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House GOP members say their new plan to cut taxes will help Granite State families thrive. Democrats denounced the tax cut plan as a $350 million corporate giveaway.

Familiar battle lines were drawn in Concord on Tuesday when Rep. Joe Sweeney (R-Salem) presented the GOP’s Consumer Tax Relief Act to the House Ways and Means Committee, calling it a “beacon of hope” for New Hampshire’s struggling businesses and communities.

“(This is) a crucial piece of legislation that not only reflects our commitment to fiscal responsibility but also addresses the pressing needs of Granite Staters in these challenging economic times,” Sweeney said. “Month after month, Granite Staters are grappling with the rising expenses that are stretching their budgets to the breaking point. In these times, when factors beyond our control are making life harder for our people, it is imperative that we take decisive action to provide relief where we can. One of the most effective ways we can do this is by cutting taxes here in New Hampshire, and that is precisely what the Consumer Tax Relief Act aims to achieve.”

The bill reduces the Business Profits Tax rate by 0.1 percent a year from 7.5 percent to 7 percent by 2030. It takes a similar approach to the Business Enterprise Tax rate, lowering it from 0.55 percent to 0.35 percent over the same period. It also cuts the Meals and Rooms Tax rate from 8.5 percent to 6.0 percent by Fiscal Year 2027.

And the proposal would also phase out the Communications Services Tax Granite Staters pay on their “two-way communication services” (wireless services and cellphones), which are currently taxed at seven percent. Under Sweeney’s proposal, the tax would be reduced over time and eventually eliminated by 2027.

House Democrats released a statement Tuesday claiming the tax cuts only benefit “multinational corporations” and would lead to defunding critical services like the Department of Safety, the Veterans Homes, Child Protective Services, and Community Colleges. 

Rep. Susan Almy (D-Lebanon) pushed Sweeney about the economic impacts, saying the tax cuts would be a disaster for state government agencies that rely on the funding.

“Do you understand what this does to the state government, which is suffering from the same inflation everybody else is?” Almy said.

The tax cuts would have a net positive impact for everyone, Sweeney countered. Cutting the business taxes would lead to more business investment and economic growth. Eliminating the Community Services Tax and cutting the Rooms and Meals tax will make New Hampshire more competitive with Massachusetts and foster more economic activity. Overall, the cuts will help generate more tax revenue for the state by boosting economic activity, he said.

“We’ve seen successful tax cuts in New Hampshire increase revenues,” Sweeney said.

New Hampshire’s GOP-controlled legislature already cut business taxes, and it is in the process of phasing out the state’s last remaining income tax — a tax on interest and dividends income. Sen. Dan Innis (R-Bradford), who led the charge to end the interest and dividends tax, wants caution exercised with any tax cut proposals.

“We have to be careful this year with what we want to do,” Innis said.

New Hampshire’s generally strong economy is showing some soft spots, Innis warned. Revenue may not be where it was a few years ago and there are early signs that could be trouble. For example, the real estate transfer tax might be lower than in previous years due to the restrictive housing market, he said.

New Hampshire weathered the economic turbulence created by the COVID pandemic, coming through with higher than anticipated revenues and a healthy rainy day fund, Innis said. Voters expect Republicans to be responsible with their money.

“I support cutting taxes where possible, but it’s a balancing act,” Innis said.

Sometimes, that means returning taxpayer money to help spur economic activity, and sometimes, that is deferring spending on big-ticket projects, Innis said. A $40 million proposal for municipal roads and bridges may need to wait, he said, especially after the state provided funding in the last session.

“We want to provide that support if we can,” he said. 

New Hampshire lawmakers only have until Thursday to finalize what the final state budget will look like for the next biennium, but there are two issues that could hurt its chances of getting passed in the full House.

One of the policies is not even related to monetary funds, it’s about a family planning contracts provision that was hotly contested in the Senate version of the state budget last month.

The Senate added language to its budget prohibiting the state from giving money to health care facilities to provide abortions. Republicans argued the language simply codifies current practice under the federal Hyde Amendment, but Democrats called it an attack on women’s health.

“The decision by House conferees to accept the Hyde amendment as part of the state budget proposal is a completely unnecessary attack on women’s health,” said Rep. Mary Jane Wallner, D-Concord, ranking Democrat on the House Finance Committee and a budget conferee.

“Because federal law already prohibits the use of tax dollars on abortion services, this amendment is a political statement, not a budget statement,” she added.

A conference committee is working to compromise on differences between the $11.8 billion budget passed in the Senate and an $11.9 billion spending plan proposed by the House Finance Committee that was eventually rejected by the full House after conservatives voted against the budget with Democrats.

Wallner blasted Republicans for sneaking the provision into the budget without public input.

