State budget cuts hit poor and education, speaker tells Milford Rotary

Thursday, February 9, 2012

MILFORD – State budget cuts are putting extensive pressure on local nonprofit organizations and having a major impact upon low- to moderate-income families, particularly when it comes to social services and education.

That was among the points made by Paul Spiess, of the New Hampshire Fiscal Policy Institute, when he spoke to the Milford Rotary Club, explaining what the institute, founded in 2009, does and why it came into existence.

The goal of the institute, he told the Rotarians gathered for their luncheon two weeks ago at the Milford Community House, is to “look at all matters as they relate to state spending and state tax policy and how those measures affect people in the lower 30-40 percent (of income levels) of our population.” The organization will speak to issues affecting those people during the legislative process and provide information to give decision-makers a more balanced view of economic issues.

The problems for the poorest segments of New Hampshire come, he pointed out, in the midst of a recession in which New Hampshire has done better than the base majority of states.

“I think we were, by most states’ standards, very fortunate in the impact” of the recession, he said, citing New Hampshire’s 5.4 percent unemployment rate, compared to the nation’s 9.1.

“We have the fourth-lowest unemployment rate in the country,” he said, trailing only Vermont and North and South Dakota.

The state’s aggregate loss of jobs was 3.4 percent, compared with 4.8 percent nationally, and its median income is $61,000, versus $50,000 nationally. In terms of households, New Hampshire has the seventh-highest median income in the country.

Despite that, the level of people living in poverty is 8.3 percent statewide, and New Hampshire incomes “have been stagnant to downward in the last decade.

And in this state, he said, one in four children is living in “abject poverty,” citing the national poverty income level of $18,000.

“The state has done really well in a very difficult time,” said Spiess, who lives in Amherst and served two terms in the state Legislature, “and yet the impact of our policy decisions has fallen almost exclusively on the lower quarter of our residents.”

He said “the vast majority” of the money cut from the state budget came from social services programs and education, the former cut by about $183 million, or about 5 percent of the overall state spending package.

Aid to community colleges was cut by 36 percent and aid to the University of New Hampshire by 58 percent.

“Now, if you think about education as being instrumental in allowing people to have opportunity to progress in life, then you can see that by cutting our state education budget, particularly those institutions geared toward people who can’t afford to go to high-priced private schools, then I think you can see that we really are beginning to eat our feed corn here,” he said. “And it has long-term ripple effects on people.”

It is because of cuts in social services that local nonprofit organizations, such as SHARE in Milford and the Open Cupboard Pantry in Wilton, are affected.

“When people are getting the support at the state level and that state support dries up, they are going to turn to the local nonprofits for relief,” Spiess said.

In Milford, however, people have tried hard to pick up the slack, he said.

“I’m extraordinarily pleased with the way this community has stepped to the plate to help people during this period of time,” Spiess said. “I think it speaks to the social integrity of the community. I don’t think that’s widely felt throughout the state.”

A major problem facing people in need is the lack of someone, or some group, to represent their interests in Concord, which is where the institute will come in, Spiess said.

“One of the things that we try to do when we look at our responsibilities as a public policy voice is to try to bring to bear facts and figures that people can relate to,” he said.

But tax policy in New Hampshire is a key.

“I worry over the implication that the only way we can solve our budgetary problems is by cutting programs,” Spiess said. “There’s no question cutting programs is part of the equation. The other part is raising revenues. No one in this state is willing to stand up and say there needs to be a balance between the two functions, it can’t be all one or all the other.”

He called budget cuts “an inverse tax increase” on the poor.

“People who are in the social safety net, when we cut services, (they) end up giving up money that has been used to sustain their ability to function in society,” Spiess said.

He said, over time, the institute hopes to be able to engage in a political discussion at the state level about state taxation “and how it can be made to be a positive instrument of economic growth.”

Looking ahead, Spiess said he was optimistic.

“I look at the state revenues on a monthly basis,” he told the Rotarians. “Some are down, but the ones that are important are up: Business enterprise tax is up, which means there’s more hiring. Business profits taxes are up, which means there’s more economic profit. Tourism, rooms and meals (tax) has done remarkably well.”

It isn’t a full-blast launch out of recession, he said, but New Hampshire is again ahead of the nation in terms of repairing the economic damage caused by the recession. Still, it will take another three or four years to recover, he said, before people are re-employed and personal incomes are back up.

“The dip will run from ’07 to 2014 or ’15,” he said. “That’s a long period of time, and it puts a lot of stress on social service organizations.”