Living in N.H. would save a New England Powerball winner up to $126 million in taxes

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If the winner of this week’s $1.4 billion Powerball jackpot lives in any New England state but New Hampshire, the record win would come with a staggering tax bill.

Excluding New Hampshire, which does not tax lottery winnings, the state income tax bill on a $1.4 billion Powerball jackpot would range from $36.8 million–$126 million, depending on where in New England the winner lives and whether he or she took the annuity or lump-sum payment.

The top applicable personal income tax rate for each New England state is:

New Hampshire: 0%*

Rhode Island: 5.99%

Connecticut: 6.99%

Maine: 7.15%

Vermont: 8.75%

Massachusetts: 9%

*New Hampshire levies a tax of 4% on interest & dividends income, but that does not apply to lottery winnings.

At those rates, the state income tax bill on $1.4 billion would be:

New Hampshire at 0% = $0

Rhode Island at 5.99% = $83.9 million

Connecticut at 6.99% = $97.9 million

Maine at 7.15% = $100.1 million

Vermont at 8.75% = $122.5 million

Massachusetts at 9% = $126 million

To put that in perspective, $126 million is not quite double catcher Jason Varitek’s $67 million in lifetime earnings from the Boston Red Sox. 

A winner’s actual tax bill would depend on which payout was taken. If a winner chose the annual annuity, the total tax bill would equal the amounts in the graph above, assuming no tax rate changes over the next 30 years. Since we can’t predict any tax changes, we have to go with the current rates.

Those tax bills would come annually based on each year’s annuity payment. Those payments would start at $21.1 million and grow to $86.7 million in the final year. The tax bill after the first year would range from $1.3 million in Rhode Island to $1.9 million in Massachusetts. The final tax bill (barring any tax rate changes over the next 30 years) would range from $5.2 million in Rhode Island to $7.8 million in Massachusetts. 

If a winner chose the $614 million lump-sum payment, the state income tax bill would be:

New Hampshire at 0% = $0

Rhode Island at 5.99% = $36.8 million

Connecticut at 6.99% = $42.9 million

Maine at 7.15% = $43.9 million

Vermont at 8.75% = $53.7 million 

Massachusetts at 9% = $55.3 million

These huge state tax bills would come after 24% of the prize is automatically withheld in federal taxes. The federal tax bill on $1.4 billion would be $336 million. On the $614 million lump-sum payout, it would be $147.4 million.

These stunning state income tax bills highlight exactly why New Hampshire is one of the top two destinations for people who move out of Massachusetts. (The other is Florida, which also has no income tax.)

New Hampshire is one of only eight participating states and two U.S. territories that don’t tax lottery winnings on top of federal taxes. The others are California, Florida, South Dakota, Tennessee, Texas, Washington, Wyoming, Puerto Rico, and the U.S. Virgin Islands.

The New Hampshire Lottery created a TV ad to air this week mocking Massachusetts’ 9% tax on incomes of $1 million or more. The new ad, spoofing the classic Saturday Night Live “Land Shark” sketch, features a Bay Stater bitten by the “no good Massachusetts tax shark that’s been swimming around stealing all our lottery winnings.”

The ad specifically calls out Massachusetts’ new “millionaire’s tax.” Last year, Massachusetts voters amended the state constitution to raise the income tax rate from 5% to 9% on annual incomes of at least $1 million. Without this millionaire’s surtax, Massachusetts’ tax bill on a $1.4 billion Powerball prize would drop from $126 million to $70 million. On the $614 million lump-sum payment, it would fall from $55.3 million to $30.7 million.

“Why play the lottery in Massachusetts where state taxes, including the new millionaire’s tax, will cost you an extra 9%?” the New Hampshire Lottery’s ad asks Massachusetts residents. “Instead, live free and play in New Hampshire where your income and lottery winnings are always free of state taxes.”

Granite Staters are having a good laugh at the ad, judging by the media coverage it’s received. But the serious point it makes is that you shouldn’t have to pay 9% of your income just for the privilege of living in your home state.

The high income tax rates in other New England states lift significant sums from people’s pockets every year. Vermont’s 8.75% personal income tax rate kicks in at $213,150 of income. Maine’s 7.15% rate kicks in at $58,050. A lot of non-rich New Englanders pay a hefty portion of their income just to live in a state that isn’t New Hampshire. 

“It does make one wonder just how much it’s worth paying out-of-pocket to live in a state like Massachusetts,” said Andrew Cline, president of the Josiah Bartlett Center for Public Policy. “Obviously, no one’s getting $126 million worth of services from the State of Massachusetts, so it just comes down to paying for the social status of living there. When you think of how Massachusetts would squander that money, putting up with such an exorbitant tax makes no sense. You’d do more social good by living in New Hampshire and donating $126 million to charity.”

The ad wasn’t meant only to tease Massachusetts, Charlie McIntyre, executive director of the New Hampshire Lottery, said. It also had a message for Granite Staters.