“These provisions never received a public hearing in either the House or Senate, in direct violation of the legislative process,” she said. “If Republican lawmakers are going to turn the budget process into a partisan debate over social issues, the least they can do is follow their own rules and be transparent about it.”

Budget writers began hammering out the details in the conference committee on Friday, with less than a week to submit a budget report by Thursday, so both legislative chambers can vote on the final version of the state budget by June 22. The current fiscal year will end on June 30.

The move to include the abortion provision signals that House GOP leadership is looking to work with conservative members, instead of Democrats, to get a budget passed. Several Democrats in the House have reportedly called the provision a “deal breaker” and if it’s included in the final version, they will vote against it.

The Senate, since it’s a smaller body of 24 members, is not as politically divided as the 400 legislators in the House. The House has several different caucuses, all wanting something different out of the state budget.

In April, the House failed to pass its version of a budget for the first time since records were kept in 1969. Members of the conservative House Freedom Caucus sided with Democrats to defeat the plan crafted by House GOP leadership citing that spending was too high and there weren’t enough tax cuts.

The Senate version included cuts to the state’s business profits tax and business enterprise tax. House Speaker Shawn Jasper took to Twitter to indicate his support for these cuts.

I support biz tax relief for NH job creators. I urge House colleagues to support our budget that will contain responsible cuts. #NHPolitics

— Speaker Shawn Jasper (@NHSpeaker) June 12, 2017

But the House Freedom Caucus and one of its members, Rep. Victoria Sullivan, R-Manchester, asked if those were the only tax cuts planning to be included in the final version.

Looking forward to more information. Are biz tax cuts the only cuts?

— Victoria Sullivan (@VSullivan4NH) June 12, 2017

With more, or other, tax cuts in the state budget, conservatives could be more inclined to support the GOP-led spending plan. Yet, if the abortion provision and no tax cuts are included in the final version before the House next week, there might not be a budget passed before the end of the fiscal year, which means lawmakers would need to pass a continuing resolution to fund the state government at its current levels and then come back to negotiate a budget again in the fall.

A lot could still happen in the final negotiation days.

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The Senate Finance Committee finished crafting its version of the state budget on Wednesday. It largely resembles what Gov. Chris Sununu proposed in February, except for new business tax cuts and a multimillion dollar investment in mental health services.

The committee voted 4-2 along party lines to approve a two-year, $11.8 billion state budget. Republicans believe the spending is conservative enough and tackles important issues facing the state, such as the mental health crisis. Democrats argue the budget doesn’t focus enough on higher education, public health, and workforce training initiatives.

“It’s a solid budget that provides what New Hampshire needs,” said Senate President Chuck Morse. “We certainly have had lists of things that we couldn’t fund, like increased funding for the university system, that we just can’t get to in this budget if we’re going to live within our means.”

One of the biggest differences between Sununu’s proposal and the Senate Finance Committee’s spending plan is the cut in the state’s business profits tax (BPT) and business enterprise tax (BET). Sununu’s budget didn’t include them.

Under the measure, the BPT would drop to 7.7 percent in 2019 and 7.5 in 2021. Meanwhile, the state’s BET would fall to 0.6 percent in 2019 and 0.5 percent in 2021.

“The budget passed by the Senate Finance Committee does not increase or create any new taxes or fees and relies on realistic revenue projections,” said Senate Finance Chair Gary Daniels. “The budget also addresses our state’s top priorities including providing resources for those most in need. This budget also includes additional business tax cuts and increases small businesses’ ability to make capital investments. This allows businesses in New Hampshire to create good paying jobs and grow their business, keeping our state competitive with other states in New England and nationally.”

The two Democrats on the committee, Dan Feltes of Concord and Lou D’Allesandro of Manchester, voted against the budget, saying several necessary programs are underfunded.

“This budget fails to fully fund full-day kindergarten, fails to fully fund our efforts to combat the opioid epidemic, and fails to adequately meet the needs of those suffering from mental illness,” D’Allesandro said. “Make no mistake, this is not the budget I wanted and I will continue to work to ensure that the critical needs of the people of New Hampshire are met.”

The Senate Finance Committee’s budget leaves out money for full-day kindergarten, which Sununu included in his proposal. Those funds, though, are part of a separate bill making its way through the Legislature.

The budget also calls for more than $17 million in spending to increase the number of mental health beds and expand mental health services. That measure was not in Sununu’s budget, but he supports it. It also increases funding for additional social workers and supervisors in the Division for Children, Youth and Families (DCYF). The Alcohol Fund is seeing an allocation of 3.4 percent of revenues, which is up from 1.7 percent in the current budget.

“We addressed our state’s most critical needs, including programs to benefit families with a disabled child and adding 60 new beds and community treatment options to relieve the growing mental health problem,” Daniels said. “We also doubled the Governor’s Commission on Alcohol and Substance Abuse Prevention, Treatment and Recovery to bring new resources into our communities combating the heroin crisis. We also made sweeping changes to the leadership at the Division of Children, Youth and Families and added more caseworkers to ensure our kids’ best interests are being taken care of and they are protected abuse and neglect harm.”

