Downshifting has to stop now!
Below is an excellent article by Rep. Marjorie Porter of Hillsborough. She lays it on the line: New Hampshire cannot continue to provide the services we expect–an excellent university system, a social safety net, help for children in crisis, care for the mentally ill, state parks, etc.–on our existing revenue structure. She says there will be tough choices. This legislature is unlikely to restore many of the cuts made two years ago, because the current mix of taxes won’t bring in enough money. Which leads to her unspoken question: will NH voters continue to choose leaders (particularly governors) who pledge no new taxes and/or no change in the way we tax?
Recently, the Monadnock Ledger-Transcript published an editorial entitled “Downshifting has to stop now.” Cities, towns, and school districts have been hit hard by the cuts enacted by the legislature last term, they say. Too many costs of government have been shifted from the state down to the local level, and property taxes keep going up. Property taxpayers simply cannot afford it any more. Specifically mentioned was the effect on local school and town budgets of the elimination of state contributions towards the retirement system for public employees. Promises were made during campaign season to stop the downshifting. Citizens must hold this new legislature accountable to these promises.
I agree with the sentiment of this editorial. Actions taken last term have had a dramatic impact on our local taxes. The state used to contribute 35% of school districts’ and municipalities’ retirement costs. Last term, that was cut back to 0%. This cut alone will cost the Hillsboro-Deering schools a little more than $250,000. The school board is struggling now with this reality. What will they be forced to cut?
And this was only one of the cuts made—there are many others. More people are relying on local town welfare offices as a result of cuts to human services. More people with mental health issues are ending up in local jails as a result of cuts to the mental health system. Fewer funds to towns for road repair means local budgets must increase. Cuts to the Children in Need of Services (CHINS) program means local schools and towns are left on their own when troubled children need help. I could go on and on.
And this, dear readers, is what is keeping me up at night. Given our current tax structure, there is really not much the legislature can do to fix it. Not unless something changes, and changes quickly.
Consider these facts:
According to the Legislative Budget Assistant’s Office (these are non-partisan number-crunchers), state revenues have increased 10% in the last decade, while inflation has increased costs by 27%.
Actions taken last term will effectively decrease revenues between $50-100M this biennium. That means current spending must decrease that much to break even.
Formerly, the CHINS program serviced 500 kids statewide, and was aimed at catching kids before they broke the law. Last term, this was cut back to funding for 50 kids, and they must be violent now to get help.
The NH gas tax is eighteen cents/gallon. It was last raised in 1991, under Governor Gregg. At that time, a gallon of gas cost $1.14. Proceeds from the gas tax funds state road and bridge repair, and 12% of the proceeds go back to cities and towns for local road maintenance.
In 2000, 38% of NH roads were classified as being in good repair, and 18% were in poor repair. By 2012, these figures had been reversed. Now, 19% of our roads are in good repair, 37% in poor repair. 174 state bridges are red-listed. Currently, 22% of municipal bridges are red-listed.
The Feds are suing the state, saying our mental health system is broken and does not meet minimum standards. Once we were held up as a model for the country.
Hospitals are suing the state over the huge tax increase forced upon them last term. The state is trying to save money—to the tune of $1.5M a month—by moving our Medicaid system to a managed care model. Things are being held up because hospitals are not willing to sign on given the current state of affairs. Estimates are that this will cost the state $16M in savings.
Our women’s prison is inadequate, and the state is being sued for discriminatory practices. Our men’s prison needs major upgrading as well.
Tourism is one of the state’s major industries, and proceeds from the rooms and meals tax make up about 12% of state revenues. Last term, the entire budget for tourism promotion was eliminated.
NH ranks last in the nation in support for public higher education. Our graduates have the highest student loan debt in the country. The State’s contribution to the budget for the university system was slashed by almost 50% last term.
The major sources of state revenues in the Granite State are business taxes. We have some of the highest business tax rates in the country.
US News ranks NH the richest state in the union, with a median income of $66,303. There are approximately 27,000 millionaires in the state.
27,115 children live in poverty in NH.
57% of voters in the last election supported a constitutional amendment banning any new personal income tax in the state.
Governor-elect Hassan has taken “the pledge,” promising to veto any state income or sales tax.
So yes, voters should hold us accountable for the downshifting of the cost of government to local property tax payers. But are you, the citizens of the state, willing to allow us to increase revenues by raising taxes at the state level so the downshifting can stop? If not, we have no options. Because, despite what you have heard, it IS a revenue problem, not a spending problem, in New Hampshire.
Talk about a rock and hard place.
Marjorie Porter is in her second term in the New Hampshire House, representing the towns of Antrim, Hillsborough and Windsor. She is the Chair of the Municipal and County Government Committee.
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