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My Turn: Budget is a result of money in politics



Last modified: Thursday, July 09, 2015
There is little time left in the Great Biennial Budget Battle, and with the state falling back on a continuing resolution, things are getting only more contentious.

In the past, legislators have eventually compromised on a budget that holds the line against either an income or sales tax, while usually cutting state employees and services by some amount deemed politically acceptable. Some budgets have included tax cuts; some budgets have added “new revenue” of one type or another. After the dust settles, the final budget usually isn’t structurally different from those that have come before, though the numbers change by a few percentage points.

This year is different.

This year, the Senate started by considering tens of millions of dollars in new tax cuts for businesses with its very first bills – but no one has really looked at the long-term consequences of these cuts. A few years back, the Federal Reserve Bank studied our state finances, trying to figure out “How Does New Hampshire Do It?” Some of the best economists in the world took on the challenge of figuring out how New Hampshire manages its state budget without a broad-based sales or income tax.

They concluded that our biennial balancing act probably can’t be replicated elsewhere. One of the reasons we can “do it” is our comparatively low poverty rate. If more people needed safety net programs, then there would be more political pressure to implement a broad-based tax. They also found that we are able to “do it” because of business taxes. “The BPT and BET are both important revenue sources.”

This year, it looks like the Senate may upset that balance.

According to the National Institute on Money in State Politics, special interest groups spent more than $900,000 on our state legislative elections last year. Some lobbyist groups spent tens of thousands of dollars on the state Senate alone. This is the “elephant in the room” that nobody wants to talk about.

With election funding like that, was there any question that the final budget would include fiscally irresponsible tax cuts?

We’re already treading the line of what service cuts our constituents will accept. When the House voted on its proposed budget, the building was packed with protesters. Hundreds of people held a “die-in” on the State House lawn. New Hampshire’s various faith leaders united against it, calling it “immoral.” If we ratchet-down state revenues even more through the Senate’s business tax cuts, what’s going to happen?

We might finally hit the political “tipping point” that pushes New Hampshire onto the list of states with an income tax, which I for one do not want. Why? Because some senators wanted to give big business a tax cut. Maybe this budget will represent the “tipping point” for campaign finance reform, too. It’s an issue that a whole lot of people – including me – care deeply about.

More than two-thirds of New Hampshire voters think the U.S. Constitution should be amended to overturn Citizens United. Already, 69 New Hampshire municipalities have passed local resolutions calling for a constitutional amendment. HCR-2, a bill I sponsored this year to call for a campaign finance reform amendment through Article V, passed the House easily on a bipartisan vote. People all over the state are participating in rallies and marches to get money out of politics. More than 120 New Hampshire small businesses have signed up to host Stamp Stampede “stamping stations” where customers can stamp their money “Not to Be Used for Bribing Politicians” and learn more about how Big Money is affecting our government. Yes, small businesses are getting involved.

Our constituents are trying to tell us something. They’re tired of their government serving lobbyists rather than citizens.

With tax cuts that will mainly benefit out-of-state businesses creating a huge $90 million hole in the “compromise” budget between Republicans in the House and Senate, few are surprised by the governor’s veto. The Fed warned that our traditional budget balancing-act was almost impossible to replicate. This year, we may hit the point where even New Hampshire can’t “do it” any more.



(Rep. Timothy Smith, a Democrat, lives in Manchester and represents Hillsborough District 17.)