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February 15. 2013 11:24PM

Governor's budget proposal takes aim at business

CONCORD - House Republicans are taking issue with Gov. Maggie Hassan over business taxes in her 2014-15 proposed budget.

In her budget, Hassan delays some business tax credits that lawmakers passed last year, but do not go into effect until the next biennium. The changes include such things as raising the threshold for paying the business enterprise tax and increasing allowable expenses.

Hassan projects that delaying implementation of the changes would save the state $17 million in revenue over the biennium.

"In the last biennium, the Legislature also made a number of promises for tax law changes, but pushed off to the next Legislature the job of paying for them. Our uncertain fiscal times mean we must further delay some of those changes," Hassan said in her budget address Thursday. "This budget suspends the implementation of unpaid for tax law changes, with the exception of the increase in the net-operating-loss-carry-forward, which this budget pays for in fiscal year 15."

The net-operating-loss carry-forward was increased from $1 million to $10 million over a 10-year period.

House Minority Leader Gene Chandler, R-Bartlett, said the tax changes were made to make New Hampshire more tax friendly, which will spur the economy.

"Under the governor's plan, tax reforms passed by the previous Legislature that would have resulted in savings to our small businesses will no longer take effect," Chandler said. "The net result is $17 million in taxes coming directly out of the pockets of our job creators over the next biennium."

House Republican policy director Laurie Sanborn, R-Bedford, said she is concerned about delaying the business tax changes and with a plan to add auditors to aggressively seek additional taxes from businesses.

"The governor talks about improving the economy but in her budget she proposes a number of anti-business tax increases and aggressive audits that she anticipates will bully an additional $26 million out of our small businesses," Sanborn said. "We need to encourage responsible business success and job creation, not impose disincentives and barriers for economic growth as this budget does."

Hassan added seven new positions to the Department of Revenue administration. The additional auditors and processors are expected to generate about $26 million in additional business tax revenue over the biennium.

Under the current budget, more than a dozen auditors were eliminated and business tax collections decreased by about $20 million this year.

"The elimination of auditors and document processers at the Department of Revenue in the last budget has led to unacceptable delays in the processing of returns and refunds and cost the state millions of dollars," Hassan said. "This budget restores some of those important positions."

Overall, Hassan proposed a general fund budget increase of $184.2 million over the last biennium or a 7.1 percent increase. The state's general fund budget would be $2.8 billion over the 2014-15 biennium compared to $2.6 billion for the current biennium.

With federal money and other state revenue such as highway funds and court fines, the total state budget over the next biennium would be $11.1 billion compared to $10.1 billion for the current year, a 10.2 percent increase.

The governor projects state revenues to increase 2 percent to $2.16 billion in 2014 and 1.9 percent to $2.2 billion 2015. Current estimates are for a 1.8 percent increase in revenue this fiscal year over last.

Under her budget, higher education, mental health services and the state's largest hospitals will receive more money. Hassan pays for the additional spending with money from casino gambling, higher tobacco taxes and an increase in the number of insurance premiums resulting from the Affordable Care Act.

Her budget expands eligibility for Medicaid, the federal-state health insurance program for the poor and elderly, which may need legislative approval. The federal government would pay about $300 million for the cost of adding about 58,000 to the Medicaid rolls during the upcoming biennium.

Medicaid expansion is projected to cost the state about $18 million over seven years, while the federal government will pay $2.5 billion to hospitals and other health care providers.

Hassan will appear before a joint House and Senate Finance Committees hearing Tuesday at 10 a.m. in the Legislative Office Building to explain her budget and answer lawmakers' questions.

The House must vote on a budget by April 4 and the Senate by June 6.

The new budget needs to be adopted by June 30.


grayno@unionleader.com


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