By Charles M. Arlinghaus
From the print edition of the Union Leader

Although the State of New Hampshire was prevented from taking what has always been considered private property in the so-called JUA case, it has come up with a clever scheme to pass convoluted rules that it thinks will allow it to transfer the cash to state control as a partial fix to the state budget crisis. In reality, it merely assures the state will again lose in court and rack up large legal fees.

By CHARLES M. ARLINGHAUS
From the print edition of the Union Leader

It’s hard to pick the biggest problem in state government because the most immediate crisis obscures all others. We spend a lot of time focused on the $600-$700 million budget problem we face in January – as well we should – but it keeps us from noticing the slower growing problems that pose a long term threat. One such problem is the state’s debt that creeps slowly along like an invasive species of plant that will eventually choke out everything else if we don’t notice it soon.

Like most states, New Hampshire divides its budget into an operating budget to pay for regular expenses and a separate Capital Budget used to borrow money theoretically for long term expenses like new buildings or other items that aren’t paid off in just one year.

The governor and legislature pay a great deal of attention to the regular budget, at least the general fund portion of it. However, the capital budget is not often the subject of debate and rancor. Generally, people assume we have to borrow money for some capital expenses and there really isn’t much to debate.

By Charles M. Arlinghaus
From the print edition of the Union Leader

I’ve been telling you for months that we have a budget crisis because we spent money we don’t have yet the governor is running around the state claiming he cut spending. Surely one of us is lying, right? Actually, no. The use of a number of clever accounting gimmicks makes calculating spending more confusing than it needs to be.

Governor Lynch will tell people over the next few months that he cut general fund spending by six tenths of a percent. Yet, I’ve been telling people we have a problem because basic state spending increased by $600 million over four years when revenues declined by $100 million. The difference between those two statements defines our fiscal problem.

By CHARLES M. ARLINGHAUS
From the Union Leader

For more than a decade, education funding has been a constant source of turmoil in the Legislature, finally taking a break only this last session. The silence doesn’t mean the problem is fixed but merely that it’s being ignored until it explodes again next year.

For the last decade, each legislature has played a game of mother-may-I with the state Supreme Court. The court decided that the system we had used for the past 200 years or so was now “unconstitutional.” Every two years, the Legislature would pass another plan, it would be challenged, and the court would say “try again.”

From the print edition of the Union Leader

Most state governments continue to hope for a new federal bailout from Washington to save their finances. New Hampshire should hope Uncle Sam puts the credit card away and does no further damage to the state. Federal bailouts have wrecked the state’s finances and represent a hidden problem no one is paying any attention to.

In recent years, New Hampshire staved off fiscal collapse not by making tough decisions but by loans and handouts. One set of bailout money is the source of next year’s budget crisis. The state used $702 million of one-time revenue to prop up its $5 billion operating budget, about 14% of the total spent. That $702 million includes some borrowing and other sources but $359 million of it is stimulus money from the federal government.

To help the 20% of our students we are failing, we should turn to a dead man born 98 years ago and an idea he had fifty-five years ago.

Even in New Hampshire, with one of the best education systems in the country, 20% of our students fail to graduate from high school. In today’s society, that is an economic death sentence. Without at least a high school degree, students will have few economic opportunities, poor job prospects, and little hope for a bright financial future.

Property taxes are annoying and too high. In the typical politician’s quest to use them as a political football, the facts will regularly be ignored. Two things are certain: property taxes go up every year and candidates will try to scare you that their opponents’ plans will “raise your property taxes.”

This year’s version of the same old song was sounded early by Steve Marchand, charging hard to defend Governor Lynch. Steve is a usually quite sensible former mayor of Portsmouth but he frets that John Stephen would cut state spