Needed: Town meeting thinking in Concord

Political scientists point to New England town meetings as an example of direct democracy, where decisions are made by the people, instead of by mayors, aldermen, or representatives. The current political climate provides another reason to admire town meetings: the sophistication of town meeting voters on budgetary matters exceeds anything seen in Concord this year.Town meeting voters are keenly aware that their votes will affect their pocketbooks. Voters must balance the needs of the community with their willingness to pay. Sometimes the voters decide that the needs of the community – a new fire truck, school renovations, repaving Main Street – justify an increase in taxes. At other times, they decide the opposite.Town meeting voters are able to solve a two- variable equation: How much should we tax, and how much should we spend?The current leadership in Concord is strictly a one-variable crowd. Their mantra is myopic: no increase in any tax. The budget must be based on whatever revenue is generated by current taxes. If that revenue is not sufficient to meet the needs of the people of New Hampshire, some needs will not be met.House members respond to criticism by claiming they were elected to balance the budget. They define success as simply matching income and expenses, completely overlooking their obligation to create a budget that meets the needs of the people of the state.Our budget crisis is not due to overspending. The state has not added any major new programs, and general fund spending grew more slowly in the past four years than in any other four-year period in the last two decades.Our budget crisis is a revenue crisis. In 2009, our economy shrank 3 percent, but state general fund revenues declined 9 percent. Our economy grew in 2010, but general fund revenue did not. Economists predict that the New Hampshire economy will continue to grow during the next two years, but the House projects general fund revenue will be flat.The state’s tax revenues do not grow as fast as our economy because we have a hodgepodge of narrow-based taxes to fund state operations. We tax small portions of our economy heavily, rather than the whole economy lightly, and this has two negative effects. First, the segments of the economy we do tax are unduly burdened. Our taxes on business profits, tobacco, telecommunications, restaurants, hotels and real estate transfers are the highest or nearly the highest of any state.Second, when a segment we tax goes into a decline, it can have a large impact on state revenues, even though the economy as a whole is improving.A more intelligent approach would recognize that our revenue problem requires changes in our tax structure, so that revenues grow as fast as the economy.New Hampshire has the second-lowest state and local tax burden of the 50 states. At the same time, the tax burden on retired homeowners in New Hampshire is the nation’s highest. The middle class bears three times the tax burden, as a percentage of income, as our wealthiest citizens.Some hope the Senate will restore funding to essential programs, but the Senate is using the same shortsighted analysis: no new revenue.In a recent poll of New Hampshire voters, 73 percent said the Legislature should consider tax increases to deal with the budget deficit.The House and the Senate should learn from town meetings that a budget is a success only when they have considered spending and revenues, and met the needs of the people.Mark Fernald is a former state senator and was the 2002 Democratic nominee for governor.