To some, Gov. Chris Sununu’s ‘Tax Cuts For Everyone’ budget plan seems too good to be true, proposing drastic tax reductions without significant spending cuts. And Granite State Democrats say that’s because it is. They argue Sununu is spending the $1.5 billion DC Democrats hope to send to New Hampshire to fund his tax-cutting budget.
“The Governor’s optimism of an increased business tax revenue while instituting business tax cuts is completely counterintuitive,” Deputy Senate Democratic Leader Cindy Rosenwald (D-Nashua) said in a statement. “In this budget proposal, Governor Sununu has increased the projected federal funds by roughly $445 million over the biennium.”
So, how much COVID-19 funding is Sununu counting on to make his tax cuts a reality?
Sununu’s response: “Not. A. Penny.” He told NHJournal his budget is based on New Hampshire revenues alone, separate from whatever monies the state receives from the $1.9 trillion COVID-19 package Democrats are preparing to pass on a purely partisan vote.
“The beauty of this budget is that it’s balanced in and of itself. We’re not relying on any money from the federal government. Any COVID money that comes in will be supplemental,” Sununu said.
But isn’t Sununu still freeriding off the feds by spending tax revenues likely to result from a state revenue “sugar high” thanks to $1,400 stimulus checks, direct local aid, and the rest of the $1.5 billion from Washington? Wrong again, the governor said.
“I think there will be benefits when people get their stimulus checks, sure. But we don’t count on that. That’s not included in our calculations.”
Sununu points out his budget uses the revenue projection from the Department of Revenue Administration, which is independent of his office. “Commissioner Stepp and her team are excellent. They take a very conservative approach and we usually end up in better shape than their projections. And I didn’t use their most optimistic numbers, we kind of kept it in the middle.”
Sununu agrees, however, that there will likely be an economic boost from federal aid to Granite Staters, which he says makes his budget math even stronger.
Either way, Sununu adds, “we can make these tax cuts work without the federal government’s help.”
NH Democrats are dubious.
“As a new homeowner myself, I am deeply invested in the wellbeing of my community and our state. But we cannot afford to pick up the tab so that large, out-of-state corporations can get a tax break,” said Rep. Manny Espitia (D-Nashua). “Governor Sununu’s vision might sound great from the podium, but I fear that this Republican budget will lead to decreased investment in public education and increased property taxes on the backs of citizens and small businesses across the state.”
Education spending is a challenge for New Hampshire, but there’s a fundamental reality many in Concord have yet to grasp: The state’s declining enrollment, a trend that began long before the pandemic. As a result, per-pupil spending continues to rise under Sununu’s plan.
“The Governor’s budget spends more money per child than ever before,” said Sununu spokesperson Ben Vihstadt. “The numbers cited in this budget are based on enrollment estimates for FY22 and FY23 that do account for some students choosing to return to public school districts. The numbers cited include all appropriations from the NH Education Trust Fund, including $30 million in one-time grants through the Public School Infrastructure Fund, divided by the public school enrollment projections for FY22 and FY23.”
Most notably, Vihstadt says, “these calculations do not include federal funding.”
Meanwhile, Sununu is resubmitting his proposal to give targeted aid to Granite State college graduates in key fields who chose to stay and work in New Hampshire.
“This plan expands funding for student loan repayment for recent graduates who pursue New Hampshire careers in healthcare, biotechnology, social work, and other related fields,” according to the budget’s executive summary. “And it doesn’t cost taxpayers a penny,” Sununu emphasized to NHJournal. “It’s paid for using our annual revenues from our 529 college savings plan — most people may not know it, but we have one of the best 529 plans in the nation.
“This isn’t loan forgiveness, this is a repayment plan that people have to earn,” Sununu pointed out.
So, does the Republican governor support the $1 trillion broad-based student debt forgiveness proposed by Sen. Chuck Schumer (D-N.Y.) and Massachusetts Rep. Ayanna Pressley?
“Absolutely not! That’s going to drive college prices through the roof. You’re creating all the wrong incentives. Colleges will raise their prices and students will expect that their debts will eventually be wiped out. Why not borrow more and more if you think the government’s going to come in and forgive it all?”
On Friday, Sununu appeared on CNBC — yet again — and used the budget debate to call out governors in other states who are looking to Washington for money to backfill their debts and underfunded pension obligations. “These other states are still taxing people at really high rates — we’re cutting taxes.”
Sununu also offered a warning to his fellow governors.
“If states are using [COVID-19 aid] to grow government and pay for their operations, they’re creating bigger problems for themselves down the road,” Sununu said.
“I’d caution the 49 other governors — you better be careful. If you’re thinking that money’s just going to replace revenue for the longterm, you’re going to create another long-term liability on your books. We’re just going to create jobs with it.”