Tuesday, May 3, 2011

Economic News In Hew Hampshire - Not So Good

Two bits of news aren't helping the economic situation here in New Hampshire.

First, state revenues for the month of April were below projections by about $30 million. That's certainly not going to help with the budget deficit, making this fiscal year's shortfall about $47 million for this fiscal year. That's on top of the existing $800 million deficit from the previous fiscal year. Needless to say, state legislators aren't happy.


"The governor had an opportunity to use responsible and realistic revenue figures like the House budget used, but instead he chose to use numbers that were nearly $300 million higher to hide his greater spending," said Republican State Committee Chairman Jack Kimball.

Over the past four years the governor and the then Democrat majority legislature went on a spending spree, increasing state spending by over 30% over that time, using inflated revenue projections to justify the high spending levels. When revenues fell well below the overly optimistic projections, the governor and legislature failed to address the expenditure problems, instead focusing on trying to increase fees and taxes at a time when most businesses and individuals were struggling to make ends meet. Even with the increases, the state revenues failed to meet projections.

At least the budget for the next two fiscal years are likely to be in balance as the GOP in both the House and Senate cut the proposed 2-year budget by over $700 million, basing it on far more conservative (and realistic) revenue projections.

The second bit of bad news concerns hiring, with over half the businesses in the state planning not to hire any new employees either this year or next year. That doesn't sound like an economic recovery to me.

A number of factors are driving this trend. One New Hampshire businessman explained why he's holding off.

At a meeting attended by about two dozen businessmen and women at the 1st District Congressman’s Manchester District Office off Lowell Street, Gary Brown of Raymond-based www.WebPageDesignUSA.com and The Image Factory said he can’t afford to hire any more staff and is fighting to keep his current 12 employees working.

“I’m at tipping point, where if I hire any more folks, I will have to pay for national health care,” Brown said.

“How an I going to survive? I’m not going to hire,” he said.

This is yet another of the unintended consequences of ObamaCare affecting employment, not just here in New Hampshire, but across the nation.

Other businesses will make do with their present staffing levels, even if work does pick up, preferring to pay for overtime rather than benefits for new hires, or hiring temps on those occasions where they need the extra help.

Other factors influencing hiring include energy prices, something some businesses cannot easily pass on to their customers. So to keep their costs low they won't add staff, offsetting their higher energy costs.

Neither bodes well for the employment picture in New Hampshire. I have a feeling this is also true for many other states as well.

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