The Governor claims his proposed 2022-2023 budget provides $15 million in additional aid to municipalities based on anticipated increases in meals and rooms tax revenues over the next biennium. Yet he brags of cutting the Meals and Rooms Tax by a half percent (a decrease of over $1.5 million from current revenues). He uses federal moneys, much of which is a one-time Covid relief payment, to make up the difference in lost revenue due to the decrease in dining and tourism last year. Yet to make his budget look great, he projects an increase of over $29 million in revenue from the lower Meals and Rooms Tax over the next biennium. Where’s that coming from? Is it realistic to expect meals and rooms sales to increase by $62.6 billion by June, 2023?
The Governor cuts the Business Enterprise Tax (BET) by a small amount, but exempts nearly 30,000 small businesses from any BET at all. He brags that 90% of the revenue raised by the BET will now go directly to the Education Trust Fund. Does that mean that more BET money will go to the Education Trust Fund or that the gross amount will stay the same but, since the total BET money will decrease due to tax cuts, the percent of the total going to the Education Trust Fund will be higher?
Another sleight of hand involves the Business Profits Tax (BPT). The Governor does not propose any change in the BPT tax rate for 2022-23. However, before those small businesses exempted from the BET start celebrating, they need to remember that they have been able to deduct what they pay in BET from their BPT. If their BET is zero, they can expect the amount they have to pay in BPT to go up.
He states that he intends to eliminate the Interest and Dividends Tax over the next 5 years, but predicts that the Interest and Dividends Tax revenue over the next biennium will increase by $9 million, leaving it to the next Governor and Legislature to figure out how to fill the hole in year 5 left by the loss of $334.6 million of Interest and Dividends Tax revenue.
Instead of addressing the structural deficit we have (i.e.increased expenses due to inflation vs. fixed revenue sources), he is making it worse by decreasing the revenue sources.
The Governor brags that his budget ensures that we spend more money per child on public education than ever before. Garry Rayno, writing for InDepth NH (2/11/21), quotes Jeff McLynch of the NH Schools Fair Funding Project as saying, “total state education aid would fall by more than $100 million between the current biennium and the next if (the governor’s) plan were to become law.”
You can read the New Hampshire Municipal Association discussion of the implications of the Governor’s budget on local taxpayers HERE.
You can see analysis of the budget by Garry Rayno, InDepthNH HERE.
Or you can go directly to the source and read the Executive Summary of the Governor’s proposed budget HERE.