The recent release of New Hampshire’s revenue receipts simultaneously offers glimmers of hope while raising even more concerns about the State Budget enacted in June.

First the good news: The “Rainy Day Fund” which is the State’s hedge against economic downturns ended the fiscal year with $56 million more of a cushion than anticipated. Governor Lynch froze new hiring, deferred equipment purchases, and curtailed out of state travel to produce these savings.

Despite the fact that Governor Lynch and Democratic Legislators approved an overall spending increase in 2007 of 11.17% and in 2009 of 10.48%, the Governor’s executive orders curbed the worst excesses of the Legislature’s spending blitz that has increased expenditures from $9.36 billion to $11.5 billion during that time.

This $56 million in the Rainy Day Fund will be a critical one-time buffer if the State loses its NH Supreme Court appeal of the JUA (Joint Underwriting Association) lawsuit. This lawsuit comes from a budget provision attempting to simply “take” $110 million from a fund designed to keep a lid on physician’s medical liability insurance costs. The State’s attempted money grab has already been ruled in violation of both the State and Federal Constitutions by the Superior Court.

The mixed news is that business tax revenues were only 4% lower than expectations. While it is preposterous to call any shortfall good news, in comparison to last year’s business tax receipts that were off by 25%, being 4% below expectations is a slim glimmer of hope. However, it’s also a warning that if the trend continues the State will face a nasty budget deficit.

Despite the good and the mixed news, NH is far from out of the budget woe woods as the bad news dwarfs the good. Other revenue sources are badly underperforming, despite many taxes being increased in the budget. Receipts from the rooms and meals tax, communication tax, and real estate tax are all down by about 9%. The interest and dividend tax is down a whopping 25%. Even tobacco taxes are down slightly. In the three months since the budget was enacted revenues are down a total of $26 million or 6.4%. Should this trend continue the deficit will only grow.

Now that the state employees union has rejected the proposed contract that would have implemented 19 furlough days, Governor Lynch must begin a series of layoffs to save a mandated $25 million. Whether he will run into roadblocks if the union files a grievance for each position eliminated or political roadblocks from his allies in the Legislature – these savings may be questionable.

So with all these budget monkey wrenches, it is certainly understandable that its authors are quick to claim that the national economy is to blame and that revenues are likely to rebound when the economy turns around. But that is a cavalier attitude based on wishful thinking rather than rational evidence.

NH’s unemployment rate just jumped to 7.2% which means nearly 25,000 people have lost jobs this year. As bleak as that is, the national numbers are worse — much worse. Since the federal stimulus legislation was enacted in February, 2.7 million Americans have lost their jobs and the national unemployment rate is at a 26 year high of 9.8%. The human toll of these numbers is staggering for individuals, families and businesses struggling to stay afloat.

Some pundits have tried to argue that things are getting better as only 263,000 Americans lost their jobs in September vs. 741,000 in January. While true, any signs that employers may be thinking of adding jobs in the future is at odds with the evidence. Job losses continue, while overtime and the average length of the work week both fell. Employers don’t need to hire anytime soon and consumer spending which drives our economy continues its retreat.

So NH Legislators who voted for huge spending increases — not to mention the property tax hikes from cost shifting and 61 additional tax and fee hikes in the last two budgets — are desperately praying for a rebound in the economy to produce the revenue they need to balance their budget. Voters should not hold their breath waiting for miracles.

Instead what Democratic Legislative Leaders are planning is a TAX SUMMIT to discuss new and innovative ways to separate taxpayers from their hard earned dollars. Will these leaders recommend an income tax, a sales tax, a tax on mortgage refinancing, an entertainment tax, or new levies on New Hampshire businesses? Every one of these taxes or others could be on the table at a time that 53,330 New Hampshire people are out of work.

After hiking spending 23% in the last two budgets, raising property taxes and 61 other tax and fee hikes one would think that Democratic Legislative Leaders appetite for new and varied taxes would be satiated. Most NH voters are shaking their heads wondering if a SUMMIT to REDUCE SPENDING is too much to ask for. Isn’t it time for the Democrats to turn off the tax hike spigot and focus on fiscal discipline?

