Wednesday, April 9, 2008

Revenues are up, but not as fast as spending

Charlie Arlinghaus notes in this morning's Union Leader, that New Hampshire's pending deficit isn't the result of falling revenues, but of skyrocketing spending. Remember these stubborn facts when John Lynch, Jeanne Shaheen, and Paul Hodes try to blame the state and federal deficits on the economy, rather than on out of control budgets.
This budget crisis is not the result of an economic collapse, but a spending increase larger than any budget of the last 20 years and reckless revenue forecasting that abandoned the state's prudent tradition of using cautious revenue estimates.

With the governor and Legislature finally admitting that they face a significant shortfall in the revenue needed to balance the budget, the casual observer might be led to believe that the economy caused a general collapse in revenue. In fact, the truth is quite different.

In just the last few days, Gov. John Lynch has pointed out that New Hampshire's economy is still doing fairly well. In an appearance in Manchester, Lynch said, "The economy is clearly softening and New Hampshire isn't immune from national trends, but we are doing better than most states."

A look at state revenues confirms his assessment. Through the first nine months of the fiscal year, revenues are 2.5 percent higher than in the first nine months of 2007. Seven of the state's eight largest sources of revenue are higher than in 2007. The two largest taxes, the combined business tax and the meals and rooms tax, would likely indicate a slowdown in business activity or in tourism, but they are each higher than in the 2007 fiscal year.

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