“Our New Hampshire players are fortunate to live—and play—in such an amazing, beautiful state, with an exceptionally high quality of life and of course, no state income tax,” McIntyre said in a statement announcing the ad campaign. “With this new campaign, we are having some fun reminding our players how good they have it, especially when they live free and play—and win!” 

 

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If NH is the Star Wars cantina, Massachusetts is The Empire

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Announcing her run for governor, former U.S. Sen. Kelly Ayotte said she’d fight to prevent New Hampshire from becoming Massachusetts. It was as if she had insulted Bill Belichick’s mother.

Lowell’s city manager demanded an apology for Ayotte’s factual assertion that his city has long been a source of illegal drugs entering New Hampshire. Boston Globe columnist Yvonne Abraham compared New Hampshire Republicans, along with all other Republicans, to the patrons of the Mos Eisley cantina in Star Wars, though she lost points for calling the cantina a “bar.”

“In New Hampshire, as in the rest of the country, the GOP has become the bar scene from ‘Star Wars,’ dominated by extremists, conspiracy theorists, culture war obsessives, and cultish devotees of former president Donald Trump,” Abraham wrote.

How offensive. Not to Republicans, but to all other Granite Staters who were so rudely and unfairly excluded.

Let’s face it, the bouncer at the Mos Eisley cantina would let most of New Hampshire in.

To the rest of New England, New Hampshire is a libertarian-ish hive of scum and villainy. It’s a land of Yankee hillbillies, anti-tax zealots, bearded weirdos, flannel-wrapped survivalists, home-brewing crypto farmers and gun-toting charity gamblers.

And to be honest, there’s some truth to that. But it’s not for the reasons New England progressives think. They think we’re just backwards rednecks. In reality, New Hampshire is a refuge in the region that attracts people who value freedom over order.

Eccentrics and frontiersmen are drawn to freedom like goth cosplayers are drawn to sites of unspeakable evil.

Granite Staters have created a “live free or die” culture in which citizens are trusted with immense amounts of power, and government is rather tightly constrained. Here, 424 legislators are held accountable to voters in small, compact districts, governors are weak, and you can open carry into some bars (and cantinas) as long as you’re not drinking.

Massachusetts is a very different place. The most obvious difference is the preference for order over liberty. But it goes further than that.

“Apparently, our state is a freedom-hating, high-tax hell scape, teeming with drug dealers from Lawrence and Lowell who prey on the decent citizens to the north,” Abraham wrote in mock summary of Ayotte’s remarks.

Well….

Massachusetts does have:

If New Hampshire is the Mos Eisley cantina, Massachusetts is the Empire. Consider the similarities.

The Empire is run by a small group of elites who seek to consolidate power and impose order on the universe. If that’s not the progressive ideal, what is?

Massachusetts is effectively a one-party state where the primary political disagreements are over how much money to tax from the people and spend on behalf of favored constituencies, thus further consolidating the ruling party’s power.

One-party rule has created such political dysfunction that Beacon Hill has devolved into non-stop insider power plays that look a little like the constant infighting among imperial brass.

But most importantly, Massachusetts has for decades attempted to colonize New Hampshire by overrunning our state with its revenue agents.

From placing state police in N.H. liquor store parking lots to taxing the income of remote workers, Massachusetts has sought to leave no dime uncollected from anyone who lives, works, or has ever set foot in the Bay State.

Massachusetts literally sent troopers to New Hampshire to search for tax scofflaws, for crying out loud.

And the Bay State uses policy to maintain control and punish groups that constitute a challenge to its power. Last year it raised taxes on incomes of $1 million or more by 80%, successfully singling out both an opposing power base and an unpopular minority for financial exploitation and domination.

Massachusetts charges an estate tax (it’s one of only 17 states to do that). So even death is no escape from Massachusetts’ imperial reach.

The state even punishes owners of some businesses with an additional “stinger tax” on top of the regular taxes they have to pay.

On the whole, Massachusetts ranks 34th in business tax climate, while New Hampshire ranks sixth.

Massachusetts ranks 7th in state tax collections per capita. New Hampshire ranks 47th.

Government power in Massachusetts is protected through taxation, regulation, and propaganda. The state and local governments take aggressive positions on one side of divisive culture war issues.

When reforms do slip through the system, the establishment does its best to crush them. The state allowed chartered public schools 30 years ago. But it quickly capped the number of charter schools, and in 2016 establishment forces defeated a parent-led effort to lift the cap. Charter school funding is limited by a law that sets it at a tiny percentage of what district public schools get, to ensure that charters never become a competitor at scale. Larger reforms, such as Education Savings Accounts, remain illegal.

Now, obviously, Massachusetts no longer employs the level of violence it once used to enforce conformity. Its ruling elite now use policy and social pressure to satisfy the Puritanical impulse to purge heretics and reinforce orthodox views.

That’s progress. But it’s unmistakable that Massachusetts values order and orthodoxy over freedom and individualism, and this preference feeds the growth of an imperial state.

All states need to establish social order, and all cultures develop social norms. Some lean more toward order, some toward liberty. New Hampshire has always held freedom to be its core value, even when it hasn’t lived up to its own ideals.

