Not just a bad budget -- it's bad economics



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The biggest source of money for New Hampshire is the federal government. Dozens of federal grants are available to states, but a state must put up its own money to receive the federal money.The new state budget rejects over half a billion dollars of federal matching funds because the Legislature was unwilling to come up with state money to qualify New Hampshire for those matching funds.The cut in the state budget exceeds the entire payroll of BAE Systems in 2009. If BAE left the state, it would be recognized as an economic calamity. Not surprisingly, the new state budget is equally calamitous: • The budgets of our hospitals have been cut by over 5 percent due to reduced payments for care delivered to those without insurance. Layoffs and declining services are inevitable. • The state government, and agencies that contract with the state, are cutting hundreds of jobs. • State aid to the university system has been cut 45 percent. Tuition that was already the highest in the nation will increase by nearly 10 percent. Staff and course offerings will be cut. • The loss of $500 million will ripple through New Hampshire's economy, affecting not only the agencies that ran those programs and the people who benefited from them, but also the businesses that prospered as those dollars were spent. Economic growth may be cut 1 percent, at a time when we are struggling to grow by 2.5 percent per year.Our Legislature has cut the cigarette tax and created a waiting list for the severely disabled. It cut the budget of the community colleges by 20 percent and increased funding for charter schools. It cut the auto registration fee by $30 -- a loss of $90 million that will cut paving, road repairs, and the rebuilding of dangerous bridges.Last winter, the Republican leadership announced that everyone would have to sacrifice in order to balance the budget, but as they hacked large chunks out of our state government, they did not ask anyone to pay one cent more to maintain state services.The Republican leadership says they had no choice other than draconian cuts because the state was "broke." Nonsense. New Hampshire has the highest median income in the nation. Our state and local tax burden is the second lowest in the nation. We could pay a little more and still be the state with the second-lowest tax burden.We have no general income tax, no retail sales tax and no estate tax. The wealthy enjoy nearly the lowest tax burden of anyone in the industrialized world.Instead of cutting the state budget by 11 percent, we could have asked our wealthiest citizens to pay their fair share of the cost of government through a capital gains tax or an estate tax. Every dollar raised would have been matched by the federal government, bringing new money into the state.The $125 million cut from hospitals may actually end up costing New Hampshire citizens more. Hospitals will probably increase rates for those with private insurance to make up the shortfall, and if those without insurance are turned away, they will go to town welfare offices for assistance in paying their medical bills.The City of Manchester has a new budget that reduces police and fire department positions, but avoids other draconian cuts. Republican Mayor Ted Gatsas understood the wisdom of a small tax increase to maintain essential services. The Legislature does not.In Manchester, city taxpayers will pay 3.5 percent more. At the state level, we could have maintained state services and the federal government would have paid nearly half the bill -- if we hadn't turned the money down.Mark Fernald is a former state senator and was the 2002 Democratic nominee for governor.

 

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