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Author Topic: Standard & Poor’s Downgrade New Hampshire - D's blame R's, R's lame D's  (Read 2390 times)
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« on: April 23, 2014, 12:27:10 PM »

Standard & Poor’s has downgraded New Hampshire from 'Stable' to 'Negative' - Democrats blame Republicans and Republican blame Democrats.

From the Union Leader

Bond rating agency hammers NH state credit rating
New Hampshire Union Leader
April 22. 2014 10:18PM

A recent court decision that ruled the state Medicaid Enhancement Tax unconstitutional has triggered a debt rating agency to downgrade its outlook on New Hampshire’s general obligation and state-guaranteed bonds.

The Standard & Poor’s change in its outlook from stable to negative could mean higher borrowing costs for the state, according to Bill Dwyer, the state’s commissioner of the treasury.

“The practical effect of the change in outlook is a potentially higher cost of capital at the time of the state’s next GO (general obligation) bond issue in December; however I believe that sufficient time will lapse between now and then so that the groundwork for a positive resolution will be in place,” Dwyer said in an email Tuesday.

In its 10-page report, S&P pointed to several issues putting pressure on the state’s finances.

“The negative outlook reflects our view of the state’s thin financial position and significantly underfunded pension funding levels, which we believe lowers its flexibility to withstand the potentially large effects of the loss of Medicaid Enhancement Tax (MET) revenue,” it said.

The loss of MET revenues, if the state Supreme Court upholds the decision, would cost the state $185 million in gross tax collections this fiscal year, which ends June 30, according to the report. The general fund budget includes net MET revenues of $72.2 million this fiscal year.

The state’s rainy day fund contains about $9.3 million and “would be relatively insignificant if all or a large portion of the MET was required to be refunded for fiscal 2014 or unavailable in fiscal 2015,” S&P wrote.

In ruling the tax unconstitutional, a Hillsborough County Superior Court judge said the state taxed hospitals differently than other medical service providers.

S&P also said the state pension fund was only 56.7 percent funded, “well below that of most other states, which we believe could result in additional pressure on future budgets.”

Republicans put the blame on Democratic Gov. Maggie Hassan.

Republican State Committee Chairman Jennifer Horn said: “As governor, Maggie Hassan has blocked efforts to rebuild the rainy day fund and has opposed pension reform, putting the collective future of our state’s hard-working public servants at risk.”

“We were warned by our state treasurer in January that without a significant change in policy in regards to our rainy day fund, we could see our credit rating drop,” House Republican Leader Gene Chandler, R-Bartlett, said. “While this is not the sole factor in the ratings change, it does compound the problem and affects our ability to address potentially major issues like what we face with the recent Medicaid Enhancement Tax court rulings.”

The governor, in a statement, pushed for leaders in both parties to work together.

“The Standard and Poor’s announcement reinforces the need for hospitals, providers, legislators and state officials to quickly work together to address the budget and health care challenges posed by the Medicaid Enhancement Tax ruling, a direct result of short-sighted action taken in the FY 12/13 budget,” Hassan said.

Read the full article HERE

Glenn Douglas
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« Reply #1 on: April 25, 2014, 10:08:51 AM »

Can you say state income and/or sales taxes?
Martin Srugis
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« Reply #2 on: April 25, 2014, 04:44:43 PM »

If we are going in that direction because of this, then I am in favor of a sales tax. It effects everyone equally.
With a income tax, we will get a host of exemptions for all sorts of reasons. The political battles for this or against.
The sales tax you can either participate or not! Income tax you have no choice, not with the IRS looking at your political beliefs and pointing a gun at your head.
A sales tax will affect low income voters who now will have "skin" in the game and maybe be leery of increasing the rate. With the income tax, if you exempt, who cares.
Plus the best and New Hampshire way, we hit the tourists as well.

Martin Srugis
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