Sununu will push for lowering meals and rooms tax in third term

Shortly after winning a third term, Gov. Chris Sununu vowed to press for one long-held priority: tax cuts.

In a press gaggle Tuesday night outside his campaign party, Sununu said he would push for cuts to the meals and rooms tax to support hotels and restaurants, and potentially a future cut to the business enterprise tax in his next two-year budget.

“Because it can be done,” Sununu said. “And it can be done responsibly.”

Aided by expected Republican majorities in the House and Senate, the governor has the ability to craft the kind of budget that he wants next year.  

That’s a contrast to 2019, when Democrats in control rejected many of his suggestions, leading to a three-month continuing resolution while the two parties quarreled, and an ultimate compromise agreement was reached.

For Sununu, that new control will allow him to veer away from the Democratic approach of using surplus funds to pay for ongoing expenses, a shift that allowed Democrats to boost spending for areas like state education support. Sununu had criticized that approach, favoring using revenue surpluses towards one-time expenses that expire after the two-year period. 

The new power will also allow Republicans to cement their preferences on business taxes. 

As part of the compromise budget agreement in 2019, the Business Profits Tax, which had been lowered from 8.5% down to 7.7%, stayed at 7.7% through the end of 2019 and did not drop to 7.5%, as Republicans had preferred. That tax affects all businesses that make at least $50,000 in gross annual income. 

The Business Enterprise Tax, which taxes compensation paid and interest paid by businesses, dropped from 0.75% to 0.6% in recent years. Republicans may push to drop it to 0.5%. 

Speaking to reporters Tuesday, Sununu said he would also seek to build up the state’s “rainy day fund,” an account within the general fund that sets aside surplus revenue for times when revenues fall. As of mid-2019, that fund had $115 million. 

“We gotta keep building that up,” Sununu said, arguing the Democratic Legislature had put unnecessary caps on the rainy day fund in favor of more spending. 

And Sununu added that he would seek to continue building up services for the Division for Children, Youth and Families, as well as the state's mental health system. 

All of those goals could be hampered by a constricting reality: New Hampshire is expected to face at least $200 million in revenue shortfalls next year brought about by a slow in business activity during the coronavirus pandemic. That means cuts are coming to spending and programs, Sununu has said throughout the year.

Asked whether that shortfall jeopardized his own spending priorities, Sununu argued that cutting taxes would raise revenues in the long term, bringing in more revenue later. 

The governor said his first priority in the corner office will be to carry on with the response to COVID-19. That includes overseeing the distribution of a vaccine, expected at some point next year.

As COVID-19 cases continued to rise in New Hampshire and nationally – the United States Wednesday hit 100,000 cases, its single-highest daily number – Sununu urged a balance between maintaining policies to keep case counts low while at the same time stimulating the economy. 

“This is not going away tomorrow,” Sununu said of the coronavirus. “It is not going away January first.” 

(Ethan DeWitt can be reached at 369-3307, edewitt@cmonitor.com, or on Twitter at @edewittNH.)