30 deadline that would have phased out business tax cuts enacted in 2015 that resulted in lawmakers approving a measure to keep the state operating at current spending levels until Oct. 1. He has pledged to sign the revised budget approved by lawmakers Wednesday once it reaches his desk.
“This compromise budget does not increase taxes and ensures financial promises can be kept to the people of New Hampshire,” Sununu said in statement. “This budget is something I can support.”
If state revenues reach the more than 6% target in 2020, the business profit tax rate would drop to 7.5% from 7.7% for 2021. The last two-year budget plan approved in 2017 brought the scheduled BPT rate to 7.9% in January from 8.2% with it slated to move to 7.7% next year.
The new budget maintains spending priorities pitched by Democrats with increased funding allocated for school districts, municipal aid and mental health services while also freezing in-state tuition at public colleges. The updated plan also decreases funding for the Department of Health and Human Services by $25 million from what Democrats initially proposed. It also removes $1 million planned for a “Sunny Day fund” and transfers $5 million toward the state’s rainy day fund.
“Budgets are a statement of our values, and this budget compromise makes clear that New Hampshire values the people of our state and is committed to ensuring every Granite Stater has the resources and opportunities they need to thrive,” Senate President Donna Soucy, D, Manchester, said in a statement. “I am grateful for the hard work and leadership of budget writers in the House and Senate.”
New Hampshire revenues are mainly generated by property taxes since the state has no sales or income tax. The state’s general obligation bonds are rated Aa1 from Moody’s, AA-plus from Fitch Ratings and AA from S&P Global Ratings.
New Hampshire has not issued any GO bonds so far in 2019, according to Refinitiv data. The state borrowed $63.4 million of GO debt in 2018 and $66.5 million for 2017.