Taxes

Balanced Budget… Or House of Cards?

Guest post by State Senator Jeb Bradley

After two marathon weeks of discussions between House and Senate members charged with negotiating a budget, early Friday morning a package emerged.  Its fate is uncertain as the full House and Senate must pass it before it reaches Governor Lynch for signature. Counting votes before the June 24th Session will be almost as daunting as reaching this compromise — anything can and may well happen.

Let’s first focus on what is in this package and what is not, then on the impact it will have on people and businesses, and lastly how this budget will affect New Hampshire’s future.

Like any compromise, this budget is a mixed bag of good news and bad news.  Several very controversial new taxes and tax hikes that had previously been approved by either the House or Senate, were dropped. These include the capital gains tax, death tax, gas tax, insurance premium tax, and a specific increase in business taxes by loss of a tax credit. All of these taxes would have directly undermined New Hampshire’s ability to attract businesses, investors, or visitors to our state. Also dropped from the final package were expanded gambling and a controversial plan to use toll revenue for highway improvements all over the state. Several taxes rumored for late consideration never made the final package including an entertainment tax and a tax on mortgage re-financing.

There are new taxes galore however.  The tobacco tax will go up by 45 cents — the fourth hike in five years.  Non-smokers may generally be callous to the impact this tax has, but smokers, especially low income people, justifiably believe they are carrying far more than their fair share of the tax burden.  This increase will also undermine the cross border advantage New Hampshire has long enjoyed – attracting visitors to purchase tobacco products here and fill our revenue coffers. Convenience stores near the borders will be impacted, and meeting our revenue goals with this tax hike is questionable.

Any gambling winnings will be taxed at 10% including those garnered outside of New Hampshire. Will we be sending auditors to Foxwoods and Las Vegas — or charitable events in New Hampshire — to guarantee tax collection?  Under those circumstances, is the $14 million of anticipated revenue farfetched?

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Guest post by State Senator Jeb Bradley

The Great Tax Debate

The legislative session may be winding down rapidly but the greatest issue of all, the budget, is far from being resolved. The budget debate comes against the backdrop of a distressed economy with high unemployment rates and families and businesses struggling to make ends meet.  Will the conference committee on the budget make this situation worse?

Unfortunately, despite our Live Free of Die motto, this debate is not between those who would frugally limit government and those who would inexorably allow it to grow. Rather, it could be called the Great Tax Debate as various factions of the legislature seek to add their preferred tax hikes to a budget bursting with higher taxes and fees.

Why is New Hampshire in such a tax predicament? Some would argue the recession and falling revenues to state coffers is to blame. That’s only part of the story however, as Paul Harvey would say ‘the rest of the story’ is that spending in New Hampshire has increased dramatically.

New Hampshire’s current budget allowed total spending of $10.4 billion up from $9.36 billion in the prior budget. The budget the Senate recently passed proposes total spending of $11.6 billion and the House passed budget was only marginally lower. Bottom line: if this spending plan is ratified, total spending will have increased 23.8% over 3 budgets. It is hard to imagine that the average family or business in New Hampshire has seen their income increase by anything approaching that figure…..that is if they have any income left.

What makes these increases even more staggering is that spending is going down in other states around the country. The bi-partisan National Governor’s Association (www.nga.org) recently released a study that highlights an average 2.2% decline in state spending around the nation in 2009. Furthermore, our nation’s governors are recommending additional spending reductions of 2.5% this year.  But, not New Hampshire, as there is little disagreement among Democratic conference committee members that total spending should increase by $1.2 billion.

With the exception of a few spending reductions such as closing the Laconia State Prison,  the budget debate focuses almost exclusively on new or increased taxes. The House has passed a new tax on capital gains and estates, as well as increases on tobacco products, rooms and meals, insurance premiums, gambling winnings and gasoline.  The Senate has passed expanded gambling for additional revenue, as well as increased taxes on tobacco, rooms and meals, and new onerous business taxes. Both budgets have numerous fee increases. Both budgets raid a fund paid into by doctors designed to keep medical malpractice rates in line. The $110 million raid of this fund will trigger an all but certain lawsuit which doctors stand an excellent chance of winning – because in reality it’s their money.  More cynically both budgets underfund to varying degrees the state’s historic commitment to assisting towns and cities. So property taxpayers are going to be left out in the cold without a seat in this game of musical tax chairs.

Sound chaotic and controversial? It is and deadlines are looming.

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Guest post by State Senator Jeb Bradley

Last week I titled my blog: Time to Talk Taxes. This week’s title is unfortunately: Time to Pay Taxes.

Just as easily it could be:  New Spending  = New Taxes = Job Losses.

The budget approved by the majority of the New Hampshire Senate proposes to increase total spending by $1.2 billion! That’s on top of a similar spending increase from the prior budget to the current budget of $1 billion. It’s noteworthy these precipitous spending increases coincide with one party political rule in Concord.

Efforts were made to trim this spending on the Senate Floor by Republicans.  We proposed four separate amendments to make across the board cuts totaling 8.4%. These amendments, which I supported, would’ve eliminated the need to increase business taxes, hospitality taxes, and tobacco taxes. The fourth amendment would’ve cut state spending so that New Hampshire’s historic commitment to assist towns with Revenue Sharing is maintained.  Revenue Sharing means $50 million to cities and towns which helps lower property taxes. Not surprisingly, all four of these amendments failed —  largely on partisan votes —  which means property taxes, business, hospitality, and tobacco taxes will all go up!

The proposed increase in business taxes is particularly disturbing. Not one Senator could defend it as either good or fair tax policy. Rather, those that voted to increase business taxes were of a mind that taxes had to be raised to enable new spending; even though those who voted for higher business taxes would likely acknowledge this tax hike will cost New Hampshire jobs.

These were not the only discouraging votes for those who want to see New Hampshire jumpstart its economy, keep the cost of government low, and ensure government accountability and educational opportunity for New Hampshire students.

Two amendments which I supported were presented to ensure that local voters could continue to adopt property tax caps in their cities and towns.  A number of communities have, by a popular vote of their citizens, successfully implemented property tax caps. They are now threatened by lawsuits in court. These amendments to protect the local option to pursue a tax cap were defeated on straight partisan votes. Now property taxpayers are confronted by the grim reality that the courts in New Hampshire may be determining property taxes instead of local voters.

The Senate Finance Committee recommended capping the number of students that could enroll in charter schools. Charter schools, which receive public funding and which are part of our public school system, have proven to be very successful. They are allowed by their charter to be more creative and innovative than traditional public schools.

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