Op/Ed: The $800 Million Budget Deficit Myth
State Rep. Cindy Rosenwald takes aim at what she sees as Republican budget mythology.
By Rep. Cindy Rosenwald, D-Nashua
For nearly two years now, Republicans in the State House have been telling a favorite story. They have told it so often that it has taken on the aura of sacred truth. The story goes that when the Republicans swept into power in 2010, they, and only they, were able to finally balance the state budget and correct an $800 million deficit left by the Democrats.
Republicans love their sacred story, and I am sure many of them believe it. The problem is, this story is not a sacred truth; it is a myth. The actual truth is much more pedestrian: biennial budgets are always balanced, and there never was a Democratic deficit of any size. In fact, if one looks at the numbers, Democrats left the state with a surplus at the end of the most recent biennium.
Let’s look at this budget deficit story a bit more closely. The Democratic budget, which ended June 30, 2011, was balanced. Not only did the Democratic majority not leave a deficit during the worst recession in most people’s memory, we actually left a net surplus of $11 million, which the House wanted to put in the Rainy Day Fund this year. Leaving a small surplus at the end of a difficult budget period looks like good fiscal management, doesn’t it?
So if Democrats leaving the state budget in good shape with an $11 million surplus is the truth, how did the Republicans turn the reality of the Democratic surplus into the myth of the Democratic deficit? Well, the answer lies in the additional federal stimulus money that flowed into New Hampshire for two and a half years through the American Recovery and Reinvestment Act.
This extra money, $802 million in total, helped maintain essential safety net programs for vulnerable residents hit hard by the recession. The federal money was one-time assistance. The Democratic majority knew all along it would not continue, and that budget cuts would have to be made during the following biennium so that there would not be a deficit. There never was a carry-forward loss; the Democrats never left the state with a deficit. Remember, there was actually an $11 million surplus left by the Democratic majority.
So the Democrats’ deficit is a myth. It makes a good story, but it just isn’t true. What is true, however, is that the Democratic budget surplus is being used to help erase a deficit in the first year of the Republican budget.
The story here is that the Republican leadership in the House insisted on cutting the tobacco tax by 10 cents a pack, ignoring testimony that this tax cut could lead to a multi-million dollar state revenue loss. The cost of cigarettes never dropped for the consumer, but cigarette companies gained a huge subsidy from New Hampshire’s tax payers. In fact, this corporate welfare has led to the state’s cigarette tax revenues falling off almost $20 million so that cigarette companies could increase their profits.
Governor Lynch will be able to apply the surplus left by the Democrats to erase the deficit built into the budget by the Republicans so that they could give a huge tax break to cigarette companies. Who can blame the Republicans for not wanting to tell this part of the narrative? No wonder they stick to the other story.
Everyone loves a good tale, but educated voters look beyond myth for the true story. The truth is that there never was any deficit in the last Democratic budget. The real Democratic legacy was a budget surplus that erased a potential deficit created by the Republicans.
(Representative Cindy Rosenwald of Nashua is serving her fourth term and is a member of the House Finance Committee.)