New Hampshire state budget (2008-2009)
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New Hampshire is facing a $550 million budget gap for the two year budget that begins July 1, 2009. In an effort to close the large budget gap Gov. John Lynch proposed laying off up to 300 state workers, closing a state prison and eight district courts. Additionally the Governor has suggested dipping into the medical malpractice insurance fund, $50 million, and the state's rainy day fund, $38 million, to help close the budget gap. [1] Despite being poised to receive approximately $750 million in federal stimulus dollars, Gov. Lynch emphasized that any funds received should be viewed as one-time expenditures. [2]
“I don’t believe this is a forever type of problem,” said Lynch. “I really believe this is a two, two-and-a-half year problem and if we work together and don’t do something stupid over the next two years, we’ll emerge as even a stronger state.”[3]
[edit] Impact of budget woes
- Main article: State budget crisis, 2009-2010
- In March 2009, New Hampshire's unemployment rate was at 6.2 percent compared to 5.7 in February 2009 and 3.7 percent in March 2008. According to state officials 45,750 residents were unemployed in March, 18,340 more than were unemployed at this time last year and 3,500 more than in February. [4]
- The House voted in favor of a suspension of the insurance tax reduction of a quarter percent in order to raise $5 million. [5]
- In 2009 the House voted in favor of an 8 percent tax on estates worth more than $2 million, to raise about $10 million. [5]
- In order to raise state revenue some lawmakers voted in favor of a 35-cent increase in the cigarette tax, to raise $57 million. Should the tax increase pass the Senate the increase would be the fourth increase of the cigarette tax in five years. [5]
- In reaction to declining revenue lawmakers voted for a 10 percent tax on gambling winnings, to raise $16 million. Additionally lawmakers voted in favor of a 15-cent-a-gallon gas tax increase over the next three years, to raise $76 million for the Highway Fund in the next biennium. [5]
- The University of New Hampshire announced in April 2009 that in light of the current economic climate a salary freeze would be imposed. Additionally, officials mentioned that yearly tuition rates could rise. Salaries will be frozen for non-union employees making more than $40,000 in an attempt top help close a projected $9 million budget gap in fiscal year 2010 and a $17 million gap in fiscal year 2011. [6]
- In early April 2009 the Manchester School Board voted to lay off 10 assistant principals; proposed cutting 107 teachers and staff; eliminating elementary beginning band and orchestra and the gifted and talented program; reducing kindergarten to a half day; cutting more than $200,000 from athletic programs; and cutting $17,000 from music and arts. [7]
[edit] Budget background
New Hampshire operates on a biennium, covering two fiscal years at a time. A fiscal year begins on July 1 and ends on June 30 of the following year, however the biennium begins July 1 of odd-numbered years. According to the state Constitution the Governor must pass a balanced budget and cannot carryover deficits. [8] Initially individual state agencies submit their budget requests in the fall, prior to the Governor's completion of the recommended budget. At the beginning of the Legislative session the Governor presents a recommended budget to both the House and the Senate. But before the bill can be enacted into law the bill must pass both houses in the Legislature. [9]
[edit] Budget figures
The following table provides a history of New Hampshire's expenditures and gross domestic product (GDP).
| Fiscal Year | Expenditures (billions) | GDP (billions) |
|---|---|---|
| 2000 | $6.2 [10] | $43.5 [10] |
| 2001 | $6.6 [10] | $44.3 [10] |
| 2002 | $7.1 [10] | $46.2 [10] |
| 2003 | $7.7 [10] | $48.2 [10] |
| 2004 | $8.3 [10] | $51.4 [10] |
| 2005 | $8.7 [10] | $53.5 [10] |
| 2006 | $9.0 [10] | $56.1 [10] |
| 2007 | $9.4 [10] | $57.3 [10] |
| 2008 | $9.8 [10] | $58.6 [10] |
| 2009 | $10.2* [10] | $60.0* [10] |
- NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
[edit] Ideas about why the crisis exists
- According to a report by the Nelson A. Rockefeller Institute of Government in January 2009, New Hampshire saw a decline in corporate tax revenue of $8 million from 2007 to 2008. However, the state did see a $4 million increase in personal income tax revenue. In total, between 2007 and 2008 the state experienced a loss of $7 million. [11]
- New Hampshire is one of nine states that does not have a broad-based personal income tax. [11]
[edit] Proposed actions
[edit] Governor John Lynch
In spite of a looming $550 million budget gap, Gov. Lynch proposed laying off up to 300 state workers, closing a state prison and eight district courts. Additionally the Governor suggested dipping into the medical malpractice insurance fund, $50 million, and the state's rainy day fund, $38 million.[1] However, despite necessary budget cuts Lynch said that he would veto any attempts to implement a sales or income tax. The Governor also noted that any stimulus funds used should be used wisely and communities should remember that they are a one-time source of funds. Some lawmakers have proposed expanding gambling locations throughout the state and although the Governor does not reject the notion of expanding gambling he said,“It should be at a time when we can have a thoughtful discussion on it, not when we have a gun to our head.” Gov. Lynch emphasized that the state needs to trim down on unnecessary expenses, for example, he proposed closing an "inadequate" prison facility in Laconia. The closure, he said, should provide $35,000 per prisoner annually. However, with the necessary cuts and wise use of stimulus funds the Governor estimates that the state will be back on track financially by 2012. “When I looked at the budget I not only looked at the next biennium, I looked four years out to see what were able to do. And I think it’s a good budget given the financial constraints we’re under,” said Lynch.[3]
