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Back at the Table Again: Spending and Revenues in 2012-2013

Executive Summary

Date: February 8th, 2011

Calling a recent state budget office pronouncement of a billion dollar hole in the next state budget, the “worst case scenario,” an independent think tank estimates the gap that state legislators will have to close at half that amount.

Calling a $500 million a “likely starting point” the NH Center for Public Policy Studies presents further scenarios – improved revenue collection due to a pick-up in the economy and a likely 5% cut in spending – in which the hole NH budget writers will have to fill shrinks to $132 million.

“The worst-case scenario is based on two underlying assumptions – that spending cuts made in the last biennium won’t be continued, and that the inflationary increase in education spending aid will occur – that are both unreasonable given statements by both the Governor and Legislature,” said Steve Norton, the Center’s executive director.

“Removing those two assumption reduces the size of the budget deficit to approximately $500 million,” he said.

According to the Center’s report, the many worst-case estimates assume that all one-time revenue sources and spending reductions used to balance the 2010-11 state budget must be replaced in the 2013-13 budget.

However, as the report points out, legislative changes adopted last spring significantly lowered the use of one-time monies on which the worst-case predictions are based. An example, said Norton, is the way that the state used $160 million in federal education stimulus funds in 2010, meaning that the state has already filled that gap on its own in 2011. “One could reasonably argue that the 2012 budget does not have to find that $160 million,” he said.

“We’re not calling a $500 million budget gap good news,” said Norton, “however, what we are trying to introduce into the budget debate is a realistic assessment of the state’s fiscal picture to give legislators a clear sense of the boundaries they are likely to face.”

Report File

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