Balancing the State Budget

I thought the following article by Susan Almy, the House Ways and Means Chair, might be of interest.
Even In Deep recession, We Balanced the State Budget Responsibly

The bi-partisan revenue projections set by the New Hampshire House Ways & Means committee, despite the claims of critics, were done very carefully and conservatively, and they have been more accurate than most other states. It was the economy, not our revenue projections, that caused revenues to fall short of even our lowered expectations.


Estimates are produced for our biennial budgets between two and two and half years before revenue collection is completed. Since the Democratic majority took over for the first time in 150 years, we have worked to make our projections as accurate as possible to avoid asking for more money from taxpayers than we needed to balance the budget.

But just three months after the final 2008 – 2009 budget was passed, the first thunderclouds of the terrible recession appeared. As the economy tumbled, revenues began to fall short. The magnitude of the national economic downturn was beyond anyone expectations. Eight years of failed Republican policy did enormous damage to our economy.

In creating the current revenue projects for the 2010-2011 budget we had two advantages that we didn’t have before. We knew there was a bad recession on, and we had a new commissioner who had been studying economic cycles. Together, my committee, including ranking Republican Rep. Norm Major, created bipartisan estimates. We used the recession from the mid-1970’s, at that time the worst recession since the Great Depression, as our model for what might happen to revenues.

This recession proved to be far worse than the one in the 1970’s. Still, our revenues for the first year, fiscal year 2010, came in only less than 2% under the estimate, much better than many other states’. And so far revenues for fiscal year 2011 are above the estimate we made in mid 2009. This is due directly to conservative and careful estimating.

The budget year 2010 ended with a surplus of more than 60 million dollars. The budget is balanced, responsible, didn’t downshift costs to local cities or towns or impose a new broad based tax, and it maintained the essential services our most vulnerable citizens depend on. It did depend partly on one-time money – just as in Governor Judd Gregg’s day in the early-1990’s recession, they depended on one-time money for nearly 30% of their total. In that recession also, the Republican legislature raised 9 taxes significantly, trying to balance their budget; we have raised two, tobacco and meals & rooms.

To secure our state’s future, Democrats have been working hard to make the New Hampshire government more efficient and user friendly. This is the kind of cost-cutting that makes sense – it costs less to the state, less to citizens and businesses that need to use state services, and less to tax-payers. Currently we have the 5th lowest state spending per capita in the nation, but we have found many places where our government had become cumbersome and expensive. In the past few years, we have:

· Replaced the state’s 30-40 year-old incompatible computer systems,

· For the first time released data on state spending at month’s end (rather than 18 months later!) so that budgets can be more rational,

· Disbanded countless antiquated committees that required agencies to employ excess staff,

· Enacted prison reform that will both cut this rapidly growing cost and make us more secure, and

· Reformed the pension system funding formula, resulting in a more than 15% solvency increase and bringing it back from the verge of collapse.

We – Governor Lynch and the majorities in the legislature – are also near to completing work on other problems we have identified. We are working on a first-in-the-nation single-permit system for environmental regulation, which should greatly reduce the costs and paperwork for local businesses and homeowners. We are working on streamlining procedures in every department, using the business LEAN model.

When we get out of this recession, assuming these initiatives are allowed to continue, our state will be in a much stronger position for the future.