It’s not an accident that no accused witch was ever executed in New Hampshire.

Given the choice, we’ll take the place that elevates liberty as its core value every time. And we’re not alone. More than 100,000 Bay Staters moved out of the state from April 2020-July 2022.

And in a sure sign of flight from power, the top two destinations for Massachusetts refugees are Florida and New Hampshire, states that have no income tax and rank high in individual freedom.

A survey by a travel website found in January that most Massachusetts residents said they’d move to New Hampshire if they could “have a clean break and move somewhere else.”

Given the choice, people tend to move from oppressive states to free ones. That’s why people generally move from Massachusetts to New Hampshire and not vice versa.

So when New Hampshire politicians say they don’t want our state to become Massachusetts, it’s not frivolous political rhetoric. It’s not a gratuitous insult. We know we’re the last hope for New Englanders who want to live free from domineering government. And we want to keep it that way. Forever.

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Join us May 16 for our 2023 Libertas Award Dinner with Mike Pence

Former Vice President Mike Pence headlines the Josiah Bartlett Center for Public Policy’s 2023 Libertas Award Dinner on Tuesday, May 16.

Join us for an elegant dinner and a conversation with Vice President Pence, focused on economic freedom and opportunity in America.

Mike Pence served as a member of Congress, representing Indiana, from 2001-2013, governor of Indiana from 2013-2017, and vice president of the United States from 2017-2021.

Our Libertas Award honoree is the Honorable Norm Major, former state representative from Plaistow and long-time chairman of the House Ways & Means Committee, where he put in years of public service dedicated to frugal and responsible state budgeting.

The event will be at the Grappone Conference Center in Concord. Enjoy a cocktail reception from 5:30-6:30 and dinner from 6:30-7:30.

For individual tickets, please visit our Eventbrite page.

For table reservations and sponsorships, please contact us at [email protected] or 603-715-0076.

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How to crush youth employment? Make it more costly to hire young people

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A surefire way to suppress already low levels of youth employment is to raise the cost of employing younger workers. Some proposals in the Legislature would do that, in the name of helping these same workers. 

One proposal, House Bill 125, would make it illegal to employ 16-and 17-year-olds after 9 p.m. Sunday-Thursday and after midnight Friday and Saturday during the school year. 

Were this to become law, employers would be subject to fines of up to $2,500 each time a high school student clocks out a minute late. (These fines are seldom imposed, according to the state.)

State law currently caps at 35 the number of hours older teens can work during a five-day school week. HB 125 was intended to fix an oversight in a previous revision of youth employment law that inadvertently let teens ages 16 and 17 work up to 48 hours during shortened school weeks. But this particular attempt at a fix would inevitably trigger unintentional violations of state child labor laws. 

The predictable effect of such a law would be to discourage the hiring of high school students, and to reduce the hours of those who are hired. 

New Hampshire already limits youth under the age of 16 to working between 7 a.m. and 9 p.m. Adding a 9 p.m. curfew for older teens would further depress employment in this age group. Teen employment was declining sharply before the pandemic and fell again in 2020. It has not recovered to pre-pandemic levels. 

With a precise time limit on the books, employers would be in violation of state labor law every time a teen doesn’t punch out on time. To avoid being written up for labor law violations whenever a teen gets distracted at the end of his or her shift, employers would end shifts earlier, hire fewer teens, or both. 

As if intended to depress youth employment even further, House Bill 58 would raise the wage for tipped jobs to a minimum of $7.25 an hour. Currently, New Hampshire employers may pay wages as low as $3.26 an hour to employees who earn tips.

HB 58 would set the regular federal minimum as the floor for all jobs, even those with substantial tip income. Were this to become law, restaurants would have to pay all servers an additional $3.99 per hour. The negative effect on employment would be immediate and predictable. 

A University of California-Irvine study published last August found that raising the tipped minimum wage reduced employment. 

“(O)ur evidence is quite clear and unambiguous in pointing to higher tipped minimum wages (smaller tip credits) reducing jobs among tipped restaurant workers, without enough of an increase in earnings of those who remain employed to offset the job loss,” the authors found.

Other research has found that higher minimum wages reduced teen employment, and that “teens exposed to higher minimum wages since 2000 had acquired fewer skills in adulthood.” 

Well-intentioned regulations such as those in HB 58 and HB 125 would end up worsening New Hampshire’s existing labor shortage and hurting the very people they are intended to help. 

In 2019, the U.S. Bureau of Labor Statistics recorded 67,000 employed Granite Staters between the ages of 20-24. In 2022, that number was down to 52,000. 

In 2019, the state estimated the number of waiters and waitresses in New Hampshire at 12,390. In last year’s report, it was down to 7,260, a decline of 41%, even though the entry-level wage was $1 per hour higher. 

Restaurants, already pressed by rising supply, labor and energy costs, have been raising prices to maintain their meager margins. Add in a state mandate to more than double base pay for wait staff, and some restaurants certainly will be forced out of business. Others will raise prices even further. Restaurant prices rose 8.2% from January of 2022 to January of 2023, according to the National Restaurant Association. That’s higher than overall consumer prices, which rose 6.4%.  

