The current legislature and governor are pushing us to establish a new government agency to control hospitals by setting prices and overseeing hospital management. Similar bureaucracies have been abandoned in more than thirty states that tried them. That model cannot be replicated here without spending more than $100 million that we don’t have.

The current legislature and governor are pushing us to establish a new government agency to control hospitals by setting prices and overseeing hospital management. Similar bureaucracies have been abandoned in more than thirty states that tried them. That model cannot be replicated here without spending more than $100 million that we don’t have.

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The state’s decision to freeze revenue sharing under the Meals and Rooms Tax could endanger the financing for the Verizon Wireless Arena in Manchester. Last week, Moody’s Investors Services downgraded the bonds used to fund the arena, held by the Manchester Housing and Redevelopment Authority, from Baaa3 to Ba2. The lower rating puts the bonds in “non-investment grade” or “junk bond” status, meaning they have only moderate security of future repayment. Manchester Mayor Frank Guinta notified Governor John Lynch of the decision in a letter on Friday.

In October, state legislators held a tax summit and a week later held a spending summit. Charlie Arlinghaus’s presentations to each gathering are attached here. Arlinghaus outlined the state’s only two successful modern attempts at tax reform in 1970 and 1993 and warned legislators that reform attempts will only be trusted if revenue neutral. At the spending summit, he pointed out a $200 million deficit in the current budget and warned about a $625 million deficit lurking in the next budget.

Spending Outlook

Taxes and the Economy

[pdf http://www.jbartlett.org/wp-content/uploads/2009/09/New_Hampshire_Hiring_Freeze_2008.pdf]   Click here to download a copy to your desktop

Governor John Lynch approved 71 exceptions to his hiring freeze in Fiscal Year 2008, at an annualized cost of nearly $3.9 million, or $464,000 in FY08 alone. Governor Lynch and the committee he charged with reviewing waiver requests approved 74% of agency requests acted upon in FY08. A report submitted in advance of tomorrow’s meeting of the Legislative Fiscal Committee understates both the number and the cost of these waivers.
Of the 104 agency requests to waive the hiring freeze acted upon before the end of the Fiscal Year, 71 were approved and 25 denied, for an approval rate of 74%1. The annualized General Fund cost of salaries and benefits for these positions is $3,877,673. An additional five waiver requests were pushed into Fiscal Year 2009, and will be included in our analysis of that’s year waiver process.

So far this year, the legislature has passed 38 new or increased taxes and fees that are budgeted to raise $318.6 million over two years. For historical comparisons, there were 29 new taxes and fees passed in the previous two years. In previous legislative sessions, the low has been 9 in 2003-4 with 20 in both 2001-2 and 2005-6. The majority of tax and fee increases have been passed separately from the budget itself.

The budget for fiscal years 2010 and 2011 passed in June of 2009 and additional legislation passed this year include 38 new or increased taxes and fees that are projected to raise an additional $318 million over the two years of the budget.

A study of the total number of tax and fee increases over the last decade shows a consistently high number with the exception of the 2003-2004 legislature. However, the current total for this legislature at 38 is nearly double the 19.5 average of the last four budgets.

Charlie Arlinghaus takes issue with a recent attempt to claim that the spending increase in the current budget can be described as a cut by one measure. He explains how intellectually misleading the report is and where the error occurs.