As tough as things are for families and businesses across NH, they will get much worse if taxes continue to climb to meet revenue shortfalls. Then we will have to re-title this blog to “The Good, the Bad and the Ugly”!

In preparation for the BRC-sponsored health care forum with John Stephen on Monday September 14th, John has provided us with many documents worthy of your perusal.

They are all in PDF format and each is less that one megabyte. (< 1 MB)

The Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) have completed a preliminary analysis and impact of H.R. 3200, the America’s Affordable Health Choices Act of 2009, as introduced on July 14, 2009.

Congressional Budget Office Analysis of Impact on Medicaid

Health Care Reform Impact on NH Budget

Kaiser Foundation Impact on Medicaid Study

Kaiser Foundation Impact on Uninsured Study

Republican Study Committee Health Reform Solutions

Collection of Op Eds About Health Care Reform

America’s Affordable Health Care Act

American Clean Energy and Security Act

Serve America Act

American Recovery and Reinvestment Act

ARRA Status Report for New Hampshire as of August 19, 2009

It shows that the stimulus has created or retained 796.2 full time equivalent jobs. Of those jobs, 700.2 are in “Goverment Services”.

http://www.sos.nh.gov/2009%20Election%20law%20changes.pdf

Please look them over as some changes may impact future election strategy.

2010 Election Schedule:

- 2010 Elections
- Filing period – June 2-11, 2010
- State Primary – September 14, 2010
- General Election – November 2, 2010

The Secretary of State’s Office has not posted the entire schedule, as of yet, but plan to soon.
Please bookmark the Secretary of State’s Website and log back to get the full, official, schedule.

The JUA was formed in 1975 to provide medical liability insurance to physicians and currently provides over 20% of the medical liability coverage in New Hampshire. The Judge ruled the JUA is independent from the State. More importantly, physicians, not the State, contribute to its funding and when the JUA faced a deficit in 1985 a surcharge on doctor’s policies was assessed to cover the gap–not State funding. Twice in the past, the JUA distributed surplus funds to policy holders–not the State. Given these facts, it’s political hubris and arrogance seldom seen in our State, for the Democratic supporters of this budget to simply expropriate $110 million. These unseemly political shenanigans, now defy both our state and federal constitutions.

The sanctity of contracts is one of the underpinnings of our society, as is the prohibition of the government taking a person’s property without just compensation. Good for Justice McGuire for upholding constitutional principles and shame on politicians who believe the State can simply break contracts and take property it doesn’t own, to enable the gravy train of a 10.5% state spending increase.

What does this $110 million hole mean for the New Hampshire Budget? First, the budget hole is not just $110 million. Recently Superior Court Justice Diane Nicolosi ruled in favor of the New Hampshire Health Care Association and blocked the State from garnering $9 million that nursing homes claim they are entitled to. Furthermore, the New Hampshire Municipal Association is set to file suit against the State for changes to pension contributions made in the recent budget. The State has historically contributed 35% of the cost of pensions for police, firefighters, teachers, and other employees. Under the recent budget the State’s contribution will drop to 25%, costing property taxpayers an estimated $27 million. Thus far, 143 towns and 53 school districts have agreed to join the Municipal Association lawsuit displaying the depth of anger at the Democratic leadership’s hike of property taxes.

In total, the State could be looking at a nearly $150 million litigation shortfall. As if misery did not already have enough company, when the budget was passed in June, its authors inflated revenue projections by $75 million to give the appearance it was in balance, at least on paper. The question now is if this budget, passed only a month ago, is even worth the paper it is written upon?

New Hampshire residents may quickly lose sight of the interminable Washington debate on new bureaucracies, taxes, and regulations involving global warming and government run health care and soon be consumed with the budget wildfire in Concord that not even all this rain will stamp out.

So where does the State go from here? The option I support would be to cut spending to balance the budget with available revenue. Spending reductions of about 3.5% would be necessary to make up the $110 million gap. During budget debates, Republicans in the House and Senate proposed larger spending reductions and unfortunately each and every one were rejected on largely party line votes. If Democrats won’t cut spending, then what other options will they pursue?

