CONCORD — Citing the familiar red flags of tax increases and a structural deficit, Gov. Chris Sununu last Friday vetoed the two-year operating budget that the New Hampshire House and Senate passed the day before.
“The Legislature’s proposed budget for fiscal years 2020 and 2021 … both threatens the state’s economic growth and leaves the next Legislature with a massive fiscal deficit,” Sununu wrote in his veto message.
“This budget takes us down the wrong path, and the people of New Hampshire will never support it.”
But Democratic legislative leaders said the governor chose big business over the people who would have benefited from property tax relief, expanded child protection and mental health services. They also said businesses want more than a small tax reduction.
“It’s deeply discouraging that the governor chose today to put big businesses before the people of New Hampshire,” stated Senate President Donna Soucy, D-Manchester.
She said the veto "kicks the can down the road on education funding and property tax relief.”
The House and Senate passed the $13.3 billion, two-year budget package without one Republican vote in either body and with a partisan, contentious debate in the Senate.
While Democrats claim the budget meets the needs of state residents more than any budget in a long time. But Republicans said the budget would hurt the businesses that create the jobs for the state’s robust economy, and will spend the state into an income tax.
The key disagreement between the governor and Democratically controlled House and Senate is business tax rates. Democrats say the rates are “stabilized” at 2018 levels, while Sununu says this is a tax increase because the rates went down in January under the last budget plan.
Maintaining the rates produces $90 million in revenue the Legislature need to balance the budget.
Sununu said the ongoing rate reductions are responsible for the state’s growing economy, noting four years ago, New Hampshire had the highest business tax rates in New England.
Democrats said they tried to work with Sununu and met him more than halfway, giving up a capital gains tax the House used to increase education funding and a paid family and medical leave program both houses passed, while the governor refused to budge on any significant issue.
Senate Finance Committee chair Sen. Lou D’Allesandro, D-Manchester, said: “The House and Senate listened to the governor and the people of New Hampshire and built a budget that helps everyone. The budget vetoed by Gov. Sununu today did more for cities and towns than any budget in the last 10 years while enacting meaningful business tax reform.
“The governor let this opportunity go by with the stroke of one red pen today simply because he wanted his way. That’s not what cooperative government is all about,” D'Allesandro said.
House and Senate Republicans urged the governor to veto the budget Thursday, saying they would support him, which would sustain his veto because Democrats do not have a two-thirds majority needed to override the veto.
“Republicans in the House stood united against the Democrats’ fiscally irresponsible deficit-ridden spend-a-thon budget, and we fully support the Governor’s decision to veto HB1 and HB2,” said House Minority Leader Dick Hinch, R-Merrimack. “This budget raises taxes on our citizens, jeopardizes our economic success, and puts us at a real risk for an income tax or capital gains tax in order to dig ourselves out of an impending structural deficit.”
Despite the veto, the governor and Democrats agreed on many issues in the budget, including Medicaid provider rate increases, a new Secure Psychiatric Unit, upgrading Department of Transportation vehicles, $40 million in revenue sharing with municipalities, funding for child protective and mental health services, reducing the number of mentally ill patients in hospital emergency rooms, ending the wait list for developmentally disabled services, lead paint remediation and fixing state-owned dams.
But the two sides could not agree on business tax rates.
Democrats say the veto leaves the state’s children, families and property taxpayers in the lurch.
“With so many crises facing our children, our families, and our state, Gov. Sununu’s veto of an entire state budget over one issue he didn’t win on is just not the New Hampshire way. It is reckless, tone-deaf, and Trumpian,” said Senate Majority Leader Dan Feltes, D-Concord. “Our families, our economy, and our property tax payers all deserve better. They deserve a budget.”
But Sununu contends the budget creates false hopes and likens it to the one passed in 2009 that resulted in a significant deficit, causing lawmakers in the next Legislature to cut critical program and lay off state employees.
“I will not put our state in that position again,” Sununu wrote. “By putting our booming economy at risk and by building spending expectations that are unsustainable, this budget relies on bad financial management practices and therefore, I cannot support it.”
The House and Senate unanimously approved and Sununu signed a three-month continuing resolution to allow state government to continue operating at approved fiscal year 2019 spending levels.
The resolution remains in effect until Oct. 1 or until a new two-year budget is approved.
Legislative leaders and the governor say they intend to continue the ongoing
While lawmakers’ budget spends $13.3 billion in total funds; Sununu’s proposed budget would spend $13.1 billion.
The Legislature’s budget spends $5.5 billion in state general funds, which is approximately $500 million more than the budget proposed by Sununu.
Garry Rayno may be reached at firstname.lastname@example.org.