Senator Odell is Chairman of
the Ways and
Means Committee, and
member of the Energy, Environment and Economic Development
Committee; Finance Committee; Citizens Trade Policy
Commission; State Park System Advisory Council; and Comprehensive Cancer Plan Oversight
District 8 towns: Acworth, Alstead, Charlestown, Claremont,
Gilsum, Goshen, Langdon, Lempster, Marlow, New London, Newbury,
Newport, Roxbury, Stoddard, Sullivan, Sunapee, Sutton, Unity,
Walpole, Washington and Westmoreland.
The economy is on everyone’s mind. Legislators earlier this month were offered a high profile briefing on the national, regional and state economic outlook.
David Wyss, the chief economist for Standard and Poor’s led off the presentations. He pulled no punches. We have been in the longest and deepest recession since the 1930’s and he expects it will take four to five years to see our employment levels back to where they were before the recession. That is terrible news for those unemployed or newly entering the workforce.
Housing is a critical sector for the nation. Today, there are too many houses selling at prices too high for buyers. Mr. Wyss suggested builders were building houses too expensive for the people to buy based upon their income. But, with all the mortgage tricks, it was possible, as we all know, for purchasers to buy a house too pricey for their income.
Now there are hundreds of thousands of those high priced houses on the market with few buyers. The impact according to Mr. Wyss is that across the country there will only be 600,000 new houses built this year. That is the lowest number in decades. It takes 1.2 million new houses each year just to take care of population increases.
In summary, David Wyss thinks we are passing out of the recession but that it will be a long climb back to where we were in 2007 and along the way more economic pain for many Americans.
Robert Tannenbaum from the Boston Federal Reserve Bank highlighted New Hampshire as doing better in nearly every category, including unemployment, than other states in New England.
Legislators often hear from Ross Gittell of the University of New Hampshire. He is the forecast manager for the New England Economic Partnership. Some of us had heard him speak a week earlier when he addressed our state’s tax structure.
He noted that in this recession unemployment in New Hampshire (and Maine) is less than the national average. Interestingly, he pointed out that in the prior two recessions, the decline in employment in New Hampshire and New England was greater than other parts of the country. He said the recession caused by the savings and loan debacle of the 1990’s saw New Hampshire unemployment exceed 10 percent.
In summary, he forecasts peak unemployment will hit New Hampshire in 2010, employment will start to grow again about a year from now but that jobs will grow slower here than in other parts of the country. Housing prices are expected to be flat until 2011 even as sales pick next year.
It took nearly three hours for the presentations and question period. And much of the information and forecasts are similar to what you hear on the news. But it is helpful to those of us on the finances committees in the legislature to broaden our perspectives as we look to future tax and spending policies for New Hampshire.
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How is the economic situation impacting state revenues?
The weak economy continues to drag down revenue measured against budget projections. In October, for example, the budget called for revenue of $216 million. Actual receipts were $204 million for a shortfall of $12 million. While that is not good, it means we were off about 5 percent. Last year, month after month, we were off by more than 10 percent so revenues may be starting to improve.
The brightest spot for many of us was the $8.1 million in revenue from the real estate transfer tax. The budget called for $8.1 million, too. This is the first month in two years that real estate transfer tax revenue met the budget goal. We will see if it is a trend.
Most of the other revenue sources were off again. In aggregate, for the period July 1 through October 31, the budget called for revenue of $623 million. Income was $585 million leaving the state short by $37.7 million.
While $37.7 million vs. a two year general and education trust fund budget of $5 billion does not seem all that big, just think if that trend holds for the next two years. The deficit, budget against actual revenue, would be a whopping $226 million. Even after all the cuts already made to balance the current budget, something more would have to be done to cover a $226 million shortfall.
State government is no different than a family that has fallen on tough economic times. We have to do things differently. We have to do less. We have to be prudent in our spending. And we cross our fingers that the economy, which impacts us all, is truly on the mend. The economists told us it was. Let’s hope they are right.
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For those following the study committee looking into the closing of the Claremont, Colebrook and Milford District Courts, committee chair, Representative Peter Leishman (Peterborough) has scheduled the next meeting for Thursday, Nov. 19 at 10 a.m. in room 212 in the Legislative Office Building. He and I will report to the other committee members who were unable to attend the public meetings in each of the affected towns. The next step will be discussions with state officials and committee members and a vote soon on the committee’s recommendations to the legislature on the court closings. All committee meetings are open to the public.
New Hampshire State House
107 North Main Street
Concord, NH 03301-4951