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Another View -- Neal Kurk: A responsible state budget does what it can with what it has

March 19. 2015 6:29PM

WE LIVE in an extraordinary state. Among the “prodigious hilltops” and pristine lakes, we enjoy the beauty and recreational opportunities of the changing seasons. We’re well educated, we work hard, we’re involved in our communities and we care about each other.

But the dynamic economy essential to sustain our lifestyle no longer exists. Our population is growing far too slowly, and it is aging: It’s the fourth oldest in the nation. Our birth rate is well below replacement level, and not enough young people are moving into our state to compensate.

Not long ago, it was very different. In the last quarter of the 20th century, our state’s economy was expanding rapidly. Good jobs abounded, and well-educated families seeking to share in our growth and looking for a good place to raise their children flocked to New Hampshire.

That’s not true today, and we can, and should, do something about it. State government can play a part in this transformation, and the state budget is a place to start.

Over the next three months, the governor and the Legislature will develop the two-year budget. The budget will determine which services the state will provide and how we will pay for them.

Our current budget is about $10.5 billion, with slightly less than half supported by state taxes, and most of the balance supported by federal taxes and federal borrowings.

The governor has proposed a much larger budget. She would expand state services by about $1 billion, increasing the state budget to $11.5 billion. She proposes to pay for this in part by raising our state taxes by $95 million.

Expanding state government is problematic. The more money that comes out of taxpayers’ wallets to support a larger government, the less money taxpayers can spend in the private sector. That puts a damper on business, on job growth and on the economy.

So, the first thing the Legislature should do is develop a budget that will not raise state taxes. The state budget should not harm the state’s economy.

This means we must pay for government from revenue generated by our existing taxes. The expected growth in state tax revenues (and yes, our state’s economy is growing, although far too slowly) should allow the state to continue to provide essential services: public safety, education, health and human services, highways and resource protection, among many others.

Under normal circumstances, these services would continue undiminished. But recent developments make this difficult. First, the federal Affordable Care Act (Obamacare) no longer limits the value of assets, like real estate and jewelry, that one may own and still qualify for Medicaid, the state/federal health care program for low-income individuals. As a result, many newly eligible people enrolled. Second, the state settled two lawsuits, one involving hospitals and one involving individuals with mental health issues.

These developments will cost the state an additional $125 million. If state government is not to harm the state’s economy, spending on existing services will have to be reduced.

That will be difficult. Many citizens testified at recent budget hearings held by the House of Representatives. Some requested additional funding for individuals with developmental disabilities, others wanted to ensure services for victims of sexual abuse and domestic violence, still others sought more and better programs for substance abuse prevention and treatment. Some spoke against the governor’s proposed increase in the cigarette tax and its application to the new electronic cigarettes.

So, why not follow the path chosen by the governor? Why not raise taxes and use the new revenue to satisfy recent developments and meet the requests for expanded services?

Because it would harm our already not-too-robust economy and reduce our opportunities for more and better-paying jobs. We can’t have it all.

The House’s budget will be larger than the current budget, but not as large as the governor’s proposal. A smaller government is the better choice.

Rep. Neal Kurk, R-Weare, is chairman of the House Finance Committee.

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