NH Budget Snapshot: Little Hope at this Point for True Fiscal Responsibility - Granite Grok

NH Budget Snapshot: Little Hope at this Point for True Fiscal Responsibility

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[New Hampshire State Representative DJ Bettencourt (R-Salem) provides the following snapshot of where the state’s budget stands today…]

Guest Post by DJ Bettencourt

It was the hope of many Granite State conservatives that the State Senate would rectify issues with the House version of the budget for fiscal year (FY) 2010-2011. Among the most notable problems with the proposed budget were excessive spending, implementation of a capital gains tax, re-implementation of the “death tax,” and the raising of several other taxes (rooms and meals tax, tobacco tax, and numerous fines and fees). Alas, no such rescue came.

Last week the Senate passed its version of the budget that ensured the debate over New Hampshire’s financial plan would not be a division of fiscal philosophy of higher taxes and extravagant spending versus lower taxes and responsible spending. Instead, the debate would revolve around disagreements about which taxes to raise and which areas would receive the dividends of irresponsible spending. That lack of budget debate is not only regrettable but utterly dangerous for the financial well-being of our state.

Here are a few of the highlights (or lowlights, as the case may be) of the Senate’s proposed budget:

 

• Cuts spending across the board from the House budget by less than one percent
• Proposes to increase total spending by $1.2 billion
• Continues to suspend revenue sharing from the state to local municipalities
• Removes $20 million from the FY 2009 rainy day fund for an additional $20 million (leaving only $29 million versus the House budget that left the fund with $49 million).
• Retirement contributions by the state are reduced from the current 35 percent to 30 percent in FY 2010 and 25 percent in FY 2011; and the Senate proposal then eliminates the offsetting increase in state and municipal employee contributions (from five percent to seven percent for Group I and from nine percent to 11 percent for Group II) that were in the House budget, keeping the increase from five percent to seven percent for new hires in Group I only. Senate savings: $1 million from the general fund versus the House general fund savings of $21.2 million and $49.7 million to political subdivisions.
• Establishes a monthly health insurance premium for state retirees under age 65 at $65 singly/$130 couple versus a sliding scale in the House budget which resulted in larger savings for the state
• Cut $2 million from the OIT budget versus a $13 million cut in the House budget
• Provides HHS with significant additional funding for higher caseloads but requires a “back-of the-budget” cut of $19.6 million in the general fund versus the House budget that called for a $28 million general fund cut in personnel
• Increases health facility and community residence licensing fees versus the House budget that used the general fund to avoid such fee increases

Next we have the three large issues of gambling, elimination of the Business Enterprise Tax Credit (BET) against the Business Profits Tax (BPT), and overall revenue estimates. I will not delve into the gambling issue much as it is an emotional subject that divides across ideological and party lines. However, gambling is included in the Senate budget essentially in exchange for eliminating the House proposed capital gains tax. Will gambling produce the kind of revenue its advocates promise? I suppose time will tell should it be included in the final budget.

Also of great concern is the suspension of the BET Credit against the BPT. Elected officials often talk of how business is the backbone of our state’s economy, but too often we fail to walk that talk. Here is an example: The BET is a .75 percent payroll tax that employers pay on their employees salaries. Until now, employers could take their BET obligations as a credit against the BPT. Elimination of this credit will cost businesses roughly $80 million. This essential tax hike is a double hit for businesses that are already facing millions of dollars in increases for the employer costs of unemployment insurance. This action by the Senate significantly hinders New Hampshire’s business climate and promises to make our financial crisis even more agonizing should local businesses be forced to close their doors or move out of state.

Democrats, since taking power in 2006, have made a sport of blundering revenue estimates and passing them off as accurate. Because the Senate made no attempt to substantively cut spending they were forced to inflate overall revenue estimates and estimates on key business taxes in order to achieve a balanced budget. This continues an unfortunate trend the Democrats have created of abandoning the practice of crafting a budget around revenues and instead crafting their revenue estimates around what they desire to spend.

The budget process is far from over as the budget now heads to a committee of conference where House and Senate leaders will attempt to work out their differences. But I believe it is safe to say that the starting points and preliminary signs in both chambers offers conservatives little hope that in the end New Hampshire will be operating under a truly fiscally responsible budget.

DJ Bettencourt has served in the NH House since 2004. He is the freshman baseball coach at Salem High and attends Franklin Pierce Law School.

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