CONCORD — State Senate Majority Leader Jeb Bradley says Gov. Maggie Hassan should say what business taxes she wants to increase, if she says recent changes to business tax law is negatively impacting the state budget.
Her office called on Senate Republicans to indicate where they would cut the budget, if there is a revenue shortfall this fiscal year.
The legislative Republican leadership has hounded Hassan to release state agency spending data for the recently completed 2014 fiscal year budget.
They claim the Health and Human Services Department has overspent its budget by more than $30 million for 2014, and that it could be over budget by $100 million at the end of the biennium June 30, 2015.
Hassan has been warning of a potential budget deficit since May, but has refused to update the Legislature on state spending, Bradley said Tuesday, noting 2014 revenues came in above forecasts, yet Hassan continues to claim that recent business tax changes “are having a negative impact on the state’s budget.”
Hassan and her office say agency budget adjustments continue to be made and will be released Sept. 30 as they have been in the past. And they said the state will have a balanced budget at the end of the fiscal year.
“The state is on track to end fiscal year ’14 with a balanced budget, but if the recent drops in business taxes and interest and dividends taxes that we saw beginning in April — when the tax law changes went into effect — continue into this year, the state will be unlikely to reach revenue targets for fiscal year ’15, putting a strain on our budget,” said Hassan spokesman William Hinkle. “Governor Hassan has already directed a preemptive spending, out-of-state travel and hiring freeze and told agencies to begin preparing for the possibility of further reductions.”
The budget Hassan presented to lawmakers in February 2013 suspended the business tax changes approved by the previous Republican-controlled legislature for the biennium. At the time, she said the state could not afford to give up the revenue.
Hassan raised the issue again when April revenues showed a significant deficit in business and interest and dividends taxes. Although they stabilized somewhat during the next two months, business and interest and dividends taxes are about $30 million below forecast for the 2014 fiscal year.
Hassan issued an executive order in May that the Joint Legislative Fiscal Committee approved freezing general fund hiring, equipment purchases and out-of-state travel.
Earlier this month, the governor told department heads not to spend on big ticket items until revenue trends are more defined.
“The Governor will continue to work across party lines to responsibly manage the state’s budget while protecting our bipartisan priorities, and she encourages the Senate to work constructively by identifying what they suggest to cut if reductions are necessary to balance the budget for fiscal year ’15,” Hinkle said.
But Bradley said the state does not have a problem with revenues which are on target, but instead that state agency spending is the issue.
“If Governor Hassan thinks New Hampshire’s business taxes are too low, she should tell us which ones she wants to increase,” Bradley said. “Does she want to start taxing trusts again? That would raise about $5 million a year. Does she want to reduce the Research and Development Tax Credit? She might want to roll back the Net Operating Loss Carry Forward provisions signed by Governor Lynch. Or maybe she wants to lower the threshold for the Business Enterprise Tax so that New Hampshire’s smallest businesses will pay more.”
Bradley said the business tax reforms had broad, bipartisan support and were factored into the revenue estimates that proved so accurate for fiscal year Bradley said.
“If Governor Hassan wants to roll back these tax reforms, she should tell us which taxes she wants to increase,” Bradley said. “In the meantime, I would repeat our request to update the public on how much state departments spent in fiscal year ’14, which ended 50 days ago.”
Hinkle said the governor is working with state agencies to address the challenges of tax law changes that may drop revenues below forecasts for fiscal year 2015, as well as caseload growth at the Department of Health and Human Services.
Hassan will convene the Consensus Revenue Estimating Panel to review the state’s revenue projections for fiscal year 2015 and has told agencies they may need to make budget cuts, he said.
While Republicans continue to push for agency budget information, they have not made a formal request to Hassan for budget information.
Instead, Senate Finance Chair Jeanie Forrester, R-Meredith, formally requested an update on department spending on July 7 in a letter to Joint Legislative Fiscal Committee chair Rep. May Jane Wallner, D-Concord, who wrote Forrester saying the request was premature and would result in incomplete information.