Are new taxes on the horizon? Unfortunately, that is more likely. The budget Governor Lynch signed increased tobacco taxes, taxes on rooms and meals, and numerous fees all while adding new taxes on gambling winnings, camping and owners of limited liability companies — the latter two new taxes without even the courtesy of a public hearing. The House earlier voted to increase gas taxes and implement new taxes on capital gains and estates. The Senate earlier voted to increases taxes on New Hampshire businesses small and large. At a time that the New Hampshire unemployment rate stands at 6.8% and families are struggling to pay their bills, there is no shortage of Democrats in the Legislature ready, willing, and almost gleefully able to raise taxes.

What about gambling? There is little question the prospects for gaming just improved. The Senate already voted for gambling (though I voted in opposition). Would the House reconsider? Even if the House does reconsider, and gambling fills this $110 million crisis of today, larger budget problems loom in the near future.

The budget that just passed included $500 million of one-time funding sources—much of it federal stimulus money. Given that the federal budget deficit this year will approach an unheard of $2 trillion and federal budget deficits are estimated to top $1 trillion per year for the next 10 years (before health care reform), no state should expect more federal largess any time soon.

So, today’s crisis involving an unconstitutional attempt to simply grab $110 million will quickly become an even larger problem that gambling revenue will not fill. Bottom Line: our State is hurtling headlong towards an income or sales tax, possibly both, unless we meet the challenge of reducing state spending.

Jeb Bradley is a NH Senator serving District 3

Josiah Bartlett Report – Click Here for PDF File

Have you heard the latest spin by the tax-and-spenders who control state government these days?

The Democrats say the new budget passed by the House and Senate and signed by Gov. John Lynch is “lean.” They say we are doing more with less. And they say spending is reduced.

Don’t believe a word of it!

At a time when 50,000 Granite Staters are out of work and paring down their home budgets to fit declining incomes, government spending continues to grow at breakneck speed.

Read More…

Peter Bragdon, of Milford, is the Republican leader in the New Hampshire Senate.

The court will be posting all new and increased fees on its website tomorrow. Generally here is what to expect:

1. All court fees across the board will go up 20%. For example, the current superior court entry fee is $175.00 ($150 basic, plus $25 surcharge). That will go to $205. (20% increase on the basic fee; the surcharge is set by a separate statute)

2. There will now be a fee for counterclaims. In other words, if someone sues you and you have a claim against them that you want to make part of the case, you have to pay an entry fee to bring it in. The fee will be the same as if you brought the case.

3. The record research fee is going up from $10 a request for up to ten names or $25 for researches of more than ten names. The new fee will be $20 a request for up to five names and $5 a name thereafter.

Supporters of the recently enacted State of New Hampshire budget were quick to claim that it was responsible and that they made tough decisions during difficult economic times. Talk about myth and spin – this budget fits the bill – literally!

Myth #1: State spending will decrease in the next two years. Sounds great doesn’t it? Unfortunately, this is flat out wrong. Here are the facts: According to the Legislative Budget Assistant–the non-partisan office that is charged with preparing budget figures–total authorized spending in the current budget, which will close June 30, is $10.408 billion. The budget that was just approved and will begin July 1 authorizes spending of $11.499 billion, an increase of $1.091 billion or 10.48% by every known method of mathematics! How can these budget supporters possibly justify this huge increase when people are struggling to pay their bills and now will struggle to pay the higher taxes and fees contained in the budget? This 10.48% increase also comes at a time when other states around the nation on average are actually reducing spending!

Myth #2: The new tax on campsites closes a loophole. If budget writers really thought this tax on camping was closing a loophole it is hard to imagine why they would have introduced it in the wee hours of the night without a public hearing. The fact is that it is a brand new 9% tax on camping. It is positively amazing how supporters of this budget claim to be the politicians that support the little guy. This budget not only taxes camping, it hikes taxes or fees on meals, tobacco, boat & car registration, salt water fishing licenses and most importantly, property taxes. Nothing can hide the fact that New Hampshire citizens of modest means will be digging deeper into their already empty wallets.

