NH Senate Republican Caucus - A Budget Win

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September 20, 2015

A budget win that conservatives almost killed


   Conservatives achieved a huge and long-sought political victory in Concord on Wednesday, despite the best efforts of a large group of...conservatives.

   The New Hampshire House of Representatives has a lot of caucuses, which are groups of legislators who join together to advance certain causes. One should be called the Perfect Is The Enemy Of The Good Caucus. It almost derailed one of the right's biggest recent policy victories, the reduction of state business tax rates.

   The state budget passed in June contained small but important business tax cuts. They would bring business tax rates below those in Massachusetts. Currently New Hampshire businesses pay a higher corporate income tax than their counterparts in “Taxachussetts” do.

   Gov. Maggie Hassan vetoed the budget because of the tax cuts. After the veto, Senate Republican leaders came up with a compromise and presented it to the governor. Republicans agreed to fund employee pay raises Hassan had negotiated earlier in the year but did not include in the budget. They also agreed to include a revenue trigger that would suspend the second phase of the tax cuts if a specified revenue target is not hit.

   For her part, Hassan agreed not only to allow the business tax cuts she had previously attacked as reckless and irresponsible, but to accelerate them so businesses get bigger rate cuts earlier.

   This is a giant win for Republicans. They got important business tax cuts past a Democratic governor, which changes the entire political debate on tax cuts in the near future. Going forward, a lower rate is locked in as the default rate. If the revenue target is met, taxes go even lower. If it is not met, Democrats will have to advocate and defend raising taxes on New Hampshire businesses. With this deal, Republicans gain the upper hand on business taxes for years to come.

   In exchange, Republicans agreed to an employee pay raise that would happen eventually anyway. That is an easy tradeoff.

   But some Republicans don't think the party should ever compromise on anything.

   Increase spending at all, for any reason, even as part of a package that should help the economy overall, and they will vote “no.”

   New Hampshire businesses should be paying attention. This tax reduction was brought to them by Sens. Chuck Morse and Jeb Bradley, and through the grass-roots work of the New Hampshire chapter of Americans for Prosperity, which put tremendous political pressure on the governor and legislators to get this deal done. Months' worth of careful and diligent work was almost undone by the House Majority Caucus, which values ideological purity more dearly than sustainable political victories. Thank goodness the perfect did not kill the good.