Analysis: Sununu’s 2019 budget address

On Thursday, February 14, Gov. Chris Sununu presented his two-year budget proposal to the Legislature. The House and Senate may revise his budget as much as they choose, but his ideas set the stage for future state spending.

The last state budget totaled about $11.8 billion. Agencies reported a need of at least $12.8 billion to continue operations over the next two years, but requested $13.6 billion. Sununu’s budget totals $13.1 billion.

Here’s a summary of highlights from Sununu’s proposal.

Business taxes

Sununu started and ended his budget address with a plea to legislators to budget conservatively. In particular, he advocated for keeping scheduled business tax cuts.

Democrats leading the House and Senate support freezing business tax rates at their 2018 levels.

State business tax revenue was much higher than expected last year, partly due to tax changes at the federal level. Republicans say this is evidence that the state tax cuts are helping the Granite State economy.

Given federal tax changes it’s difficult to estimate future business tax revenue. Nonetheless, the Department of Revenue Administration estimates that the state would see $38 million more in 2020 if it freezes business tax rates at the 2018 levels.

Learn more about the debate over business taxes in New Hampshire

Last year’s surplus

With the help of high business tax revenues, New Hampshire closed out last year’s budget with a big surplus.

Continuing his theme of conservative budgeting, Sununu proposed using part of that surplus to add $27 million to the state Rainy Day Fund.

He wants to send another $63 million of the surplus to local school building aid – a huge increase over past budgets.

Public school funding

Sununu’s budget funds specific education initiatives – such as $8.6 million for career and technical education (CTE) – but he did not propose any major revisions to the statewide school funding formula. However, the threat of a lawsuit from property poor communities is pushing lawmakers to prioritize making a change.

There are many proposals in the House and Senate to revise how the state funds education on a per-pupil basis. Depending on which proposal wins favor, the state could be looking at anywhere from $34 million to $1.1 billion in additional school funding each year. One proposal would fund that through a tax on capital gains; another would have property-rich towns pay more to the state.

Learn more about the proposals to change school funding this year

Higher education funding

The governor’s budget includes a one-time, $24 million dollar investment in healthcare and nursing programs within the university system. The budget also includes a new $32 million student loan assistance program.

However, the governor gave the University System of New Hampshire the same overall annual funding as the last four years – $81 million – and granted only a small increase to the community college system.

Learn more about the debate over higher education funding in New Hampshire

Big ticket items in social services

One of the biggest expenditures in Sununu’s budget is $61 million to wipe out the waitlist for developmental disabilities services.

His budget also includes $40 million to build a new state forensic hospital, which will house patients currently at the Secure Psychiatric Unit (SPU) of the state prison who have not been convicted of any crime. This is on top of additional funding to execute much of the state’s Ten Year Mental Health Plan.

However, Sununu’s budget makes no significant overall change to the rates Medicaid pays providers for mental health services. Those rates are very low in New Hampshire compared to other states.

Family and medical leave

Sununu’s budget includes “enabling language” to implement his plan for opt-in family and medical leave insurance based on a pool of state employees, but that plan still lacks details.

Democratic leaders in the House and Senate are working on a statewide family and medical leave program paid for with a 0.5% tax on employee wages, with no opt-out. That program has about $15 million in start-up costs that would be repaid overtime through the program revenue.

Learn more about the debate over family and medical leave in New Hampshire

Sports betting

Sports betting was a surprise winner on Valentine’s Day. Sununu’s budget includes $10 million in revenue from legalizing sports betting. It’s not clear if this will pass the Legislature, however, given the lack of applause at that part of Sununu’s budget address.

Learn more about possible new revenue sources, including sports betting

Notable funding that didn’t get a shout-out

Gov. Sununu’s budget includes some additional funding items he did not mention in his speech.

For example, he set aside an additional $1.6 million each year for marketing by the Division of Travel and Tourism.

He also more than doubled how much the Fish and Game Department gets from the general fund of all tax dollars each year, to roughly $2 million. For many years revenue from hunting, fishing, boating, and other recreational licenses has failed to cover the department’s bills, particularly for the costs of search and rescue operations.

Learn more about covering the cost of search and rescue in New Hampshire

What about the Department of Transportation?

In his speech, the governor did not address any funding for roads and bridges in the Department of Transportation (DOT). The DOT recently testified that they have $78 million per year of unfunded needs, including $24 million for repair or replacement of “red list” bridges. The governor’s budget increases DOT funding somewhat, but proposed funding each year still falls about $43 million short of what the DOT was hoping for.

The Legislature is considering a six cent gas tax increase and a road usage fee to increase transportation funding.

Learn more about the debate over the gas tax in New Hampshire

Learn more about the debate over a road usage fee in New Hampshire

Did Gov. Sununu include your top priorities in his budget? Let us know in the comments.