The Senate Finance Committee budget also approves the use of $2 million in unspent money from the 2017 Alcohol Fund for renovations and construction of a youth substance abuse treatment wing at the Sununu Youth Services Center in Manchester. An allocation of $250,000 per year for sexual and domestic violence prevention programs was also approved, along with $1 million in funding for 13 rape and domestic violence crisis centers operated by the N.H. Coalition Against Domestic and Sexual Violence.

Despite these additions, Feltes said the Senate GOP budget doesn’t reflect the needs of Granite Staters.

“This budget fails to include job training programs that would boost our workforce and close our skills gap, breaks promises made to our retirees and increases health care costs for our seniors,” he said. “It fails to live up to our obligations to Granite Staters living with disabilities by failing to fund our developmental disability waitlist and does not adequately deal with childhood mental health. And it fails to provide resources to reform DCYF and protect our most vulnerable children. Quite simply, this budget fails to adequately address the critical and time-sensitive challenges facing our state.”

The budget go the Senate floor for a vote. Usually, after the full Senate approves of its budget, the Senate and House confer to iron out differences between the two budgets. However, the House was unable to pass a budget this year. After the Senate approves of the budget, it will ultimately need to be approved by the full House.

The real test of the budget will be in the lower chamber, after conservative members sided with Democrats to sink the House GOP leadership’s plan last month. They cited an increase in spending and lack of tax cuts as reasons for opposing the budget. With BPT and BET tax cuts, it’s possible they might support the Senate’s plan, which included several provisions from the House budget.

If the state budget makes it through the House, it will head to the governor’s desk for his signature. The whole process needs to be done by the end of the fiscal year on June 30.

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Earlier this month, Democrat Steve Marchand announced he would run for governor in 2018. It’s only three months into Republican Gov. Chris Sununu’s term, which is why Marchand’s announcement was surprising.

Marchand is a Manchester-native and is a first generation Granite Stater. His parents immigrated from Quebec. He was a small business owner, the former mayor of Portsmouth, and director of corporate relations for the University of New Hampshire. He came in second in the Democratic gubernatorial primary in September 2016.

Marchand has been laying the ground work for his gubernatorial campaign for the past few months, meeting with various Democratic groups and committees. He’s already being attacked by the Republican Governors Association for his position on taxes and single-payer healthcare.

NH Journal spoke with Marchand shortly after his announcement to discuss his campaign, what he learned from his previous run, and what voters can expect to see in the coming months. Some responses were lightly edited for length.

NH Journal: Tell me again why you decided to run, and why did you announce so early?

Steve Marchand: The reason I’m running really stems off of my experience last year. We live in a very challenging time in New Hampshire. I believe we need a mission statement that drives…our efforts and resources towards achieving a specific mission and that mission is to be the best state in America to start a family and to start a business. The reason I say that is because I think our two biggest challenges at stake if we are to thrive in the next [few] years is we need to get younger and we need to get more entrepreneurial and nimble as an economy. I don’t believe, with all due respect to our current governor, that there is a specific mission to what he’s trying to achieve, and I don’t believe the policies that he pursued up to this point would move us toward a more younger and entrepreneurial economy. I want to get us in the right direction. If you look at the lack of organization, the lack of focus, and the lack of success early on in 2017, it is a direct reflection of a lack of specific vision, purpose, and mission in Gov. Sununu.

NH Journal: But why did you announce so early? It’s only been three months into Gov. Sununu’s term.

Marchand: It is a little bit earlier than usual, but these are unusual times. A lot of that is driven at the national level with President [Donald] Trump who is already doing rallies for 2020. Gov. Sununu was doing fundraising in Washington for his 2018 campaign. Because we live in these unusual times…it means that if you want to move in the right direction, you don’t have the luxury of waiting while others move forward, no matter how early on the calendar it happens.

NH Journal: You came in second in the Democratic primary after jumping into the race late in the game. Besides announcing early, what is going to be different about this campaign?

Marchand: I got in awfully late last year. It was not a strategy. It was just the way life foregoes. A number of people approached me in March of last year suggesting I would make a very good candidate because they know my background. I had very little money, very little time. I spent about $100,000 total. I got outspent 18 to 1 by the person who beat me [former Democratic gubernatorial nominee Colin Van Ostern]. With very little time and no TV ads or direct mail, it really was the definition of a grassroots effort. So I believe that the message, which is a data-driven message, focused on the mission as I mentioned earlier, resonates not just with Democrats, but across the political spectrum. So starting early allows to me invest more time on the ground. It will make me a better governor. I will continue to learn from people as I campaign. It also means I start with a base of significant support and name identification that simply was not there a year ago when I started.

