Policy Blog NH

Thinking About a Local Option Meals And Rooms Tax

State government is on the path to giving cities and towns the ability to add a local levy to the state's meals and rooms tax, as an offset to reduced state revenue sharing.  If towns want to raise an amount equal to the reduced aid from the state, the local levy will be very different from town to town.

by Dennis Delay and Steve Norton

Deficits, the Federal Budget and the NH State Budget

The Center recently made a presentation to the House Finance Committe on the status of the 2010-2011 budget, highlighting major uncertainty regarding critical aspects of that budget.  The Obama adminsitration's proposed budget represents the second blow (following on the heels of the JUA deicision) to the stability of the current 2010-2011 New Hamsphrie state budget.   How does President Obama's unveiling of the administration's proposed budget -- and estimates of the potential federal deficit -- change the landscape for budget makers? 

Better news and bad news on the State Budget

First the bad news.  Today the New Hampshire Supreme Court determined that the State could not have $110 million in a medical malpractice insurance fund (JUA).  Originally proposed by the Governor a year ago as one way to help fund the state budget, the Court affirmed a lower court decision barring the state from access to the fund.  Read the Court decision here.

The better news is

Looking Toward the Next Budget Conversation

Interest in the state budget is increasing as the next legislative session approaches.  Steve Norton talked about the state budget recently with the BIA’s Economic Development and Fiscal Policy Committee.  You can find the presentation at http://bit.ly/6HP4xH.  States across the country are also having these conversations.  

What Do November Estimates of State Revenue Mean?

For the twelve months ending November 2009, New Hampshire revenues destined for the General Fund and Education Trust Fund are 3.6% less than for the twelve months ending a year earlier.   What does that mean for the future?  Given the difficulty of predicting anything about the economy right now, no one is really sure.  However, we do know that 2010 revenues will fall short of estimates unless the next 7 month period shows a 3% increase above the same period last year.  In other words, revenue estimates produced as part of last year’s budget process could be accurate, but only if the economic situation is clearly on the mend and the free-fall in state revenues has stopped.   Has it?

 

No Sign of a Turnaround in State Revenues Yet

For the twelve months preceding September 2009, New Hampshire revenues destined for the General Fund and Education Trust Fund were 6% less than for the twelve months ending a year earlier. The decline in state revenues is broad based, affecting all revenue sources, whether from business, consumer spending, or gaming.

Recession and the State Pension System

Given current economic conditions, state and local appropriations may have to increase by as much as $80 million per year in the next biennium to prop up the state retirement system.  While analysts can argue about the relative magnitude of the issue, the fact that the New Hampshire Pension Plan will again be a topic of considerable debate in the next legislative session is hard to dispute.  How will the legislature respond?

A Budget Under Siege? State Revenues Falter in July 2009

July 2009 is the first month of New Hampshire’s fiscal year 2010 (FY2010).  Although it may be too early to tell how state revenues will accumulate in the next eleven months, the early returns are not encouraging.  Unrestricted revenue for the General and Education Funds received during July totaled $93.6 million, which was below prior year by $4.7 million.  That is 5% less than for July 2008.  Two revenue sources – real estate transfer tax receipts, and the meals and rooms tax – should be in their high collection months right now, and these are performing below expectations.    

A State Budget in the Red?

What does Judge McGuire’s decision on the state’s use of surplus funds from a state established medical malpractice joint underwriting association mean for the state budget?  The state budget included $65 and $45 million of these funds in the 2009 and 2010 budget respectively.  Obviously, if the decision holds throughout the appeal process the state’s books are out of balance. What that actually means, and how the state resolves the issue, is quite complicated.  

And How Do You Lay Off 750 State Employees?

In 2008, there were 11,063 filled positions according to the State’s Department of Administrative services.  In a recent press release, the Governor indicated that executive agencies should be prepared to make layoffs, the total number of which was estimated to be 750.  This represents approximately 7% of the 11,063 filled positions in 2008.   How those layoffs would occur, however, wasn’t made clear in the press release, and the implications of these layoffs cannot be known without significantly more information on the details of those potential layoffs.