Democratic gubernatorial candidate Joyce Craig, left, and Republican gubernatorial candidate Kelly Ayotte, right, face off during a debate in Conway hosted by the Mt. Washington Valley Economic Council, October 15, 2024. (Images courtesy of the Mt. Washington Valley Economic Council’s livestream)
Joyce Craig and Kelly Ayotte made many economic differences clear during a debate on Tuesday. Ayotte, the Republican gubernatorial candidate, cheered the elimination of the interest and dividend tax next year, while Craig, the Democratic candidate, said the reduction passed by lawmakers amounted to a tax cut for the wealthy.
But the candidates were less forthcoming on one key question: How should the next governor deal with a potential significant drop in revenue next year?
“Do you have a contingency plan for meeting a billion-dollar deficit in our budget?” asked Jac Cuddy, executive director of the council and moderator of the debate.
Despite multiple clues during the Mount Washington Valley Economic Council gubernatorial debate, neither candidate has fully answered that question. The candidates instead stuck to familiar territory and fell back on the policy disagreements that defined their campaigns.
But the budget question could be unavoidable for the next governor.
After several years of high state revenues, fueled by historic federal stimulus during the COVID-19 pandemic, and following strong state business tax revenues, the flow of funds is likely to slow.
New Hampshire’s share of the American Rescue Plan Act funds is nearing its end, with most of the remainder due by 2026. And future revenue forecasts are lower, partly due to interest and dividend tax cuts, according to a monthly sales report by the Ministry of Administrative Services.
That means the next governor may face an unpalatable choice when she drafts her first budget: raise taxes to offset revenues or find ways to cut certain state programs.
Neither candidate seemed interested Tuesday in detailing their preferred response to that situation.
Instead, the two discussed the 2022 abortion law that bans most abortions after six months of pregnancy, the value of the state’s education freedom program and the best approach to diversifying energy sources and reducing costs.
When it came to the interest and dividend tax, which will be phased out after April 2025, Craig painted the tax cut as a handout to wealthier Granite Staters. Research shows that households with a higher income pay taxes much more often than households with a lower income. Craig said she would reinstate the tax but change the threshold to ensure middle-class families would not be affected.
Ayotte said this proposal amounted to a tax increase on Granite Staters and used it to strengthen her argument that Craig as governor would usher in higher taxes. Craig promised not to impose any income or sales taxes.
Regarding education funding in the state, Ayotte reiterated her opposition to a November Supreme Court ruling in which Judge David Ruoff found the state’s $4,100 per-pupil subsidy for public schools to be unconstitutionally low, ruling that it should be at least $7,356, should be 01.
Ayotte said it was inappropriate for the court to intervene, arguing that the level of funding is a question that should be presented to the Legislature and the governor. But she did agree that the state should put more money into targeted funds for school districts where property taxes are excessive
Craig, who supported the ruling, said the current level of state funding for education is woefully inadequate and has helped keep property taxes high. She also criticized the education freedom program, which she said could “decimate” public schools if allowed to grow.
Ayotte countered that the program, which allows low-income families to use state education funds to pay for private and home school costs, provides educational opportunities to children who are not successful in their public schools.
The two agreed they would not support coercive local zoning codes that use state statutes to allow for more housing. But both candidates support some of these zoning revisions, and both have passed legislation requiring cities to allow more accessory housing to be developed by property owners.
On energy policy, Ayotte argued that Craig’s positions in favor of expanding clean energy would prove too costly and too aligned with other New England states. Craig countered that the reforms are necessary to reduce the state’s carbon footprint and would ultimately reduce costs.
And many answers saw the two candidates return to familiar lines of attack: Ayotte accused Craig of pursuing progressive policies similar to Massachusetts and failing to lead Manchester through a drug and homelessness crisis, and Craig hammered Ayotte on her previous vote as a US senator to discourage Planned. Parenting and its support for overturning Roe v. Wade in 2022.
After about an hour, the state budget issue remained largely unresolved.
“I’m just grumpy and old right now, and I haven’t been doing a very good job of getting you to answer questions about the huge potential budget deficit we have,” Cuddy said. “So as we get closer to completion, the more specific you can be, the more I would appreciate it.”
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