Photo Credit: Steve Marchand for New Hampshire Facebook page

NH Journal: You ran as a progressive, but fiscally responsible candidate last time. Is that still you? Are there any changes in your platform from before?

Marchand: My value set and my view of the priorities will look very familiar to people who followed my candidacy in 2016. There are some places where there has been a refinement or continued development of knowledge. I am a proud progressive and I’ve got a proud record of fiscal responsibility, and I’m always looking for ways to move ideas and turn them into law.

NH Journal: Gov. Sununu has made encouraging new businesses to come and stay in the state a priority. How would you plan on doing that?

Marchand: I’ve known Gov. Sununu for a long time and he’s a good guy, so it’s obviously nothing personal. However,…the policies he has pursued to grow the economy, largely run 180 degrees from what the data tell us we should be doing if we actually want to create jobs and see economic growth. For example, Chris and the Republican legislature want to cut the Business Profits Tax. Anybody who has spent anytime with entrepreneurs or being an entrepreneur will tell you that most new businesses don’t make a profit in the first five years. They lose money at the beginning. It’s really hard to start a business and see it to the point where it becomes a profitable entity. When we cut the Business Profits Tax, we accelerate what has been going on in the state for 50 years under both Democratic and Republican administrations and that is the downshifting of responsibilities and cost from the state level to the town and local level. If you focus on local property taxes and cutting the Business Enterprise Tax, you will be directly and positively impacting the segment of economy where 80 percent of net new job growth comes to fruition. I think that Chris is focused on talking points when he focuses on the Business Profits Tax, but we need to focus on the data. And the data tells me that focusing on the Business Enterprise Tax and on reducing local property taxes is the winning formula for tax reform that will lead to job creation and economic growth.

NH Journal: You say that it’s crucial to have young people in New Hampshire to become the best state in America. How do you plan to encourage them to stay in the state?

Marchand: I think of dealing with the younger population as a two-part challenge. I don’t think the current governor thinks of it this way. I don’t think our legislature thinks of it this way. I call them [young people] the numerator and denominator problem. The denominator problem is how can we attract young people to come work and live in the state. The problem with that is when you have an ever shrinking number of young kids in the state, you can’t keep 100 percent of them, even if you made college free for everyone. We have to be the most inclusive state that we can be as it relates to immigration. The states that are getting the youngest are seeing the largest influx of immigrants. Some of the rhetoric that has come from President Trump, Gov. Sununu, and members from the Republican legislature make it more difficult for immigrants to see New Hampshire as a great place to come. That’s a shame. If we’re going to get younger and more entrepreneurial, aggressively pursuing pro-immigration policies is going to be an important part of solving our denominator problem because the numerator problem is how can we keep more kids that are already here in the state. The pilot program between higher education and New Hampshire businesses I would pursue that would cost approximately $5 million a year in three programs: computer science, nursing, and education because those are three places where we don’t have enough talent to match the demands. It would create a debt-free college experience for students that enter the program…to work with New Hampshire-based companies or entities. And if they did that, kept their nose clean, kept their grades up, and then worked for one of those New Hampshire-based employers for a period of years after graduation, they would have no debt. It would be half-paid by the private sector participants and half-paid by the targeted state grant for these programs.

NH Journal: You have previously discussed legalizing and taxing marijuana, and increasing the gas tax as ways to increase revenue for the state. Are those positions you still support?

Marchand: Those are areas I continue to discuss. I do favor the legalization, regulation, and taxation of marijuana. I do feel it would have a net positive impact in terms of lowering costs for law enforcement and judicial [entities]. I also think that it will improve health outcomes and reduce addiction rates, and it will generate revenue. The gas tax is…not desirable. That’s definitely a flaw, but I believe when you can attach the revenue stream to the use of the revenue stream, that’s a more transparent system and because infrastructure is a priority. The business leaders I’ve talked to over the years also identified it as a priority. For now, the gas tax is one of the most direct tools in the toolbox. It is something I still have on the table because I think [infrastructure] is one of the biggest barriers we face to economic growth if we do not address and updated electric grid, ensured drinking water, improved Internet access particularly in rural areas, and improving our roads and bridges. Conservative business people tell me ‘why would I invest in New Hampshire, if New Hampshire doesn’t invest in New Hampshire,’ and they meant these infrastructure issues.

NH Journal: What about sales tax and income tax? You were against those previously. Are you still against them?

Marchand: That is correct.

Photo Credit: Steve Marchand For New Hampshire Facebook page

NH Journal: One of the most important issues still facing the state today is the opioid crisis. What do you think still needs to be done to tackle this problem?

