With still-dwindling state revenues, Democrats have their work cut out for them with impending budget negotiations, where they’ll likely find challenges realizing their campaign trail promises.
That includes increasing funding for the state’s university system, which saw its funding cut dramatically in the last two-year budget. Every decision to increase spending in one area comes either at the expense of another, or in the form of new revenue. Other than expanding gaming, new revenue equals taxes, and Gov. Maggie Hassan hasn’t indicated she’s willing to even consider the taxes option.
“Revenues are the big question, not just from existing sources, but also how previous changes were implemented, as well as possible sources of new revenue, which would look largely at … gambling,” said Steve Norton, executive director of the New Hampshire Center for Public Policy Studies.
The legislature made some changes to the Business Enterprise Tax and the Business Profits Tax as to how taxes are carried over — the result is expected to be $25 million to $30 million less in revenues tied to those types of changes, Norton said.
Striking a conservative tone right off the bat, Hassan, who will make her budget proposal next month, has already asked department heads for a 3-percent reduction in budget proposals from current levels.
“Two years ago, I thought the next governor would be presiding over a recovery,” Norton said. “While that’s true, it’s not true to the extent to which it could be. The only place Gov. Hassan has shown any willingness to think about revenues is gaming. Whether the House and Senate agree is another issue entirely.”
Hassan has spoken in favor of expanding gaming at one institution, many expecting that to be Rockingham Park.
Gambling could be a big piece of the puzzle if lawmakers are looking for ways to increase spending in areas that were cut particularly deeply in the last two-year budget. Norton expects a lot of attention to be paid to projected revenues from expanding gambling, and just how realistic those expectations would be.
“That’s kind of the point, watching how these budget decisions turn into long-term economic well-being,” Norton said. “In a world of scarce resources, should you invest anything additional in the university system or Health and Human Services or tax relief? What can we realistically expect in return?”
Norton said his Center’s projections suggest there will be 1.5-percent growth in revenues for the next two fiscal years.
“That’s better than a reduction, but it’s not consistent with even the basic cost of living increases one might expect that are necessary for running a business,” Norton said.
On the positive front, the state Department of Health and Human Services is expected to have a roughly $25 million surplus, which could at least partially offset lost revenues in other areas. That surplus is tied largely to caseloads not growing as quickly as anticipated, Norton said.
“I think the fight is going to be, if there is a surplus, will it go to [Health and Human Services] programs or to fill other programs elsewhere,” Norton said.
During the recession and to help balance the state budget, legislators suspended about $50 million worth of state aid typically directed to communities. Norton said one of the big questions is whether the legislature will continue suspending that aid. It’s sort of a sleeper issue, he said. But it’s also one that is central to how communities operate. They’ve been footing the bill themselves in areas tied to that state aid in recent years.