Capital Comments: The Recession & State Government

By State Senator Bob Odell

Money … more appropriately, the lack of it hangs over the State House in Concord.

Last week we nearly depleted our “rainy day” fund, the Treasurer reported on a successful bond sale, the governor pledged to keep New Hampshire a low tax state, and Claremont offered to help the state out with costs of its court.

To start, after being in business over 200 years, New Hampshire’s savings account is down to less than $10 million.  The joint legislative Fiscal Committee, made up of five members of the House and  five Senators, voted to take $80 million from our savings account which is known as the “rainy day” fund to balance the books for the fiscal year that ended last June 30.

Normally, the books would have been closed by December but without filling the gap they remained open.  The alternative to running down the “rainy day” fund would have been to carry the deficit forward into the current fiscal year.  That would have made it even tougher to balance the books for the current biennium.

The recession has had a huge impact on state government as it has on most families.  Our savings account now has about $7 for each New Hampshire resident.  Not much money for a business the size of our state government.

*   *   *

The state Treasurer, Cathy Provencher, reported on the successful sale of $125 million of state bonds.  Compared to our per capita $7 per resident in savings, our state debt is equal to about $523 per person.  That compares favorably to Connecticut, with all its taxes and casinos, too, where the debt per capita is around $4,000.  And on the other end is Nebraska with just $17 of debt per resident.

Seven states have AAA bond ratings.  New Hampshire is with the majority of states with a AA rating which helped to sell our bonds at a 2.94 percent interest rate.

It is interesting to read how each rating agency determined our financial strength.  On the positive side, we have high per capita income and compared to other states a low unemployment rate, a relatively low debt burden and we have had good financial reserves.

The negative side shows a major decline in reserves evidenced by the transfer from our “rainy fund” on Friday and the impact of an upcoming Supreme Court decision dealing with the disputed transfer of funds from the Joint Underwriting Association.  One rating agency noted the low level of funding for our state pension program saying “at its current 58 percent funded level, (it) is well below most other states’ pension funding.”

It is hard to overstate the financial challenges the state faces in providing an adequate level of services and still balancing our budget this year and in the future.  But long term, for whatever it is worth, outside experts see New Hampshire as strong financially.

*   *   *

The House Sergeant-at-Arms intones, “Madam Speaker, the Honorable Senate” and to applause from our House colleagues and guests in the gallery, members of the Senate march into the House chamber and take temporary seats set up around the dais.  Truly, first row seats for the Senators.

We are followed by introductions of key members of the Judiciary including Supreme Court Justices, the Executive Councilors and finally, the Governor and Dr. Lynch.  When the House and Senate meet together it is called a Joint Convention and in this case it was for the purpose of hearing the Governor’s State of the State address.

Noting the impact of the recession on state government, The Governor said that “New Hampshire has done better than most of the nation.  Our state’s unemployment rate is one of the lowest in the country, and more than 30 percent below the national average.”

The Governor stated that one fundamental of our state’s future is having “one of the lowest tax burdens in the country – with no sales or income tax.”

He went on to launch New Hampshire Working, a three-part effort to save and create jobs.  To reduce layoffs, the government will partner with businesses to keep people working, less than fulltime, using unemployment benefits to save the businesses money, reduce unemployment insurance expenses to the state and most importantly, help keep people employed the businesses can pay workers for full time work.

The second-part would provide unemployment benefits to men and women willing to participate in up to six weeks of on-the-job training at a potential employer.  When the training period is up, the employer could then decide if they want to hire the worker.  The third element of New Hampshire Working is the creation of a Green Launching Pad at the University of New Hampshire to help clean energy technology companies to grow.

These ideas are in response to what the Governor heard through his Job Cabinet meetings around the state including one last fall at River Valley Community College.

*   *   *

The House Finance Committee held a hearing last week on the bill to provide money to keep district and family courts in three communities, including Claremont, open in the next fiscal year.  The offer from Claremont to waive the rent for the space occupied by the court in the city hall complex should help keep the court from being closed.  Plaistow took similar action last year to keep a court in that town.

NH State Senator Bob Odell represents (District 8) Acworth, Alstead, Charlestown, Claremont, Gilsum, Goshen, Langdon, Lempster, Marlow, New London, Newbury, Newport, Roxbury, Stoddard, Sullivan, Sunapee, Sutton, Unity, Walpole, Washington and Westmoreland.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s