According to surveys of New Hampshire Lodging and Restaurant Association members, servers in New Hampshire earn between $20-$45 an hour when tips are included. Granite Staters do tip generously, ranking fifth nationally and first in New England, according to Toast, a Boston company that provides software for point-of-service tablets used by the restaurant industry.

As New Hampshire employers struggle with a labor shortage, persistent inflation and predictions of a looming recession, artificially increasing the cost of employing younger and lower-skilled workers would add an additional burden. As that burden would be tied to the hiring of those workers, it would likely lead to reduced opportunities for them. 

Hurting both employers and younger workers is not the intent of such regulations, but it would be the predicted outcome.  

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Education Entrepreneur Spotlight: Prax Village Homeschool Community

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Editor’s note: Since the COVID-19 pandemic, educational entrepreneurship has boomed nationwide. New Hampshire has experienced significant growth in the number of entrepreneurs and innovators willing to take on the daunting challenge of building a new educational ecosystem. This year, we’ll be highlighting some of the people and organizations that have begun expanding the education marketplace in the Granite State, as well as the obstacles they face in creating non-traditional learning environments. We start with Becky Anderson and Prax Village, a Seacoast community for home-schooling families. We hope you enjoy these profiles and stories of market innovation.

Prax Village: A thriving co-learning community
By Becky Anderson

Prax Village is a community of liberty-minded homeschooling families in the Seacoast region of New Hampshire. After two full years, our current member base includes more than 100 kids of all ages, from about 50 families. But Prax Village looked much different when it was established in the autumn of 2020.

A small group of like-minded families had collectively purchased and, through many volunteer hours and efforts, renovated a private community center that we call the Praxeum. The building and beautiful outdoor space on our property were used for charitable events, meetups, classes, and co-working. The Praxeum’s founders were at different stages in raising our families, yet we found ourselves always returning to a common goal: to form a support network for parents navigating the choice to raise our children outside of the conventional school system, and a strong, trusted social group for our kids as they grew.

In 2020, government-imposed COVID restrictions unceremoniously canceled many of our extracurriculars and homeschool groups, while also closing homeschoolers’ typical gathering places like libraries, museums and indoor playgrounds. Many new and long-time homeschoolers felt displaced and found themselves searching for in-person opportunities. Kids (and parents) really missed interacting with each other in a normal and natural way.

We already had a location, one of the biggest obstacles to overcome, and knew it was the right time to share it with more families, so Prax Village was launched. For an affordable monthly fee, members had just a couple of opportunities per week to meet at the Praxeum, along with seasonal special events. We trusted that this simple start would grow into richer and more robust offerings, and it has.

Through steady and organic growth, Prax Village has become a community that has greatly exceeded our initial expectations and continues to evolve and improve.

Prax Village members include kids from babies to teens, and many types of homeschoolers: brand new and seasoned, religious and secular. A wide array of educational philosophies can be found here. Many members join after moving from other states to New Hampshire for its high quality of life and increased personal freedom. Because we share common principles of liberty and a desire to raise responsible and thoughtful individuals, our members make up a strong and supportive community despite our diversity of educational styles.

Thanks to the enthusiasm and energy of parent volunteers, Prax Village now offers multiple classes and clubs five days a week, with a year-round calendar of 8-week sessions. We owe our success to members’ generosity with their time and knowledge. Over the past year, the schedule has included Spanish, soccer, book club, chess club, LEGO club, multiple art classes, music appreciation and chemistry — and that’s only a partial list!

We aim to cater to a wide variety of interests, from weekly Toddler Time for ages 2-4 with rotating parent leaders to a multi-year academic deep dive into Greek classics for ages 11 and older. Most families come to the Praxeum one, two, or three times a week for the supplemental classes that interest them most, and our 8-week sessions give everyone a chance to try out different things and maintain a flexible schedule.

We have established our own unique set of seasonal traditions — a Valentine Exchange, Freecoast Egg Hunt, Midsummer Potluck, Halloween Trunk or Treat, and Enlightenment: A Winter Solstice Celebration.

Organizers also create fun opportunities around the region exclusively for Prax Village members, like our field trip to the New Hampshire Farm Museum or sailing classes with the Gundalow Company. We have held food drives and toy drives, and seasonal clothing swaps with leftover clothes donated to the Pass Along Project. We are even beginning to see more time carved out for parents to connect and recharge, like Ladies’ Book Club and Anarcraft meetups.

In September, we tried something new and, for one weekend only, we transformed the Praxeum into Prax Museum: A Pop-Up, Hands-On, Kid-Made Science Center. Prax Village members invited friends, family and fellow homeschoolers to explore physics, chemistry, light, electricity and other amazing natural phenomena by interacting with dozens of exhibits and demonstrations. Popular exhibits included the impressive full-room pinhole camera, the Bernoulli blower, colorful shadows, and tricky goggles that turned the world backwards and upside down. Every exhibit was an opportunity to play with science and learn together.

Prax Village differs from the typical homeschooling co-op. We avoid long waitlists and limited enrollment. Because we are able to adjust our programming choices according to size and member demographics, new families can join at any time. We don’t provide core academics, as we understand that the parent is the expert in their children’s unique learning needs.

We aren’t a drop-off program. In part, this decision was made to avoid regulations and licensing, but by including parents in all that we do, we encourage strong friendships to form between whole families rather than only the children. Our large, weekly, unstructured gathering is an important social time for parents and kids alike.

With so many families leaving the public school system in search of other educational options, this is an exciting time for homeschoolers, and New Hampshire is the best place to be! Prax Village is positioned to continue leading the way as a community for liberty-minded homeschoolers in our state. If you would like more information about Prax Village or to become a member, visit https://praxvillage.org.

Becky Anderson is founder of Prax Village Homeschool Community.

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A gas tax holiday is just a holiday from reality

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Rising gas prices have prompted calls for a state gas tax holiday. Though a gas tax holiday would provide some immediate relief from high prices, the cost would have to be paid later, possibly through higher taxes or deteriorating road conditions. 

In New Hampshire, the gas tax is not a general tax. It’s a user fee. Part 2, Article 6-a of the New Hampshire Constitution requires that it be used exclusively for road construction and maintenance.

State gas tax revenues have not kept up with inflation this century. In the fiscal year ending in June of 2000, total unrestricted gas tax revenues were $116 million. That would equal $182 million in 2021 dollars. But in FY 2009, unrestricted gas tax revenues were $131.6  million before falling back to $116.5 million in FY 2021. 

While the state’s population grew by 13% since 2000, gas tax revenues have remained essentially flat in nominal terms and have fallen in real terms. 

Because the gas tax is a user fee, a holiday would stop charging people for use of the public roads for its duration. But it wouldn’t stop the wear and tear on the roads. If that funding is not made up later, the state would have to forego repairs and maintenance, replace the lost revenue with higher taxes or transfers from somewhere else, or find some way to reduce costs. 

Given current inflation, it’s not clear how the DOT would reduce costs, leaving the other two options as the most likely long-term effects of a gas tax holiday. 

Legislators have floated the revenue transfer idea. But two proposals to do that were rejected this week in the House Finance Committee. The first would have had motorists fill out a rebate form to receive checks from the state. Motorists would have had to keep their gas receipts. 

The costs of administering that scheme prompted the amendment to be replaced with a plan to send every owner of a registered motor vehicle a $25 check for each vehicle. The cost was estimated at $40 million. The money would come from the general fund, not the highway fund, so it wouldn’t be a gas tax rebate. It would simply be a check from the state to help people cover the cost of paying for fuel. 

At this week’s prices, $25 wouldn’t cover even half the cost of filling a 12-gallon gas tank.

Such one-time tax rebates are not good tax policy. They don’t have the kind of stimulating effects that tax rate cuts do. 

“The tax code should not be used like an appropriations bill to dole out benefits, effectively putting a chicken in every pot,’” as the Tax Foundation put it in a 2001 policy brief. “The primary purpose of the tax system is to raise revenue, not to micromanage the economy with subsidies. It should create a level playing field in which individual and business decisions are made to achieve the best economic outcomes.”

In this case, the general fund should not be used to dole out benefits. It should pay for necessary public services. 

If the state has a surplus of federal COVID money or other one-time revenues, it would best be used to cover state obligations that are difficult to cover with recurring revenues, such as reducing the shortfall in the state pension system. 

If the state has an ongoing surplus of recurring revenues, it should consider another tax rate cut.

As the Tax Foundation has pointed out regarding a federal gas tax holiday, it would do nothing to change the underlying causes of gas price increases and could create other problems.

Though it sounds like a nice way to give consumers some short-term relief, a gas tax holiday is not sound policy.  

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Budget deal cuts state spending by 3%, lowers taxes, creates Education Freedom Accounts

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UPDATE: This analysis has been updated to incorporate the Legislative Budget Assistant’s official tally of spending in the Committee of Conference budget.

 

The New Hampshire Legislature is scheduled to wrap up this year’s session on Thursday when the House and Senate convene to consider nearly 40 committee of conference reports hammered out by negotiators for each chamber, including the compromise version of the state’s two-year budget.

The conference committee budget would:

  • Cut state General and Education Trust Fund spending by roughly $172.5 million, or 3.1%,
  • Further lower business tax rates,
  • Eliminate the Interest and Dividends Tax, making New Hampshire truly income-tax-free,
  • Cut the statewide property tax while increasing aid to municipalities,
  • Create Education Freedom Accounts to provide school choice to lower-income families,
  • Prohibit the state from asserting, through employee training and K-12 education, that one demographic group is superior or inferior to others,
  • Create a voluntary paid family leave program;
  • Restrict abortions after 24 weeks,
  • Give legislators the power to repeal a state of emergency declaration.

