Economy, Budget and Taxes

Another State House Scam

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Ananta Gopalan
- Hampton
Another State House Scam

Mr. Charles Arlinghaus in a very interesting article that appeared in the Union Leader last week reported that the state politicians managed to create a $400M shortfall in the state budget.  It is the same crowd that is telling the citizens of the state that the gas tax increase will only go to fix the roads and bridges!

It seems that in 1991 the legislature passed Medicaid Enhancement Tax (MET) to fix the budget hole by pretending to tax the hospitals while giving it back to them so that the state can get a matching grant from the federal government.  Mr. Arlinghaus explains that under the scheme, if the hospitals paid $200M in MET, the state would divert $100M to the general fund while using the other $100M to reimburse the hospitals under DSH (disproportionate share hospital payments) thereby getting the $100M matching grant from the Feds.  The net result is the hospitals are used as props to extract $100M for the general fund.

As the time went on (in 2011) the state got greedy and it decoupled the MET and DSH resulting in a real tax levied on the hospitals only.  A procedure performed in a hospital was taxed while the same procedure outside the hospital was not.  Superior Court found that tax unconstitutional creating a huge budget hole estimated at $400M.

If a private individual or company was engaged in an equivalent scam it would be prosecuted with potential jail terms to the responsible individuals.  However, the politicians have set themselves up with unlimited immunity to defraud the taxpayers, all in the name of providing government services.  The worst part about it is that they preach to the public about integrity and pass legislation to make sure nothing like that happens outside their own realm.

We need a constitutional amendment to enact a punishment clause.  All laws passed to bind the general public shall be applied equally to the conduct of public affairs.  For example, we need the state legislative leaders and the governor to sign on the budget that they pass under the penalty of perjury.  The CEO and CFO of a public company are required to sign on their company’s annual financial statements under the penalty of perjury.  Why should the state financial statements be exempt?

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