13% more Spending… 16.8% more taxation…
Here’s a brief overview of the House Democrat budget. In General Fund and Education Trust Funds combined, the House Democrat passed budget increases spending by more than $637 million per year. That is as compared to our current biennial budget (FY2018-2019). It increases total spending over $1.5 billion in Total Funds. That’s a spending increase of 13%. Population growth isn’t 13% and neither is inflation. In fact, together combined population growth plus inflation growth don’t come to 13%.
The tax increase is $416 million per year. Comparatively, what this means is that the total taxation in this biennial budget is an increase of 16.8% over the FY 2019. The state is giving itself a pay raise of 16.8%. Are you getting a similar pay increase? If your taxes go up by 16.8% and your pay does not go up by at least that amount your household budget just took a hit.
If we divide that $416 million by the 1.35 million people in the state you can see that the House Democrats are costing each and every New Hampshire citizen over $300 per year. So if you are a family of four living on $50,000 per year the tax bite to your household budget is $1,200 per year. That means you will have a hundred dollars a month less to pay the bills. Is that going to be an issue at your house? What exactly are going to do without?
The tax highlights
The House Democrat budget includes the repeal of future business tax rate reductions. This move will end up costing our job creators over $90 million over the next 2 years, compared to current law. It also means the cost of goods and services you will purchase will increase to cover that cost. It will hit every household budget.
The House Democrat budget includes their new capital gains tax. The Democrats just imposed an income tax that they budgeted to bring in $150 million per year. Their revenue estimates for this new tax are inflated, untested, and unrealistic. The majority of stock sales in New Hampshire are done by retired people who live on the income from those sales. This is an attack on retired people with savings.
The House Democrat budget replaces the governor’s voluntary family leave plan. In its place it substitutes their own, likely-to-be-insolvent, state-run insurance program. This state sponsored insurance program is funded imposition of an income tax. It mandates collection of 0.5% tax on all wages. This move costs workers and businesses $168 million per year. For workers those are dollars you cannot spend in your household budget. Businesses will raise prices in order to be able to cover those costs. This Democrat State government just cut our pay and increased our cost of living. If that isn’t bad enough, the program will cost more than $15 million to develop. Once it is in place it requires the addition of more than 40 new government employees to administer.
Wrong process… Wrong goals…
The House Democrat budget uses one-time revenue to grow government. This is a brain dead approach to budgeting. The reason is simple. Using a non-recurring source of income to fund ongoing programs will cause a structural deficit in future budgets. What that means is that you are making programs larger with no way to pay for them in future years. This is simply planning to fail. This is intentionally setting up future budget crisis. The Governor’s proposed budget correctly proposes using one-time revenue for one-time projects. It specifies capital type projects like a mental health facility, red list bridges, etc. . These are things that need to be done but can be handled with one time funds. We simply move them up on the schedule of action items. Most of these items the House Democrats deleted from the budget.
The House Democrat budget spends $20 million that should be deposited into the rainy day fund (FY19 through FY21). They clearly have little regard for financial reserves for the state. On the one hand they set up fiscal crisis by spending one time money to expand ongoing programs which sets up a financial shortfall that translates into crisis. Then on the other hand they spend the money that should be going into the Rainy Day Fund so there are no reserves with which to cover the shortfall they are creating. It is quite simply a plan to fails for the purpose of creation of a need to impose a State sales and Income taxes.
The House Democrat budget funds the addition of 157 new positions. They are authorized in this budget at a cost of $23 million. Those are dollars that will continue into all future budgets. Positions once created seldom go away. Think about it. There’s only one governmental lay off in our living memory and those positions have been restored and now added to.
This budget proposes a dramatic change of direction for our state. After two successful budgets where Republicans lead the fight for fiscal responsibility and tax reform, and produced surpluses we are now headed down a path of profligate spending and massive tax increase. New Hampshire’s economy was doing well under the course it was on. There is 2% unemployment, businesses were moving into the state, and wages are beginning to increase. Elections have consequences.