Gov. Kelly Ayotte appears to be moving forward with a two-year budget that does not include further cuts to New Hampshire’s business taxes, despite the wishes of some Republicans.
“Our budget proposal will be based on the revenue structure we have today,” Ayotte said at a press conference in her office on Wednesday.
The comments came after House Majority Leader Jason Osborne, an Auburn Republican, co-sponsored a bill with other top House Republicans to cut the corporate tax. This tax applies to all compensation, dividends and interest paid by a business. It is currently a 0.55 percent tax; Osborne’s bill, House Bill 155, would lower that to 0.5 percent.
Lawmakers have cut New Hampshire’s two business taxes consistently since 2015. The state corporate tax was cut from 0.75 percent to 0.55 percent, while the business profits tax was cut from 8.5 percent to 7.5 percent. .
Of the two taxes, the business profit tax generates much more revenue. In the 2024 state fiscal year, which ran from July 2023 to June 2024, the state received $209.5 million from the business enterprise tax and about $1 billion from the business profits tax, according to the Department of Revenue Administration. The business tax increase accounted for just under half of the state’s $2.2 billion in total revenue that year.
In the past decade, Republicans have pushed to lower business taxes, arguing that it would make New Hampshire more attractive to businesses from surrounding states and that the resulting economic activity would keep state revenues high. Democrats have opposed them, arguing that businesses don’t need them and that state programs will suffer from lower funding in the long run.
After recent years in which business profits and corporate taxes brought in higher-than-expected revenue, taxes are now falling short of expectations, prompting Ayotte and other Republicans to call for spending cuts. state. Lowering the corporate tax could also result in lower revenue, opponents say.
Although she suggested that the tax cuts would not appear in her proposed budget, Ayotte did not rule out the proposed tax cut on Wednesday.
“The New Hampshire way is really to match our revenue with what’s coming in and what’s going out,” she said. “I’m going to look at every single bill and see if it makes fiscal sense for the state of New Hampshire, and I’m always going to be looking to make sure that we get as much money back to the taxpayers as we can.”
Also Wednesday, Ayotte suggested that while she supports the goal of universal education freedom accounts — a proposal that would see the voucher program extended to families of all income levels — she may not push for them to be made universal immediately. Instead, Ayotte appeared to favor a more gradual approach in which the program is expanded to higher-income families in steps.
In her inaugural address on Jan. 9, Ayotte pledged to find across-the-board cost reductions in state government, a message she repeated Wednesday. Without elaborating, she said she has been working with state commissioners to try to find areas to cut as she finalizes her budget.
“If you look over the last biennium and before that, but especially look at the last biennium, there’s been a pretty strong increase in spending and overall funding dollars in that,” she said. “So I look at this as: We really need to recalibrate.”
The governor, who has been in office for about a week, will present her budget proposal to the House of Representatives and Senate in February. She said Wednesday that she will use a baseline budget created by her predecessor, former Gov. Chris Sununu, in the final months of his administration, and build from there.
Next, lawmakers will take over the budget writing process.
This story was originally published by New Hampshire Bulletin.
