NH Sen Odell: "Overall, revenues are holding their own against the very conservative estimates..."

In his Sep. 4, 2011 column on Sunacom.com, NH Senator Bob Odell writes:

"Overall, revenues are holding their own against the very conservative estimates in the current budget."

"The restaurant business particularly, and the overall tourism industry generally, are important economic sectors in our state's economy." "Overall revenue from this tax was $50.2 million for July and August or $1.7 million (3.5 percent) over last year."

"Real estate transactions are an important indicator of the vitality of the economy." "...[we are] $1 million ahead of last year when we were getting real estate tax income during the phase-out period of the First Time Homebuyers Tax Credit.

"...advocates believe that to prevent fraud, voters should have a government issued photo ID with them to lessen chances of someone impersonating another person..." "...a real issue, in my opinion, [is] protecting the secrecy of a person's vote. If a voter forgets to bring his or her ID with them on election day, they can cast a provisional ballot, and that is stored separately from the other ballots cast."

........................................

Sunacom.com.
http://sunacom.com/columnists/odell/odell_09-04-11.html

Jeb Bradley NH Senate - A Wish, a Prayer, and a Credit Card

So said the Concord Monitor in their June 13th Editorial titled “Not a State Budget to be Proud Of.” How did the Democratic controlled New Hampshire Legislature get into such a predicament?

Spending has jumped by 10.5% while revenues fell through the floor --- $102 million behind the estimate for the first eleven months of this fiscal year. Leading the revenue plunge are business taxes – off $43 million, rooms and meals taxes ---off $20 million, and interest and dividends taxes --- off a whopping $27 million. With the economic recovery anemic at best, revenues are not likely to improve any time soon.

On top of that, the effort to simply expropriate $110 million from a doctor’s medical liability fund (JUA) was deemed to be an unconstitutional taking of private property. All of which created a budget deficit estimated at $300 million by June 2011 when books close – up from a $220 million projection just in April.

Governor Lynch recently called a ‘Special Session’ of the Legislature to confront this alarming deficit – about 10% of the state’s General Fund. The package that emerged from the Special Session includes unprecedented borrowing and one-time revenue sources, uncertain receipt of federal funds, and unspecified sale of State property: The Credit Card.

The non-partisan Legislative Budget Assistant projects one-time revenue sources in the original budget and in the recent deficit package exceed $1 billion. Even excluding the $110 JUA raid and a $50 million reduction of funds that traditionally has gone to cities and towns to lower property taxes – this combined budget package relies upon a whopping 27% of one-time revenue for the General Fund. Nearly $200 million of that amount is unprecedented borrowing for operating expenses rather than capital investments such as buildings or bridges. Much of the balance of one-time revenue was federal stimulus funds.

Even stimulus funds may have reached their limit. Americans, fearful of a Greece-like debt crisis have sent Congress a message. Several incumbents have lost or barely survived recent primaries so Congress has yet to authorize more state aid. Thus $48 million of even more one-time federal money Legislators counted on is in limbo. Whoops – the check is not in the mail even though desperate Legislators are declaring it will be.

The deficit package also relies on unspecified sale of State property. While this idea may make sense, in a very soft real-estate market how likely is the State to receive reasonable value? When this idea was first proposed several weeks ago the estimated revenue proceeds were $50 million. Like magic, the revenue projections just jumped to $60 million. Presto: revenue grows when Legislators simply deem the real estate market has improved.

What about cuts? There were some cuts totaling $52 million but only 1.6% of the General Fund. This so-called $300 million deficit fix in reality is limited cuts, huge borrowing, and one-time revenue --- some of which may not even be real.

Where do all these maneuvers leave the budget? The authors claim the budget is now balanced, precisely what they predicted a year ago before it became a $300 million deficit. For the budget to balance now, they are counting on the unlikely prospect of revenue recovery.

