BY: Citizens Count
In 2019 legislators will set a budget for the next two years and are likely to advocate for more funding for both education and mental health. With 133 bridges in ‘red list’ condition, the state also needs to bump up funding for transportation infrastructure.
A strong economy and spending cuts in other areas could free up revenue for these priorities. However, legislators are also looking at new sources of revenue. Here’s a run-down of what’s on the table:
In May the U.S. Supreme Court struck down a ban on sports betting, opening the door to states to regulate and tax bets. Sen. Lou D’Allesandro has said he intends to sponsor a 2019 bill to authorize sports betting in New Hampshire.
There are a lot of questions around sports betting. Would the Lottery Commission regulate it, or some other government organization? Would betting be allowed online or only in-person? Would restaurants and convenience stores be allowed to participate through a system similar to keno?
Given all these questions, there’s not yet a clear picture of how much revenue sports betting could generate. However, there are some ballpark numbers. Rhode Island anticipates about $23.5 million in its first year of legal sports betting. The Massachusetts Gaming Commission concluded sports betting could generate between $9 and $61 million for that state depending on how it was implemented.
In 2018 a commission studied how much revenue New Hampshire might generate if it legalized and taxed marijuana. They estimated New Hampshire would generate somewhere between $16 and $58 million, once again depending on how the law is crafted. The cost to regulate and enforce the law would run between $9 and $13 million.
Road usage fee
One proposal that would specifically fund transportation infrastructure is a road usage fee. Drivers would pay the fee when they register their vehicles, based on the miles per gallon of their car. Ideally a road usage fee would recover lost gas tax revenue now that cars are more fuel efficient. Opponents argue it’s just a new way to squeeze money out of drivers.
Revenue from a road usage fee would entirely depend on how it was structured, and there have been several different proposals. In 2017 the Department of Revenue Administration estimated that one proposed usage fee – ranging from $0 to $123 per car – would generate about $11 million annually.
Repealing business tax cuts
In her 2018 gubernatorial campaign, Molly Kelly argued the state left revenue on the table when it cut business taxes, one of New Hampshire’s biggest sources of revenue. In particular, she wanted to undo a cut to the Business Profits Tax (BPT) – from 8.5% to 8.2% in 2017, with another scheduled drop to 7.9% next year.
BPT revenue varies according to how successful businesses are year to year, so it can be tricky to predict how a tax cut will impact revenue – especially if the tax cut attracts more businesses to the state. At current rates, business taxes are estimated to generate about $654 million this fiscal year. Based on these estimates and BPT revenues over the past two years, very roughly speaking the state could probably generate about $10 to 15 million if it freezes the BPT cuts.
Putting the numbers in context
Could these bumps in revenue make the difference for education funding, mental health and transportation? Let’s look at the numbers:
- The draft state ten-year mental health plan calls for an additional $24 million in funding over the next two years in order to fix critical problems.
- Full-day kindergarten cost the state roughly $11 million last year. Only $2 million of that was covered by proceeds from keno gambling.
- The last state budget set aside about $950 million for per-pupil state education funding this fiscal year. $36 million of that was for charter school tuition. The state set aside an additional $33 million for school building aid. Since the details of the proposals to change the state’s school funding formula aren’t yet public, there’s no estimate for exactly how much those might cost.
- The New Hampshire Department of Transportation estimates it needs an additional $54 million per year to keep additional roads from falling into ‘poor’ condition and to reduce the number of red-listed bridges. It did receive an extra $20 million last spring thanks to a surplus spending bill.