Growing budget deficit is a threat to business
Revelation that the state budget deficit has grown by another $70 million should put businesses around the state on red alert.
The additional $70 million – “discovered” late last month due to bungled bookkeeping in the Department of Health and Human Services – means the expected budget deficit falls between a range of about $250 million to $370 million.
While a deficit of that size is extremely disturbing, finger-pointing over who is responsible for the state’s fiscal mess does absolutely nothing to fix the problem. In fact, it makes finding a solution more difficult.
Of course, there will be plenty of answers thrown around to solving a budget deficit of such proportions, from gambling and cigarette taxes to budget cuts and layoffs. But judging by New Hampshire state government’s track record, the first thing businesses in the state should do is watch their wallet.
After all, New Hampshire’s biggest revenue source by far is business taxes, particularly the business profits tax and the business enterprise tax. Collectively, they bring in more than a quarter of all state revenues, and historically business’ pocketbooks have been among the first places where lawmakers turn when they’re looking for big chunks of money. And by any measure, a quarter of a billion dollars and upwards is a big chunk of money.
The perspective of history is why the Business & Industry Association of New Hampshire issued a call last month to urge legislators and the governor to look elsewhere in the search for money to fill the budget gap.
Taxes are already onerous on the state’s businesses. In fact, when you combine state and local taxes, New Hampshire is among the very worst in the country – the fourth-highest, according to a 2004 study by the Council on State Taxation.
Any further increase in the tax burden on New Hampshire businesses will only have a negative effect on the state’s business climate and economy. Businesspeople around the state should urge our elected leaders to look elsewhere as they try to fix the state’s budget mess.