Thanksgiving has come and gone and Christmas is just around the corner. The Holidays come quickly and there's so much to do to get ready, but is New Hampshire ready for the budget problems awaiting the Legislature’s return to Concord in January?
Through the first five months of the budget that began July 1, 2009, revenue is $31 million below projections the budget was based upon. When December’s figures are known, the first quarter of the two year budget cycle will provide a more complete picture, but it's alarming to be already averaging $8 million under estimates per month. There’s no sugarcoating that!
Additionally, all eyes are on the NH Supreme Court’s pending decision regarding the lawsuit filed by the Joint Underwriters Association (JUA). To refresh memories, the JUA administers a fund that provides medical liability insurance for a large number of NH physicians. Budget writers, desperate for any possible revenue, simply decided to raid that fund of $110 million. Naturally the JUA filed suit. The State lost the initial round in Superior Court. Should the State lose in the Supreme Court as most observers expect, there will be an immediate $110 million budget hole combined with the growing monthly revenue shortfall.
Thus, the stage is set for the Legislature to engage in a profound debate in 2010 – more taxes versus spending reductions.
Perhaps some have already forgotten, in 2009 the Democratically controlled Legislature enacted or raised 38 taxes and fees including extending the interest and dividend tax to limited liability corporations, raising the rooms and meals tax, the cigarette tax, and auto registration fees while slapping a new tax on campers. On top of that, the Legislature raised property taxes across the state by eliminating or reducing aid to cities and towns creating another pending lawsuit that 150 communities will join.
As if that were not a full-course tax menu, the House passed both a capital gains and estate tax that the Senate rejected. The Senate passed increased business taxes that were rejected in a committee of conference. Also floated but rejected, were taxes on entertainment and mortgage refinancing, and of course the specter of an income or sales tax always lurks in the shadow of this Democratic-controlled Legislature.
And this is why we need spending cuts - now!
Several pieces of legislation designed to reduce spending have been filed, starting with a line-item veto for the Governor. New Hampshire is one of only eight states whose governor does not have this common sense authority. Regardless of whether New Hampshire’s chief executive is an Independent, Democrat or Republican, he or she should have the ability to eliminate wasteful spending subject to a legislative override.
Another piece of legislation would require New Hampshire department heads to submit budget proposals that include 5% spending reductions. Currently, department heads must propose a maintenance budget that upholds previous levels of services. State law does not require department heads to anticipate programs that are no longer necessary, have outlived their usefulness or could be reformed to achieve savings. The proposed legislation would require a department head to propose a maintenance budget that includes a 5% reduction. This type of information would help legislators to set priorities and make responsible spending decisions. If this legislation passes in 2010, it will be extremely useful as the next budget is developed and federal stimulus monies disappear.
Another piece of legislation would move the delivery of Medicaid (health care for needy individuals and families) to a managed care model that better coordinates and manages both the clinical as well as financial implications of health care services. Medicaid is one of the largest expenditures within state government costing $1.3 billion and requiring nearly 30% of NH’s annual ‘General Fund’. Moving to a managed care model could save significant sums while attaining program goals.
A group of lawmakers are meeting to develop a course correction budget that could reduce spending levels by $80 million. Another piece of legislation would reduce the fleet of automobiles used by state employees by 20% over four years. Other bills would eliminate the rooms and meals tax hike, the camping tax, and the extension of the interest and dividends tax to LLCs. This legislation would give Governor Lynch corresponding responsibility to enact spending reductions equivalent to the anticipated revenue from the tax hikes --- the exact procedure he used recently to trim personnel and save $25 million. Another bill would require super majorities in the Legislature to increase spending over and above a formula that accounts for inflation and population growth.
Additionally, legislation has been filed to allow cities and towns to enact property tax caps if they do not have existing authority or if that authority is subject to legal challenge. Lastly, two bills would enhance transparency and openness in state government by giving whistle blower protection to state employees and provide on-line access to all state spending records.
While each and every one of these pieces of legislation faces uncertain prospects, taken together they represent a long overdue initiative to reduce state spending that grew 11% in the previous budget and 10.5% in the current budget. This has happened at a time when other states across the nation were actually reducing expenditures.
The unappetizing smorgasbord of tax options New Hampshire confronts – income, sales, entertainment, business, mortgage re-financing, capital gains, estate taxes —are set against the backdrop of our state struggling to free itself of the clutches of a persistent recession that has left more than 50,000 of our friends and neighbors unemployed. If expanded gaming is approved next year, these revenues may provide some assistance, but will not be a panacea for today’s deficits or future deficits when federal dollars dry-up.
Thus, while spending cuts are difficult, they are absolutely necessary to ensure that our Live Free or Die State thrives into the future.
PAID FOR BY FRIENDS OF JEB BRADLEY FOR STATE SENATE, EUGENE LEONE TREASURER
Jeb Bradley for State Senate 645 SOUTH MAIN STREET WOLFEBORO, NH 03894