Spending has sky-rocketed. The democratic leadership of the County Delegation has already increased County spending by 13%. Add to that the 12.6 % increase in the proposed state budget and it equals a combined total in excess of 26% in government spending, in just one year! Unsustainable! Don’t listen to the hyperbole, here are the facts, in the Governors own words!
New Hampshire has built a thriving economy that is the envy of the Northeast, as a result of 2017 efforts to lower the tax burden on employers and engage in smart regulatory reform. (the lower taxation resulted in more than one half billion dollars in surplus revenue.) In addition, my first budget exhibited disciplined fiscal restraint by using targeted, one-time investments for the state’s most pressing needs. The Legislature’s proposed budget reverses this winning formula in a manner that both threatens the state’s economic growth and leaves the next Legislature with a massive fiscal deficit. (as it did in 2010.) This budget takes us down the wrong path and the people will never support it.
Four years ago, we had the highest business taxes in New England and a stagnant economy. The Legislature began the process of providing tax relief by lowering the burden on our employers in a measured process. This had an immediate impact on our economy. Employers thrived and created jobs. Since we began our commitment to lifting the burden on businesses, almost 27,000 more New Hampshire residents—our friends and neighbors— are working. The most in state history.
Today, the biggest concern of our employers is that they cannot find enough people to fill the many open positions. At the same time, the state has reversed a trend of watching young people leave the state. Rather, young professionals are moving to New Hampshire because of the career opportunities, quality of life, and strong public schools.
This budget would reverse that success. Most notably, it would hurt our family-run small businesses, the life blood of our economy, with an immediate, and retroactive, 12.5% tax increase. This would have a chilling effect on entrepreneurs who are thinking of starting a new business or adding new employees. We need to continue to send a clear message that our state is on the side of these hard-working small business owners who give opportunities for thousands to find the career of their dreams.
In addition to imposing job killing increases, House Bills 1 & 2 would set up the next Legislature for fiscal instability by delivering them a budget that is structurally unbalanced. In the second fiscal year of this budget, spending exceeds revenues by $93.4 million, driven by the Education Trust Fund expenses that overspend by $81,5 million. Signing this budget with this massive deficit would force the next legislature to choose between massive tax increases or major spending cuts.
We have been here before and we know all too well how it turned out. When crafting the budget in 2009, they built in a massive structural deficit and gambled on unrealistic expectations for future revenues. The results were nothing short of catastrophic, and the next legislature was forced to cut critical programs and layoff state employees. I will not put our state in that position again. (One Billion was cut.)
New Hampshire families know they must live within their means and they have every right to expect their government to do the same. Unlike Washington, our state does not and should never pass unbalanced budgets. Taking out a big mortgage with a one -time bonus from work would be a terrible decision, but that is precisely what this budget does.
Creating a budget with a structural deficit to expand funding streams to municipalities is a recipe for pulling the rug out from under these communities in the coming years. When future legislatures need to restore budgetary order, that same funding will be the first to be cut. This is in sharp contrast with pragmatic approach of the last two years, during which time we used surplus funds to make one time investments to assist local governments in solving their most-pressing problems, such as road and school infrastructure.
As Governor, my job is to represent the 1.35 million people of the state, and I must consider the long-term consequences of anything as critical to New Hampshire as our state budget. By putting our booming economy at risk and by building spending expectations that are unsustainable, this budget relies on bad financial management practices and therefore I cannot support it.
For the reasons stated above, I have vetoed House Bill 1 (HB1) and House Bill 2 (HB2).
I thought it important you know the truth!
Hon. Frank McCarthy