The Prayer: what all the borrowing and one-time revenue does is allow the budget’s authors to cynically claim it is balanced for political purposes in November and pray they avoid the voter’s wrath for their spendthrift ways. But next year---facing nearly a billion dollar one-time revenue shortfall, New Hampshire will confront a fiscal train wreck.

While spending soared and the deficit grew, the numerous tax hikes over the last four years have hurt struggling families, besieged small businesses, while leaving New Hampshire less competitive for job growth or able to confront this looming deficit. In the previous budget, 29 taxes or fees were hiked. In this budget, 38 taxes or fees were raised including the job killing LLC Tax -- nothing more than an income tax on small businesses. The LLC Tax turned out to be so toxic to both small businesses and the Democrats who voted for it, that it was repealed. Even with the repeal, New Hampshire still has the worst corporate tax laws in the nation according to the non-partisan Tax Foundation. 

Other warning signs from the Tax Foundation for our State include one of the highest levels of state debt per capita, being only slightly below the national average for state and local tax burden, and having among the higher levels of property taxes in the nation. 

All these new taxes and warning signs in terms of national rankings are against the recent backdrop of 50,080 New Hampshire people being unemployed and the national pace of job growth anemic at best.

Four short years ago when change came to both Concord and Washington, the unemployment rate in New Hampshire was 3.6% and 26,865 people were unemployed. In April, the unemployment rate had soared to 6.7% and 50,080 were out of work. Having the worst corporate taxes and a Legislature willing to levy an income tax on small business owners is no way to get people back to work.

There are those legislators -- and now candidates -- who want to ignore the taxes, spending hikes, and deficits of the last four years and claim their stewardship of New Hampshire has been responsible. They point to other states in worse shape than New Hampshire, but ignore the fact that these other states have even higher levels of spending and taxation. Comparing New Hampshire to even more profligate states is no way to govern or help struggling families and small businesses.

The Wish: many of these same folks have always wished for income and sales taxes. Next year they will likely propose an income tax and a sales tax to close the budget hole they created. There could not be a clearer choice in November or a more important election for our State’s future.

NH House Rerpublicans - House Democrats Ignore Revenue Warnings..Again

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

CPR - COMMENTS ON PROPOSED CASINO GAMBLING

Says Negative Societal Costs Far Out-weigh Supposed Revenue Windfall

Concord, NH - Today, the New Hampshire Senate Committee on Finance heard SB489 which proposes installing video and casino style gambling throughout the state.  Cornerstone has long-opposed any attempt by the legislature to expand gambling in New Hampshire. 

Commenting on this proposed casino bill was Cornerstone-Action's Executive Director, Kevin Smith:

"The facts are clear: the negative societal costs of casino gambling far outweigh any amount of supposed revenue that expanded gambling will bring in to the state.  If casino gambling is so great, it ought to stand on its own merit and not be used as a false opium because we are in the midst of a budget crisis.  In states where casino gambling currently exists, such as Nevada, Delaware, Connecticut, and Rhode Island, revenue from gambling is  down and each of those states face their own budget deficit."

Smith added, "The only jobs this casino bill is going to create are more social workers at HHS who'll have increased caseloads because of negative social consequences.  The best way to solve our budget crisis is to reduce spending and cut taxes on existing and prospective businesses so they can create jobs and in turn yield more revenue for the State."

Cornerstone-Action is the legislative advocacy arm of Cornerstone Policy Research.

Cornerstone Policy Research is a non-partisan, non-profit research and education organization dedicated to the preservation of strong families, limited government and free markets.

NH Sen Bradley - State Senate Update

Social issues monopolized the attention of the Legislature a week ago, but now all eyes are once again focused on the budget. I have been named a member of the Senate Ways & Means Committee and this past week much of our time was spent listening to revenue projections from various state agencies.

These revenue estimates are more science than art. But the accuracy of this process is crucial, as spending decisions for state government-- just like family budgets, can only be based upon available revenue.

