Conservative group says shortfall likely in budget

CONCORD - A conservative think tank says the proposed two-year state budget has a hole in it that could be as high as $1.1 billion and will require a tax hike if lawmakers don't fix it.

The Josiah Bartlett Center for Public Policy said Thursday the budget passed by the House exaggerates expected income, is too optimistic about tax revenues and doesn't address potential education spending. Unless state senators patch the shortfalls, residents will face a tax hike to compensate for the errors, the report said.

"It is a little like going on a shopping spree and waiting for the credit card bill to come," said center President Charlie Arlinghaus. "You owe the money - you're just waiting for the shock of opening the envelope in the mail."

The think tank expects a budget shortfall as high as $200 million in the plan for the two-year period beginning July 1. Arlinghaus also predicted as much as $800 million in unbudgeted spending, in part to comply with a court-ordered overhaul of the state's education funding system.

"There is a growing hole in the New Hampshire state budget. Alone it would require tax increases that would cause undue economic damage," he said. "Coupled with a planned, but undefined, increase in education spending, the amount will be too large to close with small changes to our current tax structure."

In the fiscal 2002-03 budget, lawmakers erred on the side of optimism, prompting six executive orders to cut spending afterward. Arlinghaus does not want the state to confront the same situation again.

"The time to face this budget problem is now," he said. "To paper over revenue problems and hope for the best is to delay the problem until it has to be dealt with in an emergency fashion. Better to make decisions strategically and involve everyone elected to represent us."

You can read the Josiah Bartlett study here: Policy Matters [180 KB PDF]