Myth #3: The tax on limited liability companies (LLCs) also closes a loophole. Again, if this was a loophole – why no public hearing? This tax will impact approximately 10,000 small business owners organized as LLCs who will now be subject to the 5% Interest and Dividends Tax. Without any rules yet promulgated, who knows if this will be a tax on interest or dividends—or a tax on the compensation a business owner pays him or herself. If this taxes a business owner’s compensation in the same way the Business Profits tax is applied — against so-called excessive compensation — then New Hampshire will be sending a terrible message to those very people we want to invest in the state and create jobs. Perhaps the supporters of this budget are spinning this as a business owner loophole because in reality they want an income tax!

Myth #4: If the budget were not enacted the cost to the State under a continuing resolution to keep government running would be $11 million per month. This takes the cake for spinning a myth. There is no reason whatsoever that spending for a short period could not have been authorized at 98% of existing levels to ensure deficits were not created. This is precisely what could have been done for the entire budget in order to avoid all the tax and fee hikes that will hurt working families and small businesses.

Myth #5: This budget is balanced. Whether the budget is actually balanced will not be known for some time. However, this budget relies on $75 million of magically inflated revenue estimates and a $110 million raid on a fund paid into by doctors to reduce medical liability costs. This raid is already the subject of litigation and the STATE JUST LOST THE FIRST ROUND IN COURT! Given these problems, it is hard to imagine the budget being balanced when it closes in two years.

Unfortunately, the really difficult choices were left for the next budget when the $500 million dollars of one-time revenue sources runs dry. The stage will be set in the next budget for the penultimate debate of whether this state adopts an income or sales tax or both. Even if the state were to allow expanded gaming, it will not be enough to fill this spending sink hole!

After two marathon weeks of discussions between House and Senate members charged with negotiating a budget, early Friday morning a package emerged. Its fate is uncertain as the full House and Senate must pass it before it reaches Governor Lynch for signature. Counting votes before the June 24th Session will be almost as daunting as reaching this compromise — anything can and may well happen.

Let’s first focus on what is in this package and what is not, then on the impact it will have on people and businesses, and lastly how this budget will affect New Hampshire’s future.

Like any compromise, this budget is a mixed bag of good news and bad news. Several very controversial new taxes and tax hikes that had previously been approved by either the House or Senate, were dropped. These include the capital gains tax, death tax, gas tax, insurance premium tax, and a specific increase in business taxes by loss of a tax credit. All of these taxes would have directly undermined New Hampshire’s ability to attract businesses, investors, or visitors to our state. Also dropped from the final package were expanded gambling and a controversial plan to use toll revenue for highway improvements all over the state. Several taxes rumored for late consideration never made the final package including an entertainment tax and a tax on mortgage re-financing.

There are new taxes galore however. The tobacco tax will go up by 45 cents — the fourth hike in five years. Non-smokers may generally be callous to the impact this tax has, but smokers, especially low income people, justifiably believe they are carrying far more than their fair share of the tax burden. This increase will also undermine the cross border advantage New Hampshire has long enjoyed – attracting visitors to purchase tobacco products here and fill our revenue coffers. Convenience stores near the borders will be impacted, and meeting our revenue goals with this tax hike is questionable.

Any gambling winnings will be taxed at 10% including those garnered outside of New Hampshire. Will we be sending auditors to Foxwoods and Las Vegas — or charitable events in New Hampshire — to guarantee tax collection? Under those circumstances, is the $14 million of anticipated revenue farfetched?

The Rooms and Meals tax got increased 12.5%. I have written before that this huge increase will make our states less competitive for tours, vacations, conventions, and weddings. But budget writers slapped this tax for the first time on campgrounds – without a public hearing. Campground owners are outraged at this abuse of process. One owner felt so betrayed by the Legislature not having a public hearing, he told me the only people qualified to serve in the Statehouse are the janitors. Campers arriving this summer may be just as angry when they discover this new “marshmallow tax”. Again, revenue projections may suffer if campers take their marshmallows elsewhere.

Business owners were certainly dinged too. Business owners already are subject to an 8.5% tax on profits as well as a .75% tax on all payroll expenses. Now however, business owners organized as limited liability companies or as partnerships will be subject to an additional 5% tax on any income distributed to an owner. This significant change in the 1923 Interest and Dividends tax was also snuck in at the last minute – again with no public hearing. The estimate is that this change will raise $30 million of new taxes from business over the next two years. This dramatic increase in taxes on small business may prove to the biggest $30 million mistake that New Hampshire could make — as it threatens to undermine New Hampshire’s ability to build new jobs at exactly the wrong time.