In the last budget cycle, overly optimistic revenue projections were a factor leading the Legislature to increase spending by an unheard of 17.5%. That occurred in the spring of 2007 when the economy was still growing. Two years later, over 40,000 New Hampshire citizens find themselves out of work, the unemployment rate is 6.2%, and businesses are struggling to stay afloat. What does this mean for New Hampshire’s revenue picture? It is bleak!

Business taxes normally represent about 25% of New Hampshire’s total tax proceeds. But right now, revenues actually received through April are 26% below projections—that’s a staggering $145 million short. Tax proceeds from the hospitality industry, sales of beer, liquor, and tobacco are all underperforming. Taxes from the sale of real estate have understandably fallen through the floor – 44% short in April alone. Revenue from the Interest and Dividends tax was a whopping $19 million short in April. All told, actual revenue for the fiscal year that ends June 30th is $232 million below projections.

Two large questions loom: First, how will budget writers deal with a shortfall of $150 to $200 million in the budget cycle that ends June 30th? Secondly, how will the next budget be balanced?

Federal stimulus money and partially draining New Hampshire’s Rainy Day Fund could cover the current deficit. However, these dollars are one time revenue sources, not recurring revenue. According to Charlie Arlinghaus, President of the Josiah Bartlett Center, almost $600 million of one-time sources will be used to plug holes in the New Hampshire budget.

Relying on one time revenue is bad enough, but the budget stress is heightened by the approved House budget which increased spending levels by approximately 3% --this on top of the 17.5% increase in the current budget. In order to fill these gaps created by drastic overspending, the House voted to raise taxes on the hospitality industry, motorists, smokers, insurance premiums, and gambling winnings. These tax hikes are estimated to cost taxpayers $188 million. On top of that, the House voted for a new capital gains tax as well as a new death tax which will force taxpayers to pony-up another $85 million. And, if that were not enough, numerous fees have been increased.

Unfortunately, it only gets worse. The House failed to fund measures that mitigate property taxes, school building aid and municipal revenue sharing. This translates into a further $133 million hole in the state budget that exacerbates pressure to raise more taxes or down-shift state obligations to property taxpayers.

No community is more impacted than Conway. Conway voters recently decided to build a new high school with the expectation of the State providing 55% of the cost of that new construction. The 55% matching funds is a promise the State has made and kept for years. The Conway bond issue passed by only a handful of votes, and Conway residents tell me it is inconceivable it would have passed had there been a shred of doubt about the State keeping its promises.

Right now, Conway is looking at a hole this year of $1.6 million which, over the life of the bond, will be a $24 million liability that property taxpayers will be forced to swallow. A $200,000 home in Conway will see an increase of about $250 in property taxes---just in this year alone.

The budget has yet to emerge in the Senat e nor has the Ways and Means Committee finalized its updated estimates of revenue. Senate deliberations begin as the national economy continues to shed jobs. 540,000 Americans lost their jobs in April. The 8.9% unemployment is the highest in 25 years. It goes without saying that this is not a time to raise ANY taxes---especially property taxes on hard working and struggling New Hampshire citizens. Nor is it a time to raise taxes that will undermine New Hampshire ability to turn our economy around---the Rooms and Meals tax on the hospitality industry or a capital gains tax on small business owners, investors, and seniors dependent on retirement income.

The only way to address this current and future budget crisis is to cut spending. An alternative budget was prepared in the House by Representative Neal Kurk. It cut overall spending by 2.6. There were some significant across the board spending cuts in various departments. However, there were no new or increased taxes and the State’s promise to property tax payers was funded.

Cutting spending, as Neal Kurk and others proposed in the House, while difficult, is the best way to balance the budget and restore prosperity. It will also insure that New Hampshire’s unemployment rate remains well below the national average and personal income remains well above the national average. These are the stakes, as the budget debate begins in the Senate.

In next week’s posting, I will take a look at the impact of several of the specific taxes.