Where They Stand: Democrats' Economic Plans Entail Big Projects and (Potentially) Big Price Tags

Sep 8, 2016

Last week, we took a closer look at some of the economic proposals from the Republicans running for governor. This week, we’re catching up on where the Democratic candidates stand on these issues.

When you listen to the Democrats running for governor talk about their plans to boost New Hampshire’s economy, you’re likely to hear a laundry list of proposals: full-day kindergarten, commuter rail, making Medicaid expansion permanent, among other things

Scroll down for an outline comparing the Democrats' plans on taxes, commuter rail, the minimum wage and more.

The Republican field, as a whole, is focused primarily on lowering business costs as a priority for spurring economic development. Democrats aren’t ignoring those issues entirely, but the three major candidates – Mark Connolly, Steve Marchand and Colin Van Ostern – are building their economic policies around a number of other elements that, in their view, would help to grow the state’s economy.

“I think both sides, they see the same problem in that they’re very worried about young households in this state, both in terms of residents leaving and the lack of younger households coming to the state,” says Greg Bird, an economist with the New Hampshire Center for Public Policy Studies. “One prescription is, we just need to create more jobs, better paying jobs, and people will come here — which I think is very sound. I think people do move with their feet toward opportunity. The other side says, it’s some of that, but it’s also these other quality of life characteristics people also look for. It’s not just a simple, ‘I can go get a good paying job here.’ Maybe it’s, ‘Is housing affordable? What’s the tax situation?’”

But a lot of the other priorities the Democratic candidates are putting forward to address those other “quality of life characteristics” come with the potential for a significant price tag for the state.

While the Republicans shy away from any mention of a tax increase – and have talked up plans to keep lowering business taxes – the Democrats have all signaled a willingness to raise taxes or tinker with existing ones as a way to pay, at least in the short-term, for some of their proposals.

Here, though, there are notable divisions within the Democratic field.

Van Ostern and Connolly have both said they’re opposed to a sales or income tax, which is in line with the stance of successful Democratic candidates in recent decades. Marchand, however, hasn’t taken the so-called “pledge” against these broad-based taxes – though he told the Concord Monitor he opposes the idea of an income tax because of its potential effects on property owners.

On business taxes, Marchand says he would be open to reversing the reduction in business tax rates passed by the legislature last year. Connolly says he wants to look at restructuring the Business Profits Tax – who pays and how much – but hasn’t gone into specifics about how he would adjust it. Van Ostern, for his part, has stated generally that he’d be reluctant to go back on the tax cuts imposed last year.

As for other potential revenue sources: Van Ostern is proposing a 10-cent cigarette tax to help pay for a statewide full-day kindergarten, while Connolly says he’d also be open to raising the tobacco tax by 10 cents and directing those funds to fighting the opioid crisis. Marchand doesn’t support raising the cigarette tax, though, because that would depend on people continuing to smoke.

And, according to some outside analysts, Marchand might be onto something with that concern.

Smoking rates, generally, have been declining – so in the long run, raising the cigarette tax might not bring in the kind of revenue stream you really need to sustain state programs in a meaningful way.

But the same concerns could also apply, to some extent, to raising the gas tax – something Marchand and Connolly have both expressed support for. With cars becoming more fuel efficient, gains from that tax can only really go so far, too.

Marchand is the only candidate to put forward an idea for an entirely new revenue source: legalized marijuana. For one, Marchand says that the drug could be taxed to bring in more money to pay for state programs. But he also says that legalizing marijuana will help to reduce the amount of money the state’s spending now on law enforcement issues around that particular drug.

His opponents, Connolly and Van Ostern, haven’t entirely ruled out legalization – but Connolly, for example, says he doesn’t think that its potential as a revenue source should be a major part of the decision.

Even with these ideas, though, there are still significant question marks about how the Democrats would adjust the state budget to pay for some of the big-ticket programs on their agendas. Take Medicaid expansion, for example – all of the candidates say they’d like to make the program permanent.

“We know that the federal government is doing most of the heavy lifting, and they will throughout the long term, but that will decrease slightly,” says Bird, with the public policy center. “So the question is: Where will those monies come from? Right now, it’s mostly from the hospital system and insurers. Will they continue to foot that bill, or does the state have to come up with additional monies to do that, and how do we pay for it?”

So far, none of the candidates have spelled out what the future of that plan might look like, financially.

And overall, like their Republican counterparts, the Democrats don’t delve into too many details when it comes to their vision for the state’s economy.

Of the Democratic field, Van Ostern is the only candidate to put forward a formal plan outlining his economic vision for New Hampshire. While he does provide some level of detail – proposing a 10-cent cigarette tax increase to offset the costs of expanding full-day kindergarten statewide, for example, or referencing a plan that would allow the state to extend commuter rail for less than $5 million a year – the plan consists largely of broad goals instead of specific policy prescriptions.

Marchand and Connolly address their economic priorities on their respective campaign websites, and they’ve also offered some details about their preferred policies during debates, editorial boards and other interviews. Connolly, too, offered more details about some of his economic policies in a questionnaire submitted to NHPR.

“Ultimately, you have to tell us how you’re going to pay for it,” Bird says of the Democrats’ plans. “Not only how you’re going to pay for it, but how you’re going to pay for it on a sustainable basis — that’s really critical. Funding it for a year or two years [is] probably doable through short-term measures.”

But the ideas the Democrats talking about – when it comes to education, infrastructure and other projects meant to improve the economy overall – are fairly large-scale, long-term commitments.

“So you’re going to have to find a funding source for that, or the alternative is you’re going to have to cut elsewhere in the budget,” Bird says. “We’re always constrained.”