Four things to consider as governor delivers his budget address

Sununu says his plan will contain ‘nothing too outrageous’

Gov. Chris Sununu will present his proposed state budget to lawmakers Tuesday. And while he has signaled his plan will include core budgetary concerns like tax cuts and changes to the state’s education funding system, Sununu’s budget proposal is also expected to address other major issues facing the state: housing and homelessness, mental health, substance abuse, and high energy costs.

But as with any spending package proposed by a governor – this will be Sununu’s fourth since taking office in 2017 – it’s likely to remain more a wish list than a sure thing.

Here are four things to consider as state budget season begins in earnest with Sununu’s address:

The state’s balance sheet and revenue picture remain strong

Sununu has long warned that the state must prepare for a coming recession and has projected “a bit of a slowdown” late this year. But when it comes to state finances, Sununu remains bullish.

“The economy in New Hampshire is rockin’ it, it really is,” Sununu recently told reporters.

State revenues would appear to bear that out. So far this year they’ve come in $242 million above target. While Democrats are quick to claim those numbers show Republicans set low estimates to crimp spending, Sununu chalks it up to what he calls a “pro-business” approach to taxes and regulation.

Either way, when you factor in that the state’s rainy day fund carries a $250 million balance, it’s clear Sununu’s entering the budget process with a bit of a cushion.

And that’s on top of billions of dollars of federal aid that flowed into New Hampshire during the pandemic. That cash underwrote some of Sununu’s key policy initiatives over the last two years, including a $100 million fund to spur the construction of more housing units; the state’s $13 million purchase of Hampstead Hospital for a youth mental health treatment facility; and $10 million spent to upgrade security at local public schools.

Sununu’s cut taxes before, and says more are coming

Over the course of Sununu’s six years in office, the state has cut the state’s two major business taxes, trimmed the tax on rooms and meals, and set the state on course to phasing out its tax on interests and dividends by 2027. Republicans have filed bills this year to fully repeal the interest and dividends tax, and further business cut taxes.

The House’s top Republican, Jason Osborne, has also proposed ending the state’s telecommunications tax, which collects about $30 million and mainly hits cell phone users.

Sununu hasn’t offered any specifics about the taxes he’d like to cut in this year’s budget, but he’s left little doubt about his intentions.

“I don’t want your money,” Sununu told Politico last week. “I’m getting rid of more taxes.”

‘Systems Guy’

Sununu often refers to his past private sector work in environmental engineering as informing his approach to government. Specifically, he claims expertise in building “systems” designed to empower individuals to access services how and where they need them.

Mental health and substance abuse policy have been areas of focus and challenge for Sununu. Expect those to get more attention in this budget.

Child protective services is another area likely to be emphasized. House and Senate lawmakers are struggling to reach agreement on replacing the Sununu Center, the state’s lone youth detention facility. Named for the governor’s father, former Gov. John H. Sununu, the mostly empty 114-bed center remains under criminal investigation for abuse suffered by hundreds of residents stretching back decades. Sununu is likely to call for lawmakers to act.

Education is another topic generating considerable debate in Concord these days. Lawmakers say they expect Sununu to tip his hand on possible tweaks to school funding around special education costs. Sununu himself has said the budget could propose reorganization to the state’s public higher education systems. Lawmakers cut funding there by half a decade ago, and officials have pitched for a restoration of that earlier funding level.

Two years ago Sununu proposed merging the state’s university and community college systems, a move lawmakers and university officials both rejected. Sununu hasn’t specified if he’ll again propose a merge again, but has said he wants to ensure higher education as a place where his budget could change policies

When Sununu’s speech ends, lawmakers take over

With rare exceptions, lawmakers, not governors, really build the state’s budget. And if history is any guide, Sununu will lay down some markers – on taxes, on a bottom line spending target, on a key program or two – and then watch lawmakers craft the state’s next two year plan without much input from him. Top budget writers know it.

“He’ll come in here and make a spiel, and leave. He’ll leave it to his budget expert, who’s never done this before,” Rep. Ken Weyler, who leads the House Finance Committee, told colleagues recently.

Given the narrow partisan split in the House, Republican leaders there could also struggle to realize their budget priorities. That could hinder Sununu’s ability to realize specific budget goals, but it could also help should it give the 24 member state Senate a stronger role in crafting the final budget plan later this spring. Right now Sununu is stressing everything is possible.

“I think there’s the ability for tax cuts, a lot of regulatory reform we will be proposing,” Sununu said. “Nothing too outrageous, nothing folks haven’t heard before.”

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