NH CARES
Network for Responsible Budgeting
May 16, 2007 CARES NETWORK ACTION ALERT
THE SITUATION: LOWER Senate REVENUE PROJECTIONS will likely LEAD TO
SIGNIFICANT CUTS to the DHHS HOUSE BUDGET in the SENATE BUDGET
ACTION NEEDED:
#1 - CALL YOUR SENATORS ASAP and TELL THEM YOU SUPPORT the $.45 Per Pack
INCREASE in the CIGARETTE TAX in the HOUSE BUDGET. They will be discussing
this NEXT TUESDAY (May 22nd), so you need to call right away. Note: Most
of the Democrat Senators ran on supporting a cigarette tax to cut smoking
(especially for lower-income families and kids) and to raise needed revenue
for the safety net.
#2 - URGE them NOT TO CUT the HOUSE DHHS Budget as it is the minimum needed
for the safety net and for the opportunities all citizens need to better
themselves. And if somehow they cannot use the House revenues (which
are reasonable, especially as most revenues are coming in stronger now for
FY 07 than the House projected a month ago), then raise additional revenues
and/or use the increased FY 07 surplus to take care of basic needs.
WHAT HAPPENED TODAY & WHY IT IS IMPORTANT:
$39.7m in LOWER REVENUES ADOPTED NOT INCLUDING the CIGARETTE TAX - Today
(May 15th), the Senate Ways and Means Committee cut net revenue estimates
in the House Budget by $39.7m in General Funds for FY 08-09. ($10.3m
from FY 08 House Budget revenues and $29.4m from the FY 09.) The biggest reductions
were $36.6m in Business Taxes (the BPT + BET) and $12.9m in the Real
Estate
Transfer Tax.
The HOUSE CIGARETTE TAX INCREASE IS IN TROUBLE - Unfortunately, this appears
to be just the beginning of their revenue reductions to the House budget.
In their brief discussion of the Cigarette Tax, they signaled that they
would NOT be going along with anything as large as the $.45 per pack
increase in the House Budget. Sen. Reynolds, for example, indicated she would
support
some increase between the Governor's $.28 increase (to $1.08 per pack)
and the House increase of $.45 per pack (to $1.25 per pack). The also
looked at lower cigarette tax projections than the House used for every level
of per pack increase. They requested these based on a 2% decline per
year
in smoking nationally. This may may cut $7m - $14m off projected House
revenues in the $.28 -$.45 increase range. This could be used to justify
further cuts in the House Budget.
THERE HAS BEEN NO DISCUSSION YET of INCREASING OTHER REVENUES and the SCUTTLEBUTT
from SENATE FINANCE is that the SENATE will CUT the HOUSE BUDGET down
to the GOVERNOR's or BELOW. - As noted in our last update, the rumor is each
division in DHHS may be given a "cut target" - although apparently
this has not happened yet.
These developments are not a good sign for the safety net - especially
with the Senate on a fast track and scheduled to finish their budget
by the end of the month. (We suspect they may have to delay a week or so into
early June.) In any case, is becoming increasingly clear that the Senate
intends to cut the House Budget significantly and will be bargaining
in
the Committee of Conference from a base at or below the Governor's.
Many held hopes right after the election that a Democratic Senate would
be different and at this stage would have recognized that the House DHHS
Budget needed more funds (especially for rates that reflect costs and
Medicaid funding levels that were more than bare minimum). Instead - unless something
changes very quickly - it appears that we have "business as usual" except
that this time, it is the Senate playing the "hard-nosed taxpayer-protecting
role (usually played by the House) of being conservative on revenue estimates
and resisting increases to existing taxes (like the cigarette tax) -
and then using these lower revenues to justify budget cuts.
PS: The Revenue Commissioner did testify that the increased revenues he
projected for cigarette tax increases would hold through a $.50 increase
in the tax (to $1.30 a pack). According to what was passed out today,
the $.28 increase per pack in the Governor's budget means NH cigarettes would
range from $.63 cheaper than Massachusetts to $1.15 cheaper than Maine
At the House's $.45 increase, NH's cigarette's advantage ranges from
$.46
per pack to $.98 per pack - which is why the Revenue Department does
not project a significant loss of out-of-state sales at either of these increases.
Note: In talking with your Senators. please remember that the cigarette
tax helps many low income people when it makes them to decide to stop
smoking They then pay no tax (making it very progressive - and the majority of
the people who stop smoking with the increase in taxes have lower incomes.
