Tuesday, June 30, 2009


Latest News & Notes
Spinning Budget Myths

Supporters of the recently enacted State of New Hampshire budget were quick to claim that it was responsible and that they made tough decisions during difficult economic times. Talk about myth and spin - this budget fits the bill - literally!

Myth #1: State spending will decrease in the next two years. Sounds great doesn't it? Unfortunately, this is flat out wrong. Here are the facts: According to the Legislative Budget Assistant--the non-partisan office that is charged with preparing budget figures--total authorized spending in the current budget, which will close June 30, is $10.408 billion. The budget that was just approved and will begin July 1 authorizes spending of $11.499 billion, an increase of $1.091 billion or 10.48% by every known method of mathematics! How can these budget supporters possibly justify this huge increase when people are struggling to pay their bills and now will struggle to pay the higher taxes and fees contained in the budget? This 10.48% increase also comes at a time when other states around the nation on average are actually reducing spending!

Myth #2: The new tax on campsites closes a loophole. If budget writers really thought this tax on camping was closing a loophole it is hard to imagine why they would have introduced it in the wee hours of the night without a public hearing. The fact is that it is a brand new 9% tax on camping. It is positively amazing how supporters of this budget claim to be the politicians that support the little guy. This budget not only taxes camping, it hikes taxes or fees on meals, tobacco, boat & car registration, salt water fishing licenses and most importantly, property taxes. Nothing can hide the fact that New Hampshire citizens of modest means will be digging deeper into their already empty wallets.

Myth#3: The tax on limited liability companies (LLCs) also closes a loophole. Again, if this was a loophole – why no public hearing? This tax will impact approximately 10,000 small business owners organized as LLCs who will now be subject to the 5% Interest and Dividends Tax. Without any rules yet promulgated, who knows if this will be a tax on interest or dividends---or a tax on the compensation a business owner pays him or herself. If this taxes a business owner’s compensation in the same way the Business Profits tax is applied -- against so-called excessive compensation -- then New Hampshire will be sending a terrible message to those very people we want to invest in the state and create jobs. Perhaps the supporters of this budget are spinning this as a business owner loophole because in reality they want an income tax!

Myth #4: If the budget were not enacted the cost to the State under a continuing resolution to keep government running would be $11 million per month. This takes the cake for spinning a myth. There is no reason whatsoever that spending for a short period could not have been authorized at 98% of existing levels to ensure deficits were not created. This is precisely what could have been done for the entire budget in order to avoid all the tax and fee hikes that will hurt working families and small businesses.

Myth #5: This budget is balanced. Whether the budget is actually balanced will not be known for some time. However, this budget relies on $75 million of magically inflated revenue estimates and a $110 million raid on a fund paid into by doctors to reduce medical liability costs. This raid is already the subject of litigation and the STATE JUST LOST THE FIRST ROUND IN COURT! Given these problems, it is hard to imagine the budget being balanced when it closes in two years.

Unfortunately, the really difficult choices were left for the next budget when the $500 million dollars of one-time revenue sources runs dry. The stage will be set in the next budget for the penultimate debate of whether this state adopts an income or sales tax or both. Even if the state were to allow expanded gaming, it will not be enough to fill this spending sink hole!

My grateful thanks to everyone who has written me with comments on these email updates. I appreciate all the information and ideas that you have provided. With the close of the legislative session in Concord, I won’t email updates until the fall. Please however monitor my web-site www.jebforstatesenate.com for occasional discussion about issues ranging from global warming legislation to healthcare. Hope to see you climbing in the White Mountains this summer!

Senator Jeb Bradley

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