New Hampshire governor Maggie Hassan (D) and lawmakers have been unable to agree on a biennial state budget. Lawmakers in the state’s General Court are pressing for a budget reducing state spending and promoting tax relief for businesses.
Hassan is rejecting the legislature’s budget proposals, in favor of her proposals, which increase government revenue by hiking fees and sin taxes on consumers.
Until an agreement is reached, New Hampshire is operating under a temporary continuing resolution, extending the previous two-year budget’s spending levels until the end of the year.
Raising Taxes and Fees
Joshua Elliott, Policy Analyst and Transparency Director for the Josiah Bartlett Center for Public Policy says Hassan’s proposal grows state spending by over 7 percent, but doesn’t promote a healthy climate for job creators and taxpayers.
“Her proposed budget included a number of tax and fee increases, as well as tweaks to existing tax laws that had the practical effect of raising taxes,” he said. “Her latest counteroffer to solve the budget impasse included about $100 million worth of tax and fee increases, coupled with increased revenue projections.”
Elliot says the state’s ballooning spending can be slowed with a few simple reforms.
“I’d start by accelerating those reductions to the corporate tax rate, […] making sure New Hampshire’s rate was lower than Massachusetts’ in 2016, rather than 2019,” he said. “I’d also return all of the gas tax and toll revenue, save the cost of collection, back to the Department of Transportation to spend on roads and bridges, rather than elsewhere in state government.”
Eileen Norcross, a senior research fellow with the Mercatus Center, says lawmakers should investigate why spending is increasing, and work to solve the root causes.
“If spending is growing on autopilot due to demographic changes or pressures in underfunded programs… for example, Medicaid spending, pension contributions, [and] employee health benefits… then the state should look to control costs in areas that are projected to grow faster than the ability of the state to pay for those programs,” she said.
Broad, Low, and Stable
Norcross says economic abundance requires neutral, stable tax climates, not budget stalemates and political games.
“Generally, a tax system should be based on broad bases and low rates,” she said. “If the state is instead patching together revenues from small sources, [like] sin taxes or fees, and creating uncertainty with rates and exemptions, then that can produce an erratic climate for businesses to make decisions.”
Gabrielle Cintorino ([email protected]) writes from Nashville, Tennessee.