CONCORD, N.H. – The New Hampshire House passed a budget plan Wednesday that only partially closes a gap that could approach $300 million in the next year.

The House voted 182-173 after five hours of debate to use spending cuts, taxes and borrowing to narrow the gap by $182 million. House Finance Chairwoman Marjorie Smith said the state needs to do as much as it can to close the gap, but does not have to do it all now given the uncertain economy. Smith said further adjustments can be made next year when the revenue picture is clearer.

House Republican leaders criticized the plan for raising taxes and borrowing instead of making deeper spending cuts. Rep. Neal Kurk of Weare, the ranking Republican on the Finance Committee, referred to the combination of budget cuts, tax increases and borrowing the “good, the bad and the ugly,” respectively.

The two chambers have two weeks to negotiate a compromise budget plan.

The House bill makes $37 million in spending cuts, reduces state aid to communities and restructures some state debt. It also raises taxes on some tobacco products – excluding cigarettes and hand-wrapped cigars – as well as insurance premiums. The Democrats’ plan also calls for new taxes on electricity generation and estates larger than $2 million.

The bill also would lay off 30 workers at the youth reformatory in Manchester and require state managers to take 12 unpaid furlough days.

Republicans offered 13 amendments to delete taxes, fees, borrowing and other provisions they opposed. One proposed legalizing video slots – something the House has steadfastly rejected for years. Democrats shot down all but one proposed amendment. Democrats backed deleting a proposal to transform the youth reformatory into a women’s prison and moving the juveniles elsewhere. The prison proposal would be studied instead.

Smith insisted failing to act would be irresponsible because the governor could not raise revenue, leaving him with one main option.

“The governor cannot cut the legislative or judicial branch budgets. But he could cut the executive branch and cut it and cut it and cut it,” said Smith, D-Durham.

Democratic Gov. John Lynch last month presented his plan to the House to close a projected $220 million budget gap by July 2011. The governor’s office said Tuesday it has raised its estimate of the gap to $290 million due to poor tax receipts in April.

The spending cuts would be made to the state’s $3.2 billion, two-year budget supported by general state taxes. The total budget is $11.5 billion once federal and other funds are included. The budget period ends June 30, 2011.

Many senators object to the budget cuts if they could be avoided with gambling revenues. The Senate planned to vote on a video slots bill this week as the chamber’s way of closing the budget gap.

Senate Finance Chairman Lou D’Allesandro, the sponsor of the Senate’s latest gambling bill, criticized the House budget plan for too many tax increases with questionable estimates of how much the taxes would yield.


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