The ‘rest of the story’ behind this last minute business tax increase is that it is just the latest step by the New Hampshire Department of Revenue Administration to strangle small business in New Hampshire. Desperate to raise revenue, DRA has recently taken it upon itself to essentially determine how much compensation a business owner may pay him or herself. Should the business owner pay him or herself additional compensation beyond what DRA has pre-determined is allowed, the DRA with bureaucratic hubris will simply assesses the 8.5% Business Profits Tax on this so called excess compensation.

If people are concerned about the Administration in Washington determining pay levels for executives – well it has been happening here in New Hampshire – right under our noses – with questionable legal authority for DRA to determine what is profit and what is income for a business owner.

This attack against successful small business owners, hidden from the light of day behind the audit curtain, is by itself a terrible threat to New Hampshire’s ability to build new jobs here. But now under this budget it gets worse. The business owner will pay a new 5% tax on income on top of the 8.5% tax on the balance of income that DRA has determined is excessive. The Legislature may say it wants to attract business to New Hampshire, but in fact, the Legislature is sending business a strong signal: move to Massachusetts. When tax policy in Massachusetts is more attractive than ours—that is dangerous! The pink slips will follow for NH workers.

It is not just taxes – fees are going up dramatically. Drivers will pay at least $30 to $75 more for registering a car. Boat registration fees double. Condominium registrations will nearly double. There is even a new salt water fishing license fee and a permit to carry a concealed weapon for out of staters skyrockets from $20 to $100 which means people will no longer register firearms in NH and we will likely lose money.

What about property taxes? This budget spreads the pain to them as well as property taxes will climb across New Hampshire by nearly $90 million as this budget downshifts traditional state responsibilities onto the backs of already struggling property owners.

With all these new taxes, higher fees, and soaring property taxes – what happened to spending levels? I have maintained throughout this budget process that spending needs to be reduced to avoid raising taxes on families, small business, and property owners struggling to stay afloat. While this budget did make some last minute cuts to programs and personnel – it was still not enough in my view. Overall spending will still increase 10.5%.

Governor Lynch warned that projected revenue is going to fall to 2004 levels and will be 10% lower than 2008 levels. Business tax revenues alone are currently some 27% below the projections for expected revenue.

But budget writers were still short and desperate for revenue. So despite the Governor’s warning, budget writers magically inflated revenue expectations by $75 million in order to sustain spending. Lastly, $90 million of traditional state expenditures to reimburse school districts for construction projects was moved from the operating budget to the capital budget – meaning this $90 million will be borrowed! Experts have warned that borrowing of this magnitude is unsustainable.

So what does all this mean? Economically strapped New Hampshire residents will have to dig deeper into wallets filled with fumes rather than cash. The business climate will suffer significantly at a time that nearly 50,000 New Hampshire people are out of work and that New Hampshire’s unemployment picture has also darkened relative to other states.

But what has gone under the radar is this budget’s impact on future budgets. Not enough people realize that about $500 million of spending in this budget depends directly upon one time sources of revenue: federal stimulus funding, increased federal Medicaid funding, and a $110 million raid of New Hampshire doctor’s medical liability funds. (Litigation filed against this raid as well as the $75 million magical revenue projections are likely to leave this budget with a gaping deficit.) Can New Hampshire realistically expect future federal largess as Congress stares straight into the white eyes of indefinite trillion dollar federal deficits.

This $500 million one-time spending crater is a ticking time bomb for the next budget. Will the re-financing tax, the entertainment tax, the gas tax, the capital gains tax, the death tax rise from the dead? Will existing taxes on business, hospitality, tobacco, interest and dividends, real estate sales, and communications continue on their relentless climb? Will the state dump more costs onto property taxpayers? Or will it be a sales tax or an income tax—how about both?

That is the bleak future for New Hampshire families, businesses, and property owners unless state spending, which will have grown by nearly 24% in three budget cycles, is not brought under control.