Marchand: This is one area in New Hampshire where we have seen bipartisan efforts. I applaud people on both sides of the aisle. Over the last few years, I think they have taken this issue with the level of gravity that is required and I believe there are many more opportunities in the next several years to continue that bipartisan spirit. It doesn’t mean we’re anywhere near where we need to end up, but we have everyone rowing in the same direction about the situation. We need to continue to provide the resources that continue to give a suite of services to those in the midst of recovery, beyond simply detoxification of the addictive substance. Until recently, I think a lot of people in the world of politics saw recovery as largely detoxification. The reality is that if we simply just detoxify people and then we put folks back in a situation where addiction became the norm, the likelihood of relapsing is really high. We need to work together and it requires a level of collaboration that is not inexpensive. But it’s a hell of a lot less expensive than not doing it. That needs to be our attitude. I priced it out last year in that it would be an additional $8 to 10 million a year of resources that would provide a level of stability for local and regional recovery centers to focus less on having to worry about where the next grant will come from in order to stay open. It would allow these people who are doing amazing work in the field of recovery to be able to focus on their gifts and skills to help people. I think it’s a relatively low amount of money…that would improve lives, reduce costs, and directly address what New Hampshireites say is the most important issue facing us.

NH Journal: What do you think needs to happen next year in order for the Democratic Party to gain seats back in the Legislature?

Marchand: Once every four years, the country reorganizes what it means to be a Republican and Democrat. We are in the midst of the next resorting of how people look at what it means to be a Democrat and a Republican. We are not close to the end of that process. We are right in the middle of it. Donald Trump and Bernie Sanders understood better than most the level of economic anxiety that millions of Americans across party lines are feeling. There are a lot of people who are really angry and I get it. I believe that in 2018 and beyond, and it’s part of why I am passionate about this marathon that I’ve begun as a candidate, is to rebuild the future coalition that I believe can be a Democratic majority is one that is passionate about civil liberties, that is passionate about entrepreneurship as the centerpiece to economic growth, that understands that if you think about the economy right way, you can lower income inequality, which right now is splitting our country up in highly destructive ways. We need people that have spent time professionally, politically, and in their personal lives understanding these aspects of it and are unafraid and confident to use that data, experience, and information to lead that way forward. That’s part of what excites me about this marathon that I’ve begun is I feel I have a good idea about where we need to go as a state and want to help us get there.

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Three months into Republican Gov. Chris Sununu’s term it already looks like he’s got a couple challengers in 2018. The first to announce in March was Jilletta Jarvis for the Libertarian ticket. Now, Steve Marchand, former Democratic mayor of Portsmouth is throwing his hat into the ring too.

Do these names sound familiar? Well, they both ran for governor in 2016. Jarvis was an Independent and Marchand came in second in the Democratic gubernatorial primary, finishing behind eventual nominee Colin Van Ostern.

“We can make New Hampshire the best place in America to start and raise a family, and the best place to start and grow a business,” Marchand wrote in a Monday email to supporters. “We will aspire to be the example of what America, at our best, can be. That’s why I’m running for governor.”

Last year, Marchand trailed behind his Democratic challengers in campaign fundraising and the polls, often coming in behind businessman Mark Connolly and Van Ostern, the former executive councilor. However, he managed a surprising second place finish, garnering 25 percent of the vote. Van Ostern received about 52 percent and Connolly took 20 percent.

On a Tuesday press call, Marchand chalked up his difficulty in fundraising to his timing and to entering the race late, but told reporters he enjoyed the experience.

“Keep in mind, last year, I got to second place in our primary despite very little time and consequently very little money,” he said.

Now, he’s not going to make the mistake of entering late again, and while it is definitely early to announce a run for the Corner Office in 2018 (more than a year-and-a-half out), Marchand said he couldn’t sit idly by under the leadership of President Donald Trump and Sununu.

“I realized there was an unprecedented passion unprecedented due to a lot of circumstances at the state and national level,” he said. “These are unusual times.”

Marchand has been quietly campaigning for the past few months, attending various Democratic meetings and doing meet-and-greets with his base. Already, he’s criticizing Trump’s and Sununu’s agendas. He pointed to Sununu’s first bill signing, which repealed required permits for concealed weapons.

“That’s not the direction we need to go in as a state,” he said. He also accused Sunnunu of wanting to weaken unions, suppress voter turnout, and privatize public education.

So what makes this campaign different than his last one?

He’s taking his job of fundraising more seriously, by hiring Nick Daggers of the CFO Consulting Group. Daggers specializes in fundraising for political campaigns.

Marchand only raised about $30,000 during his campaign last year, according to campaign filings with the secretary of state’s office. Van Ostern raised $1.1 million in just the primary election.

Daggers even wrote a blog post on his company’s website discussing the importance of early campaign fundraising.

“An early fundraising start will give the opportunity to build a solid infrastructure, allow the candidate more time to campaign, and most importantly give you the greatest chance at victory,” he wrote in 2013.