Overview

This year’s budget fight was unusual in that it did not center on taxes and spending, or indeed on fiscal issues much at all. In fact, House negotiators accepted the Senate’s version of House Bill 1, which contains the detailed spending for each state agency, with no changes. Instead, the field of debate shifted to House Bill 2, the trailer bill that contains the policy changes necessary to implement the state’s $13.5 billion budget plan over the next biennium.

The Senate-approved version of HB 1 would spend $5.4 billion from the state’s General Fund and Education Trust Fund in Fiscal Years 2022 and 2023. This represents a reduction in state General and Education Trust Fund spending of approximately $172.5 million, or roughly 3.1% of state spending. (The committee of conference made some changes to HB2, which will have a very small effect on this figure. To make sure we’re using official state numbers, we use totals from the Senate budget, as the Legislative Budget Assistant has not made an official tally of the Committee of Conference budget.)

That is an historic achievement and would be the second time in this century that state spending declined from one budget to the next. (The last time was in the 2012-13 state budget passed in 2011.) General and Education Trust Fund spending is the portion of state spending paid for by state revenues, such as business taxes, the tobacco tax, the Meals and Rooms Tax, etc. Total spending, which includes federal outlays, is $13.5 billion in this budget.

Tax Cuts for Everyone

Since 2015, Republicans at the State House have been pushing to lower the rates of the state’s two largest business taxes. The Business Enterprise Tax is a levy of payroll and operating expenses paid by all but the state’s smallest businesses. The Business Profits Tax is paid on profits, and it is largely borne by larger businesses. Six years ago, New Hampshire had among the highest effective corporate tax rates in the nation, prompting the GOP to take up business tax reform as a key step to improving the New Hampshire Advantage. Showdowns over business tax rate cuts led to impasses between Gov. Maggie Hassan and the Republican-led Legislature in 2015 and between Gov. Chris Sununu and the Democratic State House majorities in 2019.

This year, Republicans hold majorities in both chambers, as well as the governor’s office, and that has meant more business tax cuts. This year’s budget would lower the BET to 0.55%, down from 0.75% six years ago. The BPT would drop to 7.6%, down from a high of 8.5% six years ago. Cutting the state’s two largest taxes on Granite State employers by 27% and 10.5% over the course of four budget cycles is an impressive legacy for Republican lawmakers that has helped the state’s economy. Thanks in part to business tax reform, New Hampshire business tax revenues have exceeded projections every year since rates began to fall. The Granite State now boasts a growing economy, higher state tax revenue, and an unemployment rate of 2.5%. Business tax rates are just the first of many tax cuts contained in this budget.

HB 2 would also increase the filing threshold for businesses paying the BET from $200,000 to $250,000, meaning that many of the state’s smaller firms would no longer have any business tax liability, while delivering a small tax savings to all BET filers. This was an idea originally proposed by Senate Democrats as an alternative to Republican tax rate cuts, but was included in addition to the rate cuts.

The budget deal begins to phase out the Interest and Dividends Tax entirely. This 5% tax on investment income above $2,400 hits hardest seniors who have planned to retire on their investment income. It has led critics to charge that New Hampshire has never been truly income tax free. The tax phases out over five years, dropping a percentage point each year. This puts New Hampshire on the path to becoming the ninth state to have no tax on personal income.

The budget reduces the Meals and Rooms Tax, a levy on restaurant and hotel bills, from 9% to 8.5%.

And finally, the budget incorporates the provisions of Senate Bill 3, which would shield New Hampshire businesses from tax liability on loans received through the federal Paycheck Protection Program.

Property Tax Relief

The most expansive set of tax changes occur on property taxes, which fund state, county, municipal, and school district expenditures. The final budget package includes a House provision lowering the Statewide Education Property Tax (SWEPT) by $100 million in 2023. This is a direct tax cut for every property owner in New Hampshire.

The budget also increases revenue sharing with municipalities under the Meals and Rooms Tax. While the last budget sent approximately 22% of these revenues back to cities and towns, this package sets revenue sharing at 30% and sets them aside in a newly created dedicated fund. Meals and Rooms Tax revenues have been a popular target for state budget writers in both parties over the past two decades. In total, this budget would increase M&R revenue sharing by $50.5 million to a total of $188 million.

The budget increases funding for county nursing homes by $29.1 million. It also prevents a drop in the state’s education funding formula caused by the drop in fall enrollments and the Free and Reduced Lunch program during the COVID-19 pandemic. Left unaddressed, this would have resulted in a $67 million reduction in state aid to local school districts. The budget also contains $30 million for school building aid, $35 million targeted to school districts with the greatest fiscal need, and $1.9 million for schools shifting to full-day Kindergarten.

Remarkably, the state budget would provide tax relief on all four sections of every Granite Stater’s property tax bill: state, county, municipal, and school.