[edit] Republicans
Contrary to some New Hampshire lawmakers, Republicans said that their proposed budget includes spending $11 billion over two years but does not include new or increased taxes. "Republicans as a matter of policy believe that you don't raise taxes in a recession ... You live within your means," said Rep. Neal Kurk. [12] However, the Republican plan does include an average 13.5 percent across-the-board spending cut; approximately $324 million over two years. “It is clear that House Democrats are leading us down the road toward a sales or income tax with their tax and spend approach to state government," said House GOP Leader Sherman Packard. Additionally lawmakers noted that their proposal restores $83 million in school construction aid that has been eliminated in alternative proposals. [13]
[edit] Democrats
In response to the state's looming budget gap Democrats have proposed a $11.5 billion biennial budget that includes several budget cuts and new taxes to raise the necessary revenue. The increase in taxes is estimated to generate approximately $113 million in new revenue. Additionally in order to reduce the number of necessary budget cuts, lawmakers recommended using $117 million in federal economic stimulus money. [13] "We're trying to share the pain with everyone, to keep the pain as low as possible for everyone," Rep. Marjorie Smith said. "If you think any of us on the committee enjoyed what we were doing, you are wrong." The Democratic plan raises the cigarette tax by 35 cents a pack, the gas tax by 15 cents over three years, and the tax on rooms and meals to 8.75 percent, an increase of nearly 10 percent. [12]
[edit] Economic Stimulus Package
New Hampshire is expected to receive $750 million from the $787 billion dollar economic stimulus.[14] All told, the federal stimulus plan would create or save 16,000 jobs in New Hampshire, based on White House estimates. [15]
For more information on how the federal stimulus funds are being used in the state of New Hampshire, visit the state recovery website.
According to preliminary reports, New Hampshire is expected to receive:
- $258.3 million for education [16]
- $250 million in Medicaid funding [16]
- $129.4 million for transportation [16]
- $47 million for special education [2]
- $200 million for state stabilization funding [2]
[edit] Budget transparency
New Hampshire currently has no statewide, official spending database online.
[edit] Legislation
None.
[edit] Government tools
The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:
| State Database | Searchability | Grants | Contracts | Line Item Expenditures | Dept/Agency Budgets | Public Employee Salary | Exemption Level |
|---|---|---|---|---|---|---|---|
| None | n/a | n/a | n/a | n/a | n/a | n/a | n/a |
[edit] Limitations and Suggestions
[edit] Economic Stimulus Transparency
- The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.[17]
- New Hampshire will receive an estimated $592,154,447 [18]
- The economic recovery website to show how legislators and government officials in New Hampshire are spending Federal funds is available here.
[edit] Support for creation of the database
[edit] Independent transparency sites
None.
[edit] Public employee salary information
None.
[edit] See Also
New Hampshire taxpayer-funded lobbying
[edit] External links
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
- Josiah Bartlett Center for Public Policy
- New Hampshire Department of Administrative Services, Budget Office
- New Hampshire General Court
- New Hampshire state site
[edit] Additional reading
- Gov. John Lynch,"Inaugural address," January 8,2009
- Gov. John Lynch,"Budget Address," February 12,2009
[edit] References
- ↑ 1.0 1.1 NHPR,"Lynch Outlines Plan Aimed At Closing Budget Gap," February 12,2009
- ↑ 2.0 2.1 2.2 Fosters Daily Democrat,"Gov. Lynch urges judicious spending of stimulus funds," April 8,2009
- ↑ 3.0 3.1 Seacoastonline.com,"Lynch defends budget; asks for patience," April 8,2009
- ↑ WMUR,"NH Unemployment Continues To Rise," April 13,2009
- ↑ 5.0 5.1 5.2 5.3 New Hampshire Business Review,"N.H. House OKs capital gains, other taxes," April 10,2009
- ↑ WMUR,"UNH Announces Salary Freeze, Possible Tuition Hikes," April 3,2009
- ↑ WMUR,"Proposed Manchester School Budget Full Of Cuts," April 14,2009
- ↑ INPUT,"State Budget Process Tutorial," retrieved April 15,2009
- ↑ State of New Hampshire,"Annual Financial Reports," retrieved April 15,2009
- ↑ 10.00 10.01 10.02 10.03 10.04 10.05 10.06 10.07 10.08 10.09 10.10 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 US Government Spending,"New Hampshire State and Local spending," retrieved April 15,2009
- ↑ 11.0 11.1 Nelson A. Rockefeller Institute of Government,"State Revenue Report," January 2009
- ↑ 12.0 12.1 Union Leader,"Dems 'share pain,' GOP picks budget battle," April 7,2009
- ↑ 13.0 13.1 Examiner,"NH's 'share the pain' budget: Dems vs. GOP," April 7,2009
- ↑ Associated Press,"Lynch: Use NH stimulus funds carefully," April 8,2009
- ↑ American Recovery and Reinvestment Act,"Impact," retrieved April 15,2009
- ↑ 16.0 16.1 16.2 New Hampshire Union Leader,"Stimulus: How NH stacks up," April 7,2009
- ↑ National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
- ↑ Wall Street Journal,"Stimulus Spending by State," April 9,2009
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