The incoming Senate and House have their work cut out for them when it comes to the state budget. The economic downturn, coupled with decisions on the parts of both the Legislature and the Governor, have left a $700 to $800 million dollar hole in the budget. The Legislature, while looking for cuts in other departments, which resulted in hiring freezes and layoffs, increased its own budget faster than the budget overall. Given current revenue forecasts, overall spending will have to decrease. The Legislative Branch, having seen the largest increases, has much more room to cut than other departments. Though the Legislative Branch accounts for less than 1% of the budget, it is crucial for legislators to lead by example

After months of discussion about the exact size of the historic deficit we face next year, the news is filled suddenly with reports of a surplus. Did something change or are we just in the middle of election season? The short answer is things haven’t changed but the easiest distraction from bad news is to ignore it completely. The deficit is still huge. It will dominate the state’s financial future. And, paradoxically, we have a mid-budget surplus for the same reason we face a huge deficit.

The slides from Charlie Arlinghaus’s seminar for policymakers on the basics of the state budget, how its organized, where to find information and how to become your own state budget expert.

Not too long ago we believed in balanced budgets. But that’s all changed. Other states made the tough decisions. We did not. Today the State of New Hampshire is just another failed enterprise hoping the federal government will cut them a check before the debt capsizes that ship.

Borrowing, transfers, and wishful thinking draw the actual spending cuts and tax increases included in a $295 million budget deal unveiled Tuesday, June 8 at the State House.

House and Senate budget writers have crafted a package that includes nearly $72 million in spending cuts, which doesn’t include an $18.5 million increase in HHS spending. It also contains $4.99 million in tax increases, $51.21 in lapses and transfer among state agencies, $65 million in borrowing, and $112.87 million in speculative revenues that may never be realized.

Summary: Using a historical projection model, state revenues can be projected to fall $84.8 million short of the amount budgeted to balance spending in the first year of the two-year budget. Revenues in the second year of the budget are built off the first year’s projection plus 2.2% growth over that base. At that rate of growth, revenues would be an additional $86 million out of balance in the second of the two budget years. The combined revenue shortfall of $171 million is the largest component of a budget deficit greater than $250 million that legislators must resolve to balance the state’s finances.

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 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.