If the state budget were a giant tire, now would be a good time to send someone out for a bigger patch.
Already facing a revenue shortfall of about $65 million one quarter of the way through the two-year budget cycle, state officials will have to plug another $45 million hole now that the New Hampshire Supreme Court has rejected the state’s bid to tap into the treasury of the state’s medical insurance underwriter.
Last week, in a much-anticipated decision, the state’s high court voted 3-2 to uphold a lower court ruling and block the administration from using $110 million of the $152 million surplus held by the New Hampshire Medical Malpractice Joint Underwriting Association.
Previously, a superior court judge ruled the state’s bid represented an unconstitutional taking of private property. This time, the court majority rebuffed the state on the grounds that seizing surplus funds dating back to the formation of the JUA would violate the contract clause of the state constitution.
Originally, the state had intended to use $65 million to balance the previous two-year budget and divide the remaining $45 million equally over the next two years. Last week, however, the Legislative Fiscal Committee decided to withdraw $65 million from the state’s Rainy Day Fund in order to close the books on the 2008-09 budget year that ended June 30.
Reaction to the court’s ruling was both partisan and predictable.
Democratic Gov. John Lynch expressed his disappointment, noted the amount represented less than 1 percent of the state’s $11.5 billion budget and promised that “we’ll manage through it.”
Republicans renewed their criticism of the governor for engaging in such a risky scheme, claimed the budget shortfall is much larger than projected and called for a reduction in spending – not “more taxes, fees and tricky financial gimmicks,” in the words of Senate Republican Leader Peter Bragdon, of Milford.
At the risk of saying we told you so, we thought this budget was headed for trouble even without rolling the dice on the JUA money.
Back in June, with only a week remaining before the start of the fiscal year, we called on lawmakers to “reject this work of fiction, get back to the table immediately and spend the next week putting together a two-year budget more rooted in reality.”
We didn’t believe the rosy revenue projections, nor did we believe the administration had done enough to reduce the bottom line. At a time when governors were recommending budgets showing an average decrease of 2.5 percent, according to a report by the National Governors Association and the National Association of State Budget Officers, state lawmakers were preparing to put their stamp of approval on a spending package that was up slightly from the previous two-year budget.
Clearly, lawmakers from both parties are going to have their hands full trying to maneuver this budget to a soft landing when the two-year budget closes June 30, 2011.
Unless the economy stages a rapid recovery – which seems pretty unlikely at the moment – some analysts believe the shortfall could grow to between $200 million and $300 million by the end of the biennium.
That would be challenging enough even if we weren’t in an election year, which means you can expect the political rhetoric to be hot and heavy this summer in anticipation of New Hampshire voters heading to the polls Nov. 2. Of course, none of that political posturing is going to help one iota in crafting a solution to the state’s mounting budget problems.
Given that, we would encourage our elected officials to put aside the urge to play the blame game, recognize that New Hampshire – like virtually every state in the country, be they led by a Democrat or a Republican – is reeling under the weight of a recession of historic proportions, and pledge to work together for the common good.
That’s one pledge we would like to think everyone can get behind.
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