If Marchand can drum up a solid war chest before other candidates jump into the race, he could be a serious contender before he actually starts spending any of it.

Don’t expect too many changes in his platform, though. Marchand still supports legalizing and taxing marijuana and increasing the state’s business profits tax, which would supply millions of dollars to support state aid for full-day kindergarten and improve the state’s infrastructure, among other policies.

Yet, his record is already being criticized by the Republican Governors Association.

“From property taxes, to the gas tax, to the business profits tax cut, Marchand has consistently supported increasing the tax burden on New Hampshire families,” the group said in a statement. “While Steve Marchand may claim to be the most fiscally responsible candidate for governor, his campaign won’t be able to rewrite his record of supporting higher taxation on Granite State voters.”

Besides entering the race early, Marchand said he’s more committed to expanding his “knowledge base” and getting out to interact with voters on a grassroots level statewide.

“The more you go out and speak to groups and to people, the more you learn,” he said.

With this early momentum, Marchand also seeks to improve upon some mistakes his Democratic challenger made in the general election.

Van Ostern’s biggest struggle in his race was name recognition. A poll before the election found that only 10 percent of respondents did not recognize Sununu’s name, but about 28 percent never heard of Van Ostern. While Van Ostern benefited from a strong ground game from the New Hampshire Democratic Party and a bigger war chest than Sununu, the voters didn’t turn out for the Democratic nominee like they did at the top of the ticket.

By getting out of the gate early and meeting with voters now, Marchand is increasing his chances that come Election Day next year, the voters will remember who he is.

Yet, Democratic voters might also recognize Connolly’s name on the ballot. The former gubernatorial candidate is also mulling another run. He stirred some intrigue when he had a paid “sponsored post” on Facebook last week.

Connolly said Marchand’s announcement was too soon and that now is the “time to governor” and the “focus should be on the budget.”

“We should be working with our leadership in the Senate and House to get our best possible budget for the state,” he told NH1 News. “After the budget plays out… I’ll consider running again if the ideas I offered in 2016 aren’t being fully addressed. But certainly at this stage you don’t say if you’re in or you’re out.”

Marchand’s focus is on Trump and Sununu. He believes Sununu’s “full-throated” support for Trump during the campaign and still in his term, will ultimately be his downfall.

“It’s never too early to begin what’s going to be a long and difficult process,” he said. “It is difficult to defeat a first-term incumbent governor. I’m under no illusions. I will be a happy warrior. I will not be outworked. I know the magnitude it will take.”

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It’s official. New Hampshire is ranked the 2nd best state in the country. Well, according to U.S. News & World Report, which released Tuesday the findings of its “Best State” rankings.

To some, the rankings are looked at as a symbol of the progress the Granite State has made. For others, it’s seen as a waste of time and not reflective of what’s actually going on in the state.

That’s true, at least, for Louisiana, which came in last place, and whose governor told The Boston Globe that the list used statistics and indicators from before his term. A spokesman for Gov. John Bel Edwards, a Democrat who took office in 2016 after years with Republicans in charge, said the ranking system could be helpful in guiding public policy, but it “lacks critical information.”

New Hampshire’s southern neighbor, Massachusetts, took the title as “best state” and state officials, on both sides of the aisle applauded the news.

Regardless if states agree with the rankings or not, it’s true that they do shape the public policy discussion and highlight issue areas where the state could improve.

Even Gov. Chris Sununu told reporters that the number 2 ranking “helps immensely” as he works to court new businesses from out-of-state.

“Though we have much work to do to ensure that our state continues to grow and thrive, this announcement is something that Granite Staters can be particularly proud of today,” he said in a press release. “It will also serve as useful information to those considering moving their home or business to New Hampshire.”

The survey was conducted by evaluating states across 68 metrics and tens of thousands of data points provided by McKinsey & Company’s Leading States Index. The seven different categories — healthcare, education, infrastructure, crime and corrections, opportunity, economy, and government — were weighted based on a national “citizen experience” survey asking people to prioritize each area in their state and their levels of satisfaction with government services. The combined ranking in each category determined a state’s order.

For New Hampshire, the state ranked 4th in healthcare, 3rd in education, 12th in infrastructure, 13th in crime and corrections, 1st in opportunity, 13th in economy, and 30th in government.

Photo Credit: U.S. News & World Report

As with any good news in the state, the second place ranking quickly became a battle over who should get credit for it. Can Sununu, who has been in office for only two months, tout it on his resume? Should former Democratic Gov. Maggie Hassan receive the praise? Or how about the Republican-controlled Legislature which passes the bills and laws impacting these rankings?

New Hampshire Democratic Party Chairman Ray Buckley said the state’s high ranking reflects the accomplishments of Hassan, who is now the freshman senator from the Granite State.

