Last week I titled my blog: Time to Talk Taxes. This week’s title is unfortunately: Time to Pay Taxes.
Just as easily it could be: New Spending = New Taxes = Job Losses.
The budget approved by the majority of the New Hampshire Senate proposes to increase total spending by $1.2 billion! That’s on top of a similar spending increase from the prior budget to the current budget of $1 billion. It's noteworthy these precipitous spending increases coincide with one party political rule in Concord.
Efforts were made to trim this spending on the Senate Floor by Republicans. We proposed four separate amendments to make across the board cuts totaling 8.4%. These amendments, which I supported, would’ve eliminated the need to increase business taxes, hospitality taxes, and tobacco taxes. The fourth amendment would’ve cut state spending so that New Hampshire’s historic commitment to assist towns with Revenue Sharing is maintained. Revenue Sharing means $50 million to cities and towns which helps lower property taxes. Not surprisingly, all four of these amendments failed --- largely on partisan votes --- which means property taxes, business, hospitality, and tobacco taxes will all go up!
The proposed increase in business taxes is particularly disturbing. Not one Senator could defend it as either good or fair tax policy. Rather, those that voted to increase business taxes were of a mind that taxes had to be raised to enable new spending; even though those who voted for higher business taxes would likely acknowledge this tax hike will cost New Hampshire jobs.
These were not the only discouraging votes for those who want to see New Hampshire jumpstart its economy, keep the cost of government low, and ensure government accountability and educational opportunity for New Hampshire students.
Two amendments w hich I supported were presented to ensure that local voters could continue to adopt property tax caps in their cities and towns. A number of communities have, by a popular vote of their citizens, successfully implemented property tax caps. They are now threatened by lawsuits in court. These amendments to protect the local option to pursue a tax cap were defeated on straight partisan votes. Now property taxpayers are confronted by the grim reality that the courts in New Hampshire may be determining property taxes instead of local voters.
The Senate Finance Committee recommended capping the number of students that could enroll in charter schools. Charter schools, which receive public funding and which are part of our public school system, have proven to be very successful. They are allowed by their charter to be more creative and innovative than traditional public schools.
Charter schools also undertake a huge effort to raise private dollars to bolster public funds. I recently attended a fundraiser for the Seacoast Charter School, one of the first charter schools in our state. The enthusiasm and the dedication of students, parents, staff, and the community to raise funds for this school is exceptional. It should be noted that the cost to taxpayers for charter schools is often substantially less than the cost of traditional public schools, while the quality and educational opportunities provided by charter schools is excellent.
A budget amendment would have eliminated this cap. It failed largely on partisan lines, though I supported the amendment. Should the cap stay in the budget, it is likely that at least some of the fledgling charter schools will not survive. If charter schools fail, taxpayers will find that decision both penny foolish and pound foolish, as educational innovation and lower costs to educate students will disappear. Far worse, those students who thrive in charter schools but struggle in traditional public schools will have the door of opportunity literally slammed in their face. It’s an unconscionable price for nearly 1000 New Hampshire students without a voice in this political wrangling.
On another budget issue, the Senate Finance Committee recommended removing $110 million from a fund paid into by physicians to keep medical malpractice rates in line. Doctors have forcefully stated that any money paid into this fund is not something the State can raid, because it was paid for by physicians, not the state. An amendment which I supported would have made sure this fund was not simply expropriated by the State. Naturally it failed on partisan lines. An almost certain lawsuit will follow. The State can’t count on access to this money anytime soon which means a $110 million budget hole.
Slot machine gambling easily passed the Senate. I voted against this proposal. I was struck by how little debate there was upon the potential change that gambling would have on the fabric of our state. Lastly this budget was chocker-block full of fee increases including hikes on drivers licenses, boating licenses, tolls, vanity plates, environmental permits, saltwater fishing licenses, gun permits, and motor vehicle, tractor, and motorcycle registrations. Companion legislation even raised the tax on home heating oil.
In total, taxpayers got smoked at a time that people are struggling to pay their mortgages and worried about finding or keeping a job. As if that were not enough, the economy is being unquestionably impacted in New Hampshire. In November, only five states had a better unemployment rate than New Hampshire’s. Six months later ten states have a better unemployment rate than ours. 47,000 people in New Hampshire are out of work, 20,000 more than a year ago. Economist Dennis Delay recently predicted that 13,000 more of our friends and neighbors will lose their jobs before the economy turns around.
The Labor Dep artment just released the national employment numbers. 345,000 more Americans were out of work in May. The unemployment rate has climbed to 9.4% the highest in more than 25 years as 14.5 million people are unemployed. Since mid-February when the American Recovery and Re-Investment Act (the Stimulus) was signed, 1.5 million Americans have lost jobs. The rate of job loss may have slowed from a flood to a mere torrent but that’s grim solace indeed to people who have lost their jobs or fret every waking moment about losing their job.
Economists are predicting that national unemployment will continue to mount to over 10% before we hit bottom and slowly start to climb out of this recession a year from now.
That's why what we do with this budget matters so much! And why it is mind boggling that the majority party in the Legislature is even willing to contemplate raising taxes on businesses struggling to keep their doors open or on the hospitality industry, one of the largest in New Hampshire. A number of business leaders have warned me that these tax hikes will cost jobs, will make New Hampshire less attractive and will further undermine our already eroding competitive position relative to other states.
It is my hope that our colleagues on the other side of the aisle will reconsider their proposal to increase spending by nearly $1.2 billion and pay for it with large tax hikes on businesses, property owners, and just about everyone else. It is never easy to cut government spending. But it has to be done.
The editors of the Portsmouth Herald said it best recently: “we would urge our legislators to do what those of us in the real world have been doing for quite some time now and reduce spending rather than looking for new ways to support programs and services we can no longer afford.”