My Turn: Legislature needs to work on closing tax loopholes
Gov. Maggie Hassan has done an excellent job working with legislative leaders to craft and oversee the state’s current two-year budget. An array of problems is being effectively managed. This budget will end in balance. But looking ahead to the next two-year budget, we in state government face difficult challenges. Services and infrastructure needed to grow our economy and protect the health of our people and our environment must be provided. Tax loopholes must be closed. And a tax system that weighs disproportionately on people least able to pay must be reformed.
Looking back, the 2013 bipartisan budget agreement was a vast improvement over the previous budget. Within the limits of available revenues, funding was restored for critical public services – for such needs as uncompensated care in hospitals, tuition-relief for public higher education students and protective services for abused or neglected children.
This important step forward – this coming together of legislators with Gov. Hassan to enact a strongly bipartisan budget after two years of ferocious partisan discord – was in truth just one step on the way to achieving a long-term, fiscally responsible outcome. The budget did nothing to alleviate the unfairness of our tax system. And it continued to underfund a long list of essential public services. Pending at the time of the budget’s enactment were several lawsuits with potential for destroying the budget’s balance. Uncertain at the time of enactment were the effects of the pending transformation of our health care system. Also uncertain were the effects on revenue of several changes to the business taxes and the interest-and-dividends tax that had been enacted by the 2011-2012 Legislature. And there were countless other uncertainties.
Gov. Hassan, working effectively with Attorney General Joseph Foster, state agency leaders and legislative leaders from both parties, has taken us several more steps in the direction of a long-term, fiscally responsible outcome. The budget-threatening lawsuits have been settled – our obligations to hospitals, to the mentally ill, and to female prisoners are now more clearly delineated. Good health care coverage has been extended to tens of thousands of New Hampshire citizens with a system of subsidies for those of low income that maximizes federal reimbursements. And tough budget management interventions – hiring freezes and selective limits on discretionary expenditures – have been instituted in response to shrinking revenues attributable to the 2011-2012 tax changes and to an increase in Medicaid health care participation rates. With these forceful legislative and executive interventions, our current budget should end, as it began, in balance.
But long-term economic health requires more than this. For the next two-year budget cycle, revenues will likely fall far short of what is needed to just maintain the existing level of services, much less respond to higher education, health care, local aid and other unmet needs that are critical to New Hampshire’s economic revival. And without intervention, the revenues that we do receive will continue to place undue burdens on middle- to low-income taxpayers.
To meet these difficult budgetary challenges, policy makers are considering many alternatives. Legislation that I am sponsoring with Sen. Dan Feltes and others would close gaping loopholes in our tax system to ensure the wealthy and large corporations pay their fair share. By reaching offshore tax havens, high-end trusts and capital gains from investments, this legislation would provide tax relief to low- and moderate-income interest-and-dividends taxpayers, targeted property tax relief and local aid, and substantial new revenues for essential public services.
Others may have different ideas on how to responsibly balance our budget in this next biennium and beyond. It will be hard. A well-constructed casino bill is an option worth considering as a revenue-generator for future biennial budgets, but its revenues are not likely to be available within this next biennium. So let’s at least close those gaping tax loopholes. And let’s get on with the conversation.
