Three weeks after vetoing the Democratic budget, Gov. Chris Sununu is aiming to get town officials on his side.
The governor’s office invited local officials across the state for a closed-door info session on the budget veto in Concord Friday morning. But amid high tensions around the governor’s veto in recent weeks, that invitation quickly became political. A group of two dozen mayors, city councilors and select board members penned a letter Thursday detailing concerns with the governor’s budget veto – with several spilling out of the meeting to air their concerns.
“The difference for Nashua is about $5 million over two years in school aid,” said Jim Donchess, mayor of Nashua, comparing the governors proposed budget with the one approved by Democrats. “Five million dollars means a lot.”
Other public officials jumped to Sununu’s defense.
“I think the meeting was excellent,” said Jim Morgan, a councilor from Derry. “It was the first time the governor’s called the municipalities down since Jeanne Shaheen. We understand exactly where the governor is coming from, and the importance of not having a structural deficit.”
The meeting came as State House leaders continue to slog toward some sort of a compromise after last month’s veto, which Sununu issued to protest a rollback of business tax cuts proposed by Democrats and what he has called irresponsible long-term spending.
In a letter sent out to towns and cities July 9, Sununu laid out a vigorous defense of that veto. “Just like you, I am responsible for the operations of government,” Sununu wrote. “Just like you, I must prioritize needs in order to budget within the state’s means.”
The letter criticized the Democrats’ budget for what the governor called a $93.4 million “structural deficit” – a term Democrats have disputed. By investing in long term programs with one-time funds, Democrats are saddling a future legislature with a potential shortfall, the governor charged.
The letter highlighted portions of the governor’s proposed budget back in February that he said would have benefited cities and towns, such as an approximately $63.7 million bundle of funds for one-time school building aid targeted to property-poor districts. And it mentioned areas proposed by Democrats that Sununu would agree with, including $40 million sent back to towns and cities through revenue sharing and the restoration of stabilization grants to schools, which are scheduled to be reduced year after year.
Sununu has remained adamant that the business profits tax rate not be increased to 7.9% from its present 7.7% – a major stalling point in negotiations with Democrats.
But some public officials disagree.
In a July 18 response letter, 28 local officials slammed the governor’s veto and argued that the final Democratic budget served local towns better. That budget contained around $200 million in municipal aid and increased school funding, largely by setting the business profits tax rate at 7.9%.
“When you vetoed everything from funding for substance use disorder treatment to investments in local education to municipal aid, you left the people of New Hampshire wondering what will happen to services and programs they depend on, and left communities across the state unable to plan for their future,” the officials wrote.
On Friday, a handful of those signatories spoke out, accusing Sununu of prioritizing low tax rates for businesses over low tax rates for residents.
“He’s proposed a compromise, which certainly moves in the right direction, but we are still dealing with huge property tax increases as a result of what they call downshifting,” said Donchess, a Democrat. “The state over time has pushed a lot of costs and reduced revenue to cities and towns, and we need to reverse that.”
Other public officials defended the governor’s action.
“My biggest concern is the deficit contained in the vetoed budget,” said Kevin Smith, Londonderry town manager, a former Republican candidate for governor. “(The) last time the state carried such a deficit it resulted in significant cuts at the state level and municipalities were left to pick up the tab.”
Democrats have argued that because their budget contains more in one time funds than in ongoing expenses, the structural deficit charge by Republicans is unfounded.
Local officials on separate sides of the political divide appeared torn over priorities. Some, like Donchess, said higher revenue sharing and educational funding should be the key focus in the budget. Cutting business taxes further would eat into revenue sources that could go back into schools, they argued Friday.
“What I get from businesses is that the business enterprise tax, the business profits tax, and whether it’s 7.5%, 7.9% is not that big an issue,” Donchess said. “They’re concerned about is attracting workforce, young people who can fill the positions there.”
But Franklin mayor Tony Guinta – whose city’s school district has endured painful cuts in recent years – said the business environment should not be left out. The business tax rate, he said, should be allowed to drop to 7.5% at the same time as stabilization grants – which started in 2012 but have been reduced by 4% since 2016 – are restored to towns.
“We’re looking at priorities across the board,” he said. “The school board looks at the major priority is being the schools. City Council’s looking at the fire, police, municipal, paving our roads.”
He added: “I get more calls about potholes than I do about any other issue.”