Reduced revenues mean taking money away from our most fragile citizens

TAXES

There is a persistent belief in some circles that to lower taxes is to bring in more tax revenue. To follow this reasoning to its conclusion, maximum tax revenue would be achieved with no taxation whatsoever. The philosophy dates inauspiciously to a curve drawn on a cocktail napkin in 1974 by an economist named Arthur Laffer. Laffer is an important figure, as he can be thought of as the father of budget deficits and the federal debt.

Despite the state budgetary hit from the Covid-19 pandemic, some in Concord are interested in testing Laffer’s curve again. Tax cut proposals abound. The biggest-ticket item is lowering business taxes, with the state budget taking a projected hit of $138 million over four years.

Let’s assume, just for the sake of argument (and empirical logic), that lowering taxes does not bring in more tax revenue, and that past instances where New Hampshire tax revenue has increased following tax cuts have been attributable to factors such as a red-hot economy. How, then, would we offset lost revenue?

The answer, based on past examples, is undesirable: By socking it to property owners, through the nation’s thirdhighest property tax (only fractionally behind budgetary basket case Illinois), and by ignoring Medicaid costs — thereby widening the worst gap in New England, if not the nation — between care costs for the state’s medically indigent clients and state payments.

The latter option, particularly, would be especially cruel as we work to recover from the Covid-19 pandemic.

The pandemic has left the Medicaid providers I represent in the most financially precarious position they have ever been in. Gone is the hope inspired by the last bipartisan budget adopted by the General Court and Governor Sununu, which recognized years of Medicaid funding neglect through a down payment of 3.1% Medicaid funding increases.

The governor’s welcome announcement in his 2020 State of the State Address that he wanted to continue to address long-term care challenges was quickly overshadowed by the terrible pandemic that followed.

Governor Sununu deserves credit for utilizing the federal funds the state received to address the pandemic in many ways helpful to long-term care. The state stepped up to supply personal protective equipment when it was nearly impossible to find. As late as last July, we were reportedly one of the just seven states conducting staff testing in nursing homes (and we started in April). Grants were made available to providers. A workforce stipend was provided for those working on the front line with the state’s Medicaid clients. Robust weekly communication has occurred between state epidemiologists, the Department of Health and Human Services and providers.

It is not the fault of the state that all of these measures cannot remediate the extraordinary financial hit that long-term care providers have taken (and it debases the memories of those lost to the pandemic to suggest the state was culpable for lost lives).

Going forward, it’s hard to even quantify what Medicaid funding increase could prevent providers from sinking. We are going to need more federal help and lots of it. But the first rule of legislating in Concord must be to do no harm. Let’s be sure not to take money away from our most fragile citizens in a fragile care system, an outcome that the Business and Industry Association warned against in its statement of legislative priorities.

Let’s create New Hampshire opportunity by reversing the daily net exodus of thousands of New Hampshire healthcare workers across the border into Massachusetts.

Brendan Williams is president and CEO of the New Hampshire Health Care Association, which represents most of the state’s nursing homes and many assisted living facilities.