School Choice

The Senate has included the provisions of SB 130, the Education Freedom Accounts Act, in HB 2. This expansion of school choice would provide New Hampshire families earning up to 300% of the federal poverty level with scholarships funded by the state’s adequate education grants. They could use these scholarships for a wide range of educational alternatives, including non-public schools, remote learning hardware and software, transportation costs, and even tuition at another public school or the New Hampshire Community College System. Our analysis projected that these accounts would save taxpayers $6.65 million in the first two years alone while improving student outcomes.

Late-Term Abortion

Currently, 43 states limit late-term abortions. The current budget package would add New Hampshire to that list, prohibiting the practice after the 24th week of pregnancy expect in cases where the procedure would protect the life, health, or well-being of the pregnant mother. The budget would also strengthen current state statutes barring the use of taxpayer funding for abortion services, requiring regular audits of abortion providers.

Critical Race Theory

Opposition to the teaching of Critical Race Theory in schools prompted responses in both the New Hampshire House and Senate. The House approach, House Bill 544, was a ban on “divisive concepts.” The Senate took a different tack, strengthening the state’s existing non-discrimination laws to prevent the the state, in training materials or in K-12 education, from asserting as fact that people of a particular age, sex, gender identity, sexual orientation, race, creed, color, marital status, familial status, mental or physical disability, religion, or national origin are inherently superior or inferior to any other. The Senate language, which also provides a legal path for those who believe they have been exposed to such discrimination, has been added to the state budget package in HB 2.

Emergency Powers

The final hurdle to a budget deal is a limit on the broad emergency powers granted by the New Hampshire Legislature to the governor following the attacks of September 11, 2001. The current emergency statute gives the House and Senate the authority to terminate any state of emergency declared by the governor by majority vote of both chambers. But it does not explicitly give the Legislature the authority to rescind individual emergency orders issued under such a state of emergency, nor does it provide a smooth path for such a resolution to come to floor of the House or Senate.

During the COVID-19 pandemic, Gov. Chris Sununu issued dozens of executive orders. Some were waivers of state regulations, enabling health care workers to provide treatment free from red tape or allowing restaurants to serve beer and wine to go. Others, such as the statewide mask mandate, met with opposition from conservatives and libertarians concerned about government overreach.

Last year, with the legislative session cut short and limited to brief meeting on the UNH campus, Democratic leaders blocked attempts by a handful of legislators to address the state of emergency. This year, lawmakers dealt with a number of bills curtailing the governor’s emergency powers or codifying emergency procedures into state law, but never voted on whether to end the overall state of emergency.

The House position would have maintained gubernatorial authority to declare an emergency, but would have required a vote of the House and the Senate for it continue past 30 days. The Senate position would have clarified the Legislature’s ability to address individual executive orders and would have allowed a governor to renew any order unless and until both the House and Senate voted to cancel it. This has been a major point of contention between the two chambers.

The final compromise contains elements of both approaches. Governors in future emergencies would be able to renew any emergency order. But should any state of emergency last as long as 90 days, the governor would need to explain the continued need directly to the Legislature, which would then vote in each chamber whether to terminate the state of emergency. Should majorities of both the House and Senate approve, the state of emergency would end immediately. Much like a veto override, both chambers would need to agree to rescind the governor’s directive, though by a simple majority vote of each.

This compromise would ensure that the Legislature would have the chance to affirm or deny a governor’s emergency declarations with an up for down vote. It gives legislators a considerable amount of power while maintaining a governor’s ability to act swiftly to respond to an emergency.

In sum, this budget represents the largest bundle of conservative policy achievements passed in a single bill in living memory.

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December set N.H. records for COVID-19 deaths, infections

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December was by far New Hampshire’s deadliest month for COVID-19 fatalities, with 233 recorded deaths, according to state data. That record high represents a 441.8% increase over November and a 32.4% increase over May of 2020, which recorded the state’s previous high of 176 deaths. 

The number of new recorded COVID-19 infections in December —23,034 — was more than double the total number of all recorded infections from March through November.

That huge increase in infections in just a few weeks indicates rapid and broad community spread of the virus. 

On Nov. 30, the state had tallied 20,994 total COVID-19 infections since the epidemic was first detected in New Hampshire. By December 31, the state had recorded 44,028 infections.

Total new infections in the month of November were 10,545. December’s 23,034 new infections represented a 118% increase over the previous month.

This rapid increase in infections and deaths is not unique to New Hampshire. December was the deadliest and most infectious month for the entire United States as well. 

As the Josiah Bartlett Center reported last month, the state’s hospitalizations figures are inaccurate, so we are not calculating a hospitalization total. 

The state officially listed an increase in total hospitalizations of only 63 for the month of December, an obviously incorrect number. The state went from 160 current hospitalizations on December 1 to 252 on December 15 to 317 on December 31. 

The large rise in daily numbers is not reflected in the state’s totals because the state does not include most hospitalizations in its totals.

The state’s official tally of total hospitalizations includes only people who were hospitalized when their COVID-19 infection was first recorded. Anyone hospitalized after the initial infection was recorded by the state shows up in the daily hospitalization count, but is not included in the total hospitalizations. 

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How would N.H. handle a presidential vacancy before the election?

