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.

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. 

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. 

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.

 

During this presidential primary season, Granite Staters will hear a lot of talk about the supposed benefits of socialism vs. the alleged failures of capitalism. This excellent, brief video from Prager University offers a good primer on the subject. It explains well the philosophical mistakes made in the assumption that socialism is morally superior to capitalism.

Sign up for our e-newsletter by Feb. 21 for a chance to win a $100 Murphy’s Taproom gift card!

Socialism is gaining popularity in the United States.

And we’re here to fight back… with beer.

Each Friday we publish a free-market e-newsletter called The Broadside.

Sign up for The Broadside using the form below — or refer a friend who signs up — by February 21, and you’ll be entered to win a $100 Murphy’s Taproom gift card!

Why February 21? Well, that’s the 171st anniversary of The Communist Manifesto.

Subscribe to The Broadside for the intellectual ammunition you need to win arguments with your socialist friends — or your online trolls, whichever.

Do it by Feb. 21 for a chance to win a pile of burgers and beer!

That’ll make you happy, and Marx hates happiness.

So sign up today and make Karl sad.

Editor’s note: John Kramer, vice president for communications at the Institute for Justice, won this year’s Thomas Roe Award, the highest award given by the State Policy Network for achievements in advancing free-market ideas. Kramer is from Sunapee, N.H. With his permission, we share his moving acceptance speech in the hope that it inspires others to challenge themselves, to overcome their fears and anxieties, and to learn and achieve more than they might think possible.

 

Chain of Inspiration

by John Kramer

 

In a tiny church in a tiny New Hampshire town, a Christian missionary from Africa delivered a plea for assistance.

“If we only had $200 for a row boat,” he said, “My mission could row across the lake where we live and we could bring the Word of God to those on the other shore—to the natives who have never heard the Gospel.”

In the congregation of that tiny church was a widow. She had been left with 9 children and no inheritance to speak of. She supported her family as a part-time public school teacher, helping kids with learning disabilities.

She had received her paycheck—an actual paper check back in those days—but she got it too late to deposit it. Back then, there were also these things called “banker’s hours.”

As the missionary concluded his talk, the ushers took up the collection. This widow opened her purse. Her kids looked over to see if she would direct a dollar their way to drop in the basket. Instead, she did something remarkable.

She took out that paycheck and endorsed it over to the church so this missionary could have the boat he needed to spread the Gospel.

Each of her kids panicked in the face of this act of charity—charity not given out of surplus, but out of genuine need.

How would they pay for food?

How would they pay for oil to heat their home with winter fast approaching?

Everyone in that family knew the daily hardships they already faced. They lived paycheck to paycheck. And here was their Mother giving away an entire paycheck—as an act of faith.

That woman—that widow—was my Mother, Therese Kramer.

I was her youngest. I want you to know that we did not go hungry. And we did not go cold.

The missionary left our church with the funds he needed for his boat—thanks to the widow’s mite.

But the story doesn’t end there. A couple from our parish—the Quinlans—learned about my Mother’s act of charity. They secretly paid for our entire heating bill that winter—an enormous sum compared to what my Mother had contributed. Because they wanted to remain anonymous, it took me 30 years to finally confirm it was the Quinlans who saved our family that winter.

So why do I donate paintings to worthy causes like State Policy Network or Christ House? Or work to build up those around me? Because I saw the example of my Mother. I saw the example of the Quinlans. Why has Shirley Roe created this award to honor her late husband? Because she saw Tom in action. She saw his values and his spirit, and she wanted Tom to inspire others for generations to come.

And that’s what I’d like to talk with you about tonight: The importance of that chain of instructive inspiration.

As I mentioned, I lost my father when I was very young. I was two-and-a-half. I never really knew him. But my Mother gave me a great piece of advice in the context of that loss. She said, “You may not have a father, but you have many father figures around you.  Study them.  Emulate them. Make their best traits your best traits.”

And that became a lifetime obsession for me. From my uncles, I learned the importance of a work ethic and always keeping your word. From my teachers, I learned the importance of studying history and civics and writing. From Chip Mellor—IJ’s first president—I learned by example the importance of staying true to your values and your vision.

From Clint Bolick—IJ’s other co-founder—I learned the importance of facing challenges with a joy-filled heart.

One day we faced an infuriating problem, and Clint told me, “Hey, we can solve these problems and be happy or we can solve this problem and be angry. I choose to be happy.”

What an instructive bit of inspiration for us all.  You can choose to face your challenge—any challenge—with a happy heart. It is no wonder that Chip and Clint are each Roe Award Winners. I am truly honored to join their ranks.

When we challenge ourselves to take on the best qualities of others, we are harnessing a life-changing force. That ability . . . that willingness . . . to change is the secret to a rewarding life.

Think for a moment about the happy and successful people you know. Likewise, think about those who are chronically miserable and failing. Have you pieced together yet what separates those two groups of people? Nearly all of the difference is found in how you handle the fear of the unknown. It is the people who embrace that fear . . .who grow and learn and improve . . .who become better-equipped to take on whatever life throws at them.

The more you welcome that challenge to improve—drawing inspiration from others—the more you’ll experience the world around you. And the more you experience, the more you’ll think. And the more you think, the more you’ll learn. And the more you’ll learn, the fewer frustrations you’ll feel and the braver you will become.

It all starts with embracing that chain of inspiration—of recognizing in others the qualities you want in yourself, and then making them part of who you are. Happiness is found in learning; and learning—real and deep and true learning—can only come from action.

So keep the faith, and keep at it. Because it matters. Because your work matters.

Seek out inspiration from those around you. And live in such a way that you inspire others. We can’t all be the missionary rowing across that lake. Nor should we be. We each have our own critical role to play in this movement.

Whether we’re marketers or attorneys or administrators or policy analyst or any other role in the Free Market Movement, we can ensure those around us have the resources and support and example they need to succeed, to spread the word of freedom.

Now let’s go get ’em!