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  • Staff Photo by Grant Morris

    A sign on Nashua Superior Court informs people that on Tuesdays and Thursdays the Court Clerks office will be closed. Documents can be left with the bailiffs and they will make sure they go to the clerk's office the following day.
  • Staff Photo by Grant Morris

    Boxes for documents left with bailiffs after 1pm on Thursday or Fridays wait to be filled Thursday afternoon at Nashua's District Court.
  • Staff Photo by Grant Morris

    Boxes for documents left with bailiffs after 1pm on Thursday or Fridays wait to be filled Thursday afternoon at Nashua's District Court.
Friday, December 31, 2010

Current recession hitting state budget harder than last

CONCORD – The impact of the current recession on the state budget is much deeper and more serious than the bank failures of two decades ago, lawmakers on both sides of the aisle agree.

Republican State Rep. Neal Kurk of Weare was a member of the House Finance Committee in 1991.

Back then, the state found a mechanism to balance the budget through what came to be called Mediscam, Kurk said.

Federal money the state receives in Medicaid reimbursement is supposed to go back to Medicare, he said.

However, the state used the money instead to balance the budget.

“Everybody thought it was reasonable. It was justified because the state paid out more than it got back,” he said.

New Hampshire, one of the nation’s wealthier states, got back only 87 cents for ever dollar spent on Medicaid, Kurk said. Poorer states, such as West Virginia, got back more than they paid in, he noted.

Still, the Medicaid money helped the state weather the crisis, he said.

Currently, however, the state faces a budget deficit of $675 million, about 13 percent of the general fund. That’s far worse than any deficit in the early 1990s, he said.

Democratic state Sen. Lou D’Allesandro of Manchester agreed. In the early 1990s, D’Allesandro chaired the Senate Finance Committee.

Nationwide, the current recession “is probably a little deeper,” D’Allesandro said. “It’s definitely had more wrinkles in its effect on every aspect of the economic system.”

That’s particularly true in the economy’s inability to create and replace jobs, he said.

Nationwide, unemployment continues to hover at 10 percent, although New Hampshire is faring significantly better at 5.4 percent.

By the early ’90s, New Hampshire’s shoe manufacturing industry was already gone, D’Allesandro said. The electronics industry “didn’t fare well,” but most other industries emerged from it well, he said.

The current recession “put the death knell on the paper industry,” with the last of the North Country mills closing, D’Allesandro said.

“Also, when that stimulus money disappears, you’ve got to replace it. That’s a huge hole,” D’Allesandro said.

Health and Human Services Department numbers show the depth to which this recession has impacted people.

Food stamps are an excellent indicator of economic conditions because people are eligible based on income and the money they have in the bank, said Terry Smith, director of the state Division of Family Assistance.

In May of 1994, there were roughly 24,000 households receiving food stamps, even though the economy has started to improve in 1992, Smith said.

Typically, there’s an 18 month period between when the economy starts to improve and food-stamp caseloads hit their maximum, Smith said.

Today, with the recession, there have been 52,960 households receiving food stamps.

Of course, the state’s population has grown in the ensuing 16 years, “but it hasn’t doubled,” Smith said.

From March of 2009 to February of 2010, the number of cases grew by an average of about 1,000 a month.

The rate has slowed since then, but the number of cases continues to increase, Smith said.

Since June of 2008, the number of households receiving food stamps has increased by 21,130, or 66 percent, he said.

“Caseloads will continue to increase until the economy turns around, and then 18 months past that,” Smith said.

Patrick Meighan can be reached at 594-6518 or pmeighan@nashuatelegraph.com.