“Thanks to Senator Maggie Hassan’s steady leadership in the Governor’s office over the last four years, New Hampshire has been recognized as the number one state in the nation for economic opportunity and the number two-ranked state overall,” Buckley said in a statement.

“As Governor, Senator Hassan worked across party lines to balance two fiscally responsible budgets that protected critical economic priorities for our people and to pass and reauthorize our Medicaid expansion program that has strengthened the health and financial security of more than 50,000 hard-working Granite Staters,” he added. “She also froze in-state tuition at our universities and reduced tuition at community colleges, and cut taxes for our small businesses that are the backbone of our economy.”

Democratic politicians also said Hassan’s leadership deserves the credit for the high ranking. Sen. David Watters, D-Dover, said “Maggie Hassan made this happen.”

@Maggie_Hassan made this happen. In Concord, we must first do no harm to a thriving NH economy. @NHDems #nhpolitics https://t.co/IUtDmI2qYn

— David Watters (@SenDavidWatters) February 28, 2017

However, others said it doesn’t matter who is responsible for the high ranking. It should be on what the state needs to do in order to improve, said Greg Moore, state director for the New Hampshire chapter of the Americans for Prosperity.

Overrated: worrying about who's responsible for NH being #2 in state rankings. Underrated: worrying about why NH isn't #1. #nhpolitics

— Greg Moore (@GregMooreNH) March 1, 2017

For example, even where the state received high rankings, there are still some troubling statistics within those numbers. New Hampshire ranked 3rd for education. It came in first place for “Pre-K to 12” education, for its strong test scores and college readiness. Yet, it came in 39th for higher education due to high college costs and amount of student debt at graduation.

Sununu admitted to the high cost of tuition for the public university system. In his budget that he revealed in February, he didn’t increase funding for it either, but he revealed a plan that he believes will help solve the problem.

“I’ve put forth a plan for a $5 million scholarship program in the state, not to help 10 or 20 or 100 students, but over 8,000 students, [who] can really grab on to these funds and not just use them for our university system, but they can use it for community colleges, career schools, private schools,” he told NH1 News. “Whatever pathway they think will best provide them the tools to enter the workforce. We’re making those changes today and again I think we’ll see a lot of growth in those rankings as we move forward.”

Moore also said the state should focus on the business tax rate as a way to stimulate economic growth and encourage businesses to expand to New Hampshire. In the rankings, New Hampshire ranked near the bottom for GDP growth (32nd place). He pointed to the fact that the Granite State has a higher business profits tax rate (8.2 percent) than Massachusetts (8 percent). He is supportive of further reducing that rate.

“It certainly is fair to point out that that legislative leaders pushed for the tax cuts strongly, and that then-Gov. Hassan vetoed the budget over them, but thankfully we were able to make them a reality,” he told NH Journal. “If we want to be more competitive than Massachusetts, we need to continue to expand on the successful business tax relief efforts we’ve had to this point.”

By looking at the low rankings in the different categories for New Hampshire, lawmakers can figure out what they need to discuss to take the title of “Best State” away from the Bay State.

Although, New Hampshire is already technically the “Best State” since Massachusetts is a Commonwealth…if you want to be technical.

As a Mass ex-pat, I would point out that MA is not a state, it is a commonwealth, for what it's worth. Thus, NH best state. #nhpolitics https://t.co/uBKICQ4xVW

— Greg Moore (@GregMooreNH) February 28, 2017

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When neighboring “Taxachusetts” was considering a hike in its already high income tax in 2013, many people in the Granite State welcomed the proposal.

“Welcome to New Hampshire!,” said Senate Majority Leader Jeb Bradley at the time. “We should be putting up billboards. We have long marketed New Hampshire’s attractiveness as a place to do business for precisely this reason.”

But recent research suggests that raising taxes and spending in one state can have substantial negative effects on people in neighboring states.

While border counties within a state that raises taxes are obviously affected by the change, about half the effect spills over to counties on the other side of the border, found Sam Peltzman, a researcher at the University of Chicago, in a study released last year.

Research suggests areas that rely on interstate business suffered in the wake of a 1 percent rise in a state’s taxes and spending. (Credit: University of Chicago)

Peltzman examined economies in neighboring states from 1975 to 2012. He measured employment levels, wages, and the number of businesses established after tax and spending policies were implemented. The results suggested that the economy of a border county shrank when its state’s taxes and spending increased, and local economies on the other side of the border were also impacted.

“The results in this paper tend to add weight to the view that larger state and local government is purchased at the cost of a smaller private sector,” Peltzman wrote in his study.

So why are two state’s economies, like Massachusetts and New Hampshire, so intertwined? Well, for many people who live in border cities and towns in the Granite State — Nashua, Londonderry, and Salem, to name a few — they commute everyday to the Bay State for work.

