Republicans Predict $360M Shortfall
Concord—Ignoring their mistake of three years ago when over-exuberant revenue estimates led to a huge state budget deficit, House Democrats are once again basing their budget on revenues that are totally unrealistic, given the current state of the economy.
Rep. Norm Major, a seven term veteran of the New Hampshire House and a former chairman of the House Ways & Means committee, first warned the majority party in April, 2007 that their revenue projects were much higher than economic forecasts could possibly support. This week the majority party chose once again to ignore history and turned their backs on Major’s revenue predictions a second time by refusing to allow him to present his updated estimates on the floor of the House.
“If we are going to be dealing with the budget over the next week in a committee of conference, shouldn’t the House be made aware of an additional $57M problem? Shouldn’t we know about a potential $360M deficit? But we were prevented from bringing these figures to the House floor. When I asked Speaker Norelli she told me that we were, ‘Running out of time and that there was a race getting ready to start.’ What is more important, the start of a road race or a budget deficit that is pushing New Hampshire toward financial disaster?” asked Major.
According to Rep. Major, the Democrats over inflated estimates on three major taxes will result in an additional $57M shortfall, increasing the budget deficit to $360M, a jump of 19%.
Democrats are estimating $503M in business taxes for 2011, $40M higher than Major’s estimates and a 13% increase overall. This comes despite the fact that all businesses filing with money in April this year are down 10.5%. When it comes to Meals & Rooms taxes, the Democrats have actually increased the tax rate by 12.5% while revenues have only seen an 8.3% increase. Reasonable growth in this economy is no more than 3%, but Democrats are anticipating a growth of $10M in meals and rooms, or a 7.3% increase. Said Major, “This state has never realized a 7% increase in growth in this tax and we certainly cannot anticipate that happening in this economy.” Finally, Democrats are projecting a $9.7M increase in lottery revenue in 2011, or 14.3%, when normal increases fall in the 3% to 5% range.
The end result will be another $57.7M tacked on to the budget deficit because House Democrats once again want to increase spending to match their inflated estimates, just as they have done for four years. When their spending has fallen short of the revenue, they have resorted to raising more than 60 taxes and fees.
“It is clear that the Democrats are looking to leave us in such a hole that only a broad based tax will dig us out of it,” said House Republican leader Sherm Packard of Londonderry