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President Donald Trump announced on Friday that he had tested positive for COVID-19, raising several constitutional questions regarding the presidential election that is just weeks away. The Broadside, our weekly newsletter, which you can subscribe to here, spoke with N.H. Secretary of State Bill Gardner Friday morning to learn how various scenarios might play out under New Hampshire law.

First, if a president is temporarily incapacitated, the 25th Amendment sets out procedures for transferring power to an acting president, as explained here.

But what would happen electorally if the president of the United Staters should die or resign before the election on Nov. 3? (A president anticipating a grave illness or imminent death could resign before an election, immediately elevating the vice president to the presidency.)

In such a scenario, would ballots have to be changed? Would votes for Trump count? Would votes for Vice President Pence count? Gardner walked us through the various scenarios. 

“Some states, if the candidate dies the candidate remains on the ballot,” Gardner told The Broadside. “In this state, if the candidate dies after the Tuesday before the election, so it’s less than a week, then you don’t do anything. If it’s before that, the law has provisions for pasters over the name.”

Under state law, new ballots can be issued up to one week before the election. If a candidate for president were to die or withdraw from the race before the Tuesday before the election (in this case, Tuesday, Oct. 27, new ballots could be printed and rushed to polling places. State law (RSA 656:3) requires ballots to be sent “at least 6 days before” an election. 

Obviously, already issued absentee ballots could not be changed.

In the event that a nominated candidate withdraws, is incapacitated or dies before the election, RSA 655:38 and 655:39 establish that the candidate’s political party would choose a replacement. At the federal level, too, parties replace presidential nominees. 

The process of replacing a candidate on a ballot is governed by RSA 656:21, “Pasters; Substitute Candidates.” That law states:

“In the event that a candidate dies or is disqualified as provided in RSA 655:38 or 655:39, the name of the substitute candidate shall be printed on the state general election ballot. If the state general election ballots have already been prepared and time will permit, the secretary of state may authorize adhesive slips or pasters with the name of the substitute candidate thereon to be printed and sent to the town or city clerks representing the territory wherein the deceased or disqualified candidate was to be voted for. Such paster shall be affixed to the ballots as provided in RSA 658:34. The name of the substitute candidate shall be received by the secretary of state no later than the Tuesday prior to the election in order for a substitute name to be placed on the ballot.”

So what happens if a presidential candidate withdraws, is incapacitated or dies within a week of the election and there’s no time to put the replacement’s name on the ballot? The ballots won’t be changed, Gardner said.

But that’s OK for presidential elections since people don’t actually vote for presidents. 

Contrary to popular belief, your vote for a particular presidential candidate is not really a vote for that candidate. It’s a vote for a slate of presidential electors. (Constitutionally, there’s no such thing as “the popular vote” for president.)

As the Library of Congress explains: “When citizens cast their ballots for president in the popular vote, they elect a slate of electors. Electors then cast the votes that decide who becomes president of the United States.”

Constitutionally, a vote for President Trump is a vote for the Republican slate of electors. If President Trump were to resign or die before the election, citizens could still express their preference for the Republican nominee by checking Trump’s name on the ballot. 

Should President Trump win New Hampshire after dying or resigning, the state’s Republican electors would be free to cast their Electoral College votes for Mike Pence (who would already be president). Technically, New Hampshire’s electors can vote for whomever the party chooses as its replacement, or anyone else. No state law limits their vote.

“The electors actually can vote for whom they want,” Gardner said.  

That’s not necessarily the case in every state. Thirty-two states and the District of Columbia have laws requiring electors to vote for their party’s nominees. Each law is worded differently, so it’s not clear if all of those electors could vote for the vice president-elect as president. 

In the case of a president dying or failing to qualify for the office after the Electoral College vote, the 20th Amendment states that the vice president-elect shall become acting president. But if the president-elect dies between the election and the Electoral College vote, it’s less clear how the transition would work, given that so many electors’ votes are bound by state laws. 

As usual, the process is simpler and easier to understand in New Hampshire. Electors are free to vote for whomever they want. So in the case of a candidate becoming ineligible during or immediately after the election, there’s no constitutional issue here. 

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A conversation about the Espinoza ruling with Tim Keller and Kate Baker

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On June 30, 2020, the U.S. Supreme Court ruled in Espinoza v. Montana Department of Revenue that states cannot exclude religious institutions from participating in school choice programs. New Hampshire has a similar scholarship program and a similar constitutional provision to the ones that were under discussion in the Espinoza case.

On July 8, the Josiah Bartlett Center for Public Policy presented an online discussion of the case and its impact on New Hampshire, featuring two experts on the question of religious liberty and alternative education.

Tim Keller, senior attorney for the Institute for Justice, was a co-counsel for the plaintiff in the case.

Kate Baker is executive director of the Children’s Scholarship Fund N.H., which administers a New Hampshire tax-credit scholarship program.

In a webinar for the Josiah Bartlett Center, they explained the Espinoza ruling and its effect on New Hampshire.

We posted the video of that discussion on our newly resurrected YouTube channel here.

 

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