CONCORD – The state’s budget deficit gap has widened to a projected $290 million and thus far state House of Representatives budget writers failed to come up with enough proposed revisions to erase the entire deficit.
Numbers released Tuesday by the Departments of Revenue and Administrative Services predict a $200 million shortfall in revenue this biennium. The governor had estimated revenue would come in about $130 million short. But when adding other factors, such as the loss of money from the Joint Underwriting Association’s medical malpractice fund, the total budget shortfall that the state is facing could be close to $290 million.
“The governor has already put forward a plan to address $220 million, and he will continue to work with lawmakers in addressing this very serious challenge,” said Lynch spokesman Colin Manning.
The new numbers came out just days after the departments released revenue numbers from April that were significantly lower than expected.
“What you saw in April is what’s going to be sustained through the end of this fiscal year and the first half of next year,” predicted Revenue Commissioner Kevin Clougherty.
As of the end of April, the state had taken in $98 million less than expected. The Department of Administrative Services, in a Senate Ways and Means Committee hearing yesterday, predicted that the state would close the 2010 fiscal year in June with a $119.7 million revenue shortfall and would have a shortfall of $79.3 million in fiscal year 2011.
Until Tuesday, the plan to address the budget deficit fell about $40 million short of erasing it. That hole is now predicted at about $110 million. The extensive plan from House budget writers, which is headed for a showdown vote in the House this week, addresses $181 million of the deficit. Though the proposal falls short of solving the deficit, the group hopes it contains enough spending cuts, tax increases and debt reshuffling to demonstrate they’re serious about tackling the problem this year.
Manning said the new numbers show the continuing impact of the recession.
“The recession is something we’ve been dealing with for the past two years now,” Manning said. He said Lynch will continue to work with the House and Senate “on a bill we can support that will work to address this challenge.”
House Finance Committee Chairwoman Marjorie Smith, D-Durham, repeatedly told her colleagues that their job was to make a good-faith effort and not to rewrite the budget.
'We are not coming up with a new state budget,” Smith said. “These are changes we are making to seriously respond to our shortfall.”
Rep. Neal Kurk, R-Weare, the ranking GOP member of the budget panel, said it failed to go far enough.
“There are a lot of things we can do more than this to fundamentally alter the size of state government,’’ Kurk said. “I respect the wishes of the majority, but this just doesn’t do the whole job.’’
The spending cuts in the package – $37 million – are only about half of what Gov. John Lynch proposed last month, Kurk said.
The largest cut Lynch wanted that didn’t make the grade was taking $4 million out of the judicial branch budget. Supreme Court Chief Justice John Broderick led an aggressive lobbying effort that included visits to newspaper editorial boards across the state.
This proposal (SB 450) nonetheless makes dramatic changes: raising two new taxes, raising two others, closing a state prison and moving the state detention center into new quarters, along with laying off more than 65 state workers.
Smith said that when Lynch gave the committee his proposals three weeks ago, she didn’t think the panel could endorse as much as it did.
“We went further than I initially thought we’d be capable of doing,’’ Smith said last week after the House Finance Committee endorsed the plan on a 13-12 vote.
The biggest move the plan makes is to close the leased state Prison for Women in Goffstown and move all inmates to the Sununu Youth Services Center in Manchester.
The Sununu building houses criminally delinquent and truant juveniles. Their numbers have shrunk by half over the past four years, and Smith said the site could be better used as a prison for women.
The juveniles would be moved to two vacant halfway houses on the grounds of the former Laconia State School property.
Smith said she made the proposal because studies have shown that conditions at the women’s jail are deplorable and that options for women to have programs while behind bars are woefully inadequate.
Some prisoner-rights advocates assert the state could be vulnerable to a federal lawsuit lodged against their treatment of female inmates.
Sen. Lou D’Allesandro, D-Manchester, said Smith’s plan is worth taking a look at, but should not be stuck into this budget bill without a public hearing.
“I just think we should take a year to study this,’’ D’Allesandro said.
Rep. Fran Wendelboe, R-New Hampton, said she’ll ask the House to strip that provision next week and replace it with a study committee.
Lynch also proposed to raise $20 million in more taxes, but from a single source: cigarette sales.
Polls of New Hampshire voters show this tax is the most popular among them, since fewer than three in 10 adults smoke.
House budget writers decided against that because of opposition from convenience and retail store owners as well as tobacco lobbyists. They said the move risked losing too much business from out-of-state patrons who wouldn’t bother making the trip over the border, and that Massachusetts joining Powerball had already robbed the state of many customers.
Instead, Smith and allies turned to raising taxes on groups that also aren’t in favor among the working class: owners of insurance and electric utility companies and those who are the heirs to multimillionaires.
Smith said these changes, which are estimated to raise more than $33 million, wouldn’t hurt the business community, as it’s struggling to recover from the worst recession since the Great Depression.
But Kurk said raising taxes in this down economy sends the wrong message to companies looking to locate or expand here once the state is back on the rebound.
D’Allesandro said he would offer his own balanced-budget moves later this week.
Kevin Landrigan can be reached at 321-7040 or klandrigan@nashuatelegraph.com. Concord Monitor Staff Writer Shira Shoenberg contributed to this report.
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