This year’s state budget

This budget is balanced on paper, but in ways that create more problems than they solve. This budget relies on rather rosy revenue estimates – some $31 million higher than prudent estimates by those with an exceptional track record for accuracy. The same “rosy revenue esti – mates” approach was taken to balance the 2009/10 budget, and it required a special session of the legislature to resolve. This budget relies on $17 million of one-time tobacco settlement money to pay for on-going appropriations. As a result, the next budget will start off $17 million in deficit. This budget relies on $60 million in additional revenue from a 30c tobacco tax increase – 10c more than the House position – and on $14 million by suspending business tax reductions scheduled to take effect this July. The result: small and large busi – nesses hurt, fewer jobs created and a slower economy – not good public policy when 40,000 Granite Staters are looking for work. A 12c increase in the gas tax only makes matters worse.

This budget intentionally underfunds at least two important state functions – a likely $4 million shortfall in the overtime line at the state prison for men and a likely $1.2 million shortfall in indigent parent defense funds – and authorizes the Fiscal Committee to cover the shortfalls by tapping into any surplus or increasing any deficit. This is not truth in budgeting.

This budget also diverts about $27 million more from the highway fund to the general fund than current statute authorizes. This money pays for traffic-related expenses in the Department of Safety. Were the current statute followed, the highway fund would receive an additional $27 million, cutting over 3c per gallon off any proposed gas tax increase.

This budget substantially expands the size of state government. In total funds, it’s 10.2% larger than the current budget, growing state government at more than 5% per year at a time when the state’s economy is growing around 2%. Part of that growth is expanded Medicaid under the Affordable Care Act (“Obamacare”). The cost: $1.3 million in this budget, with likely tens of millions more in future years. Yet, despite all of its additional revenue, this budget fails to provide the $7.2 million building aid for new school projects contemplated in the recent changes to the school building aid program. Indeed, for all its appropriations for health and human services, this budget does little to encourage economic growth and, in fact, sends the message to our business community that we plan to take millions more from them to grow state spending. This will hurt our state’s employers’ ability to invest, expand and create jobs. This is the wrong message to send.

Rep. Neal M Kurk of the House Finance Committee:

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