November 9, 2008
Eagle Tribune
New Hampshire state government is hurting for revenue. In October, tax receipts slipped $15 million below estimates and added to the state’s money woes. For the year, projections have now veered off target by $72 million.
Yet a sample of local political leaders suggests Republicans and Democrats alike have ruled out new taxes as a solution. Despite the crisis, New Hampshire lawmakers say the way out of the financial mess will come by cutting spending and not being “penny-wise and pound foolish.”
“We haven’t faced a challenge this significant in decades,” House Speaker Terie Norelli said. “It’s not going to be a pretty picture.”
New Hampshire will slide into the national economic crisis in better shape than some of its neighbors, said Senate President Sylvia Larsen, D-Concord. She blamed falling property sales and lost taxes on business profits for October’s revenue drop. But, Larsen said, the governor and Legislature have dialed down state spending as economic conditions have worsened.
“We’re very aware of those numbers coming in lower than anticipated,” she said. “We’ve made corrections together with the governor. Every agency in state government has been asked to tighten its belt.”
As a result, New Hampshire has kept its excellent bond rating and should be able to manage the budget shortfall by cutting spending.
“That’s the first solution,” Larsen said.
And, she added, it’s the only practical one because Gov. John Lynch has been adamant. He will veto a sales or income tax, and it would be a waste of time to test him. But Larsen could not say where fat could be carved out of the state budget.
“There’s nothing I am planning to go after, but I am willing to look through all of our spending plans,” she said. “We’ve already gone through the budget with a fine-tooth comb.”
She will fight to save some programs from budget cuts.
“I want to protect essential social services,” she said, to aid the “fragile elderly, the mentally ill, the disabled and the needy.”
Norelli expects the gap between revenues and expenses to top $100 million in the next budget cycle. But she prefers not to see cuts made for short-term savings, if those savings result in escalating long-term expenses.
“One of the examples,” she said. “Mental health. If we decide we’re not going to provide service for someone who can’t afford it, we save today, and tomorrow we may spend a lot more in the emergency room, the state hospital or in prison.”
Norelli sees no end yet in sight to the crisis on Wall Street and therefore doesn’t expects New Hampshire property sales and business profits to recover soon. But she said the pay-as-you go adjustments resulted in some success, as New Hampshire closed the 2008 books with a slight surplus.
Colin Manning, spokesman for Gov. John Lynch, said the governor is now projecting a revenue shortfall of $250 million.
“Making cuts of this magnitude will require tough choices,” he said.
So far, Lynch has met with heads of state agencies on a list of spending cuts. Likely targets are overtime pay, consultants and vehicle expenses.
But Lynch is not considering new sources of revenue, like taxes or casino gambling. However, he has met with the agencies which raise revenues, like Lottery Commission and the Liquor Commission, to talk about ways to improve their efficiency.
Republican Sen. Bob Letourneau, who represents Derry, Hampstead and Windham, said this is not the first time New Hampshire has gone through a financial crisis, and lawmakers should resist raising taxes as a solution.
“That will make it worse,” he said. “The public is suffering with the same problems, and the state has to find ways to trim itself.”
But education should stay a priority, Letourneau said, as well as health and human services — for the elderly and the ill — and infrastructure.
“We have a serious problem,” he said. “We’re short on money for this budget cycle, and the money allocated to be spent in the next cycle is probably not there. We have to get our hands wrapped around this and get it done.”
State Rep. Betsy McKinney, R-Londonderry, also said the focus should be on spending cuts.
“It’s not painless,” she said. “That’s the way you have to start. And I think you have to put in a hiring freeze, reduce programs and weed out ones that aren’t working. Could be a long haul.”