When Massachusetts was considering a bump in the income tax, many residents who lived in or near Nashua said they would feel the effects of it when they took home a smaller paycheck. If they take home a smaller paycheck, they have less money to put back into the economies of the towns where they live.

Even New Hampshire businesses near the border can feel the impact of tax changes in the state south of the border.

Massachusetts changed its sales tax to include a “tech tax,” a 6.25 percent sales tax on computer and software technology services, which went into effect in 2013. It was a short-lived tax, quickly being repealed by former Gov. Deval Patrick, but even New Hampshire businesses with a physical presence in Massachusetts that provided Bay State customers with services covered by the tax had to pay it. A “physical presence” could mean having one sales representative with a home office in Massachusetts, according to some interpretations of the law.

In 2014, the Bay State also made some changes to its corporate income tax that impacted some New Hampshire businesses. It applied to any service-based business that has Massachusetts customers, like law firms, medical providers, and consultants, or businesses that sell some intangible products used in Massachusetts like the licensing of software.

These companies now have to pay an 8 percent tax on the revenue derived from those Massachusetts clients. Before, a New Hampshire company’s revenues collected from Massachusetts would be used to calculate the business profits tax (BPT) owed to New Hampshire. But now, businesses are double taxed. A company still must count all of its revenue for New Hampshire’s BPT, but the revenue collected in Massachusetts needs to be counted and taxed by the Bay State.

It can be a complicated system and, sometimes, New Hampshire businesses don’t even know when they would need to pay Massachusetts taxes. In turn, some companies think twice about doing business or hiring out of state for fear of having to pay more money to another government, which could affect their bottom line.

“State tax structures can create cross-border issues in a number of ways, including positive economic development in bordering communities that are able to draw businesses and individuals into the state as well negative impacts from tax policy decisions that create adverse tax climates causing individuals and businesses to leave the state for a preferential neighboring state,” said Kathryn Michaelis, an attorney in the tax practice group at the Rath, Young and Pignatelli law firm in Concord.

It’s not all doom and gloom for New Hampshire residents and businesses paying Massachusetts taxes. Many Massachusetts residents cross the border because New Hampshire has historically one of the lowest tax rates on cigarettes in the region, a lower gas tax, no tax on liquor sales, and no sales tax. This strategy allows the state to net revenue on the sales, despite the absence of a tax, which makes it appealing to other businesses and consumers, and pumps economic activity into the cities and towns on the border.

At one point, Massachusetts tried to capitalize on the cross-border purchases by challenging in court that they should collect taxes from a store that sells tires to Massachusetts residents in New Hampshire. A court disagreed.

But New Hampshire still struggles economically on several fronts, including high electricity costs, expensive property taxes, and a high cost of doing business in the state. Both Massachusetts and New Hampshire employees get paid more than average American workers, driving up employers’ labor costs.

“While a favorable tax climate may draw in businesses to a bordering community, the state and local officials must always be careful to not offer tax incentives or subsidies or restructure the tax system in such a way that it creates too much of a cost burden on the locality or state in the long-run,” Michaelis told NH Journal. “Each state and local jurisdiction needs to find balance in retaining and recruiting business while ensuring that its revenue remains steady to support government services.”

New Hampshire worked hard in the 1980s and 1990s to have the “New Hampshire Advantage” where students would graduate school, go to college, and eventually return to raise families and work. People from Massachusetts, New York, and New Jersey moved to the state and businesses would have access to this cluster of highly educated and skilled workforce.

By the 2000s, positive net migration stopped, college graduates moved away, and New Hampshire’s business climate was not as diverse. Now, politicians are trying to figure out how to deal with a workplace shortage and make New Hampshire an attractive place for businesses.

One way the Republican-controlled State House sees on getting their advantage back is through right-to-work laws, which would prohibit public and private sector unions from charging non-members fees for negotiating on their behalf. If passed, New Hampshire would become the only state in the Northeast to have a right-to-work law.

The cross-border economic relationship is not unique to Massachusetts and New Hampshire. Illinois and Indiana have a similar relationship, with my many people leaving Illinois due to its high taxes. The same is true for New Jersey and Delaware, where a high gas tax in the Garden State could benefit Delaware, yet both have high property taxes. What tax policy is passed in one state could spill over into its neighboring states.

Carl Davis, research director for the Institute on Taxation and Economic Policy, said it can be difficult to isolate the taxes and determine if economic growth or hinderance is a result of an increase or decrease in taxes.

“It’s not cut and dry,” he told NH Journal. “It’s hard to look back and see if a state raised taxes because they have a poor economy or because of their taxes, their economy is doing well. There are always trade-offs.”

But for New Hampshire and Massachusetts, the economies and tax policies of the two states seem to be fairly linked for its residents, businesses, and communities.

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