Budget deficit needs immediate action

Many of New Hampshire’s newly elected representatives have started to consider how to tackle the budget deficit that the state faces for the coming biennium.Some observers now say we are rapidly approaching a $900 million hole, and this issue has rightly moved to the top priority of the new House and Senate leadership.But as they assemble the resources to try to close the biggest two-year budget shortfall in New Hampshire’s history, they need to begin paying close attention to the quickly growing hole for the last six months of the current state budget that could well pass $100 million.The seeds for the current deficit were sown in the last Legislature’s budget “fix” passed in June. Included in this bill were several fiscal assumptions that would never come true, that many responsible legislators and outside groups warned Gov. John Lynch and the prior Legislature to stop.Sadly, they didn’t listen then, and now their troubles have come home to roost with the new majority.In the budget “fix,” there was a provision to bring in $60 million from sales of state assets. This was on top of another $17.5 million in sales included in the original state budget.Now, selling off land, buildings and other state property that aren’t being used is a good idea, but putting substantial numbers in the state budget without any plan on how to do it was irresponsible.This group just reported, however, that it could only ascertain $400,000 from selling two homes in Manchester’s North End on property used by the Department of Health and Human Services.The Legislature began the process to sell these very houses back in 2006, if that gives any sense of the likelihood that these properties will be sold in the next six months.In addition to this hole, the budget “fix” also included an anticipated $48 million in enhanced Medicaid money from the federal government before Congress had even set the guidelines for states.Later, the state learned it would only be receiving $29 million, adding an additional $19 million to this year’s deficit.This $96 million shortfall, added to the more than $8 million revenue hole through the end of November, means the state is likely looking at the prospect of having to find more than $100 million to fill this year’s budget hole.The reality of this fiscal situation means that our Legislature, which was already trying to find ways to plug holes in the next budget that is under considerable water, should also focus its immediate attention in January to solving the current shortfall facing the state.Unfortunately, the clock is working against our new leaders to find solutions. Every day they wait, it will require greater and greater spending cuts to move the state back into the black.The majority in both the House and Senate ran on a platform of bringing fiscal restraint to Concord. This will be their first test of these efforts.What we cannot have is the same type of budgeting gimmicks that brought the state budget into its current crisis. That means that we can’t engage in more borrowing, more accounting tricks and more pretending that real problems don’t exist.Furthermore, one thing that simply must not happen is an increase in taxes or fees. With dozens of these over the past four years, our citizens and our employers simply can’t afford any more. We need to get back to the New Hampshire values of limited government, less spending and more economic prosperity.John Stephen, a business and government solutions consultant, was the Republican nominee for governor in 2010.