Bipartisan Deal Reached on State Budget

Sep 15, 2015

Legislators have reached a deal with Gov. Maggie Hassan on the state budget. 

The details of the deal have not been made public yet, but a summary provided to NHPR shows that it centers on the Republican-backed proposal to lower New Hampshire's business tax rates. Under the compromise plan, the Business Enterprise Tax and Business Profits Tax would be lowered in two steps: once in 2016 and again in 2018.

But the second reduction would be contingent on total state general fund revenues meeting certain targets. If revenues fall short of those targets, the second round of rate cuts would not take effect.

The rate cuts outlined in the compromise would be the same as those passed by Republicans this spring, but they would take effect one year sooner. The original Republican proposal did not include the required revenue targets.

In addition, the compromise budget plan would fund a pay raise for state employees. The raise would increase wages for state workers by 2 percent in 2016 and another 2 percent the following year.

Getting the budget deal in place will require a series of legislative votes. Lawmakers are scheduled to return to Concord Wednesday to vote to override Hassan's veto of the Republican-passed budget. But lawmakers will first vote on the compromise budget deal. If that passes, Hassan will then ask Democratic lawmakers to vote to override her veto of the budget, meaning the compromise will, in effect, serve as an amendment to the budget passed by the Legislature in June.

Full details on the deal are expected to be announced this afternoon.

NHPR's story from earlier today follows below:

Since Hassan vetoed the budget passed by the Legislature in June, she and top Republicans from the House and Senate have met almost every week to try to craft a plan the three sides can agree on. 

But as House Speaker Shawn Jasper said, there hasn’t been much progress. 

“That has been part of the issue," Jasper said. "We keep meeting, and we keep agreeing to disagree.”

Those meetings continued through Monday, but still no deal has been put in writing. What is clear, however, is that any compromise budget is likely to hinge on one issue: the state’s business taxes. Specifically, whether to cut those tax rates, how much to cut them by, and how to pay drops in state revenues caused by the cuts.

The Republican-backed cuts would lower the rates of the state’s two main business taxes, and phase them in over three years. The two taxes, the Business Profits Tax and the Business Enterprise Tax, together account for the state’s largest revenue source. 

Hassan has said repeatedly that these cuts would only benefit large corporations and would “blow a $90 million hole in future budgets.”

Republicans, including Majority Senate Leader Jeb Bradley, strongly disagree, saying these cuts are necessary to attract more businesses to New Hampshire. Bradley said his party will not sign off on a new proposal unless it includes lower business tax rates.

“She has told us numerous times that she doesn’t believe that the business tax cuts are appropriate," Bradley said in an interview. "Well, we disagree and that is where we are at."

During this budget stalemate, the state has been running on spending levels from the last fiscal year. In most cases, this means state agencies are getting less money than they would under the vetoed budget.  

The last public negotiations were back in July, when Hassan introduced what she called a compromise plan. Her proposal included the business tax cuts, but also added several new taxes and fees. Republicans immediately rejected it, but have indicated they would approve a pay raise for state employees, which Hassan pushed for in her plan.

As far as Hassan is concerned, her latest offer is still on the table. 

“I am again encouraging legislative leaders to come up with a counter proposal so that we can continue moving toward a solution," she said.

It’s unclear whether Hassan’s last offer will be the basis for any compromise, but both sides agree there is no path forward without a bipartisan budget deal. 

“We can’t override the governor’s veto without the support of our democratic colleagues in the House and the Senate, and clearly that won’t happen unless the governor says 'OK,' ” Jasper said.