Capital Comments: Stark Reminders of a Changing World

By State Senator Bob Odell

Last week was our annual legislative break.  It gave me the opportunity for a short trip to Portland, Oregon to spend a few days with a couple of grandsons.  Those two boys, seven and five years old, certainly helped take a lawmaker’s mind pretty much away from legislative issues and the state budget.

There are, of course, many stark reminders of how the world has been changing.   How about a $25 per charge for your bag when you check in at the airport?  And if overweight, the fee could be over $100.

A Hawaiian Airlines billboard on the way to the Portland airport reminded travelers there was a time in the past when we looked forward to a trip on an airplane.  And that was the case back in the late 1960’s when I first began to travel for business.  Today, with the necessary security procedures, and the nickling and diming that goes on for checking bags, buying snacks or beverages on the plane and now even one airline’s charge to use a blanket, a simple trip can be a cause of anxiety and frustration.  You seem to pay more for less.

Thomas  Friedman, in a recent column in the New York Times,  noted  a new annual $45 fee in Tracy, California, for 911 service or a single charge of $300 if you use 911 for an emergency.   New Hampshire, in the current budget, raised fees and charges on a wide range of services to raise revenue.  And still income fails to meet goals necessitating the Governor’s recent call for $140 million in new spending reductions.  There is no escaping the fact that those cuts will reduce services and force layoffs.

Friedman quoted Michael Mandelbaum from Johns Hopkins University writing “ … it feels as if we are entering a new era, ‘where the great task of government and leadership is going to be about taking things away from people.’”  Friedman suggest s “In these past 70 years, leadership – whether the country, a university, a company, a state, a charity, or a township – has largely been about giving things away, building things from scratch, lowering taxes or making  grants.”

Now the perspective of some thoughtful observers is that the era of benefits and generous government programs is slowing dramatically and in some cases coming to an end.

Meanwhile, after grants for education and to the towns and cities, Medicaid is the largest cost driver in New Hampshire.  Medicaid provides services, especially medical care and nursing home payments, for residents who meet poverty criteria.  Nationally, Medicaid enrollments have seen the largest one-year increase ever.  And caseload growth in New Hampshire follows the same pattern.

As part of the federal stimulus program, Washington is sending nearly $100 billion of extra money to “enhance” the federal government’s share of the costs of Medicaid.  New Hampshire received money that helped us avoid program cuts and harsh reductions in other parts of the current budget.  The extra money runs out at the end of this year unless Congress extends the enhancement payments.  Once again, states are dependent upon the largess of our legislative brethren in Washington.

There are rules, too, that come with federal dollars.  A state receiving the enhanced federal money cannot change eligibility requirements and thus reduce caseloads by moving people off the Medicaid roster.  Instead, to save money, some states have moved to cut coverage for some programs like adult day care, eyeglasses, hearing aids and dentures.  When Kansas recently tried to cut payments to providers, there was a backlash and the state turned to consider increased tobacco and sales tax.

And last week’s report from The Rockefeller Institute said that all states together will continue to find that revenue will be “insufficient to support current (state) spending commitments.”  And while New Hampshire continues to have a stronger economy than most other states with our unemployment one-third less than the national average, revenue through February, the 8th month of the fiscal year, is behind our revenue plan.

***

February is not a major month for state revenue.  But the plan was for $94.2 million to come in.   But, in fact, revenue pending some adjustments came in at $81.3 million for a shortfall of 13.7 percent.    March and April are major revenue months because of business tax and interest and dividends tax filings.  Revenue for those months will be critical in determining our financial status.

Those concerned with the state budget noted that business taxes, annually our largest source of revenue, were off 40.6 percent in February.  If that percentage loss in business taxes continues through the year,  the state’s financial situation will be grim … even worse.

The next sixty days will provide a reality check on our state’s financial situation.  And likewise, we will mirror what is going on across America.  Being in my mid-sixties, checking the state’s revenues nearly every day, it is difficult to imagine a more serious financial situation for our state.  We have exhausted most of our rainy day fund, and we watch as state revenue falls behind our budget projections and even below revenue in the prior year, and wonder when the economy will turn upward.

Even while sharing vacation time with family and friends,  it was difficult to not be concerned about where we will be financially as a state next week, next month or next year.  These are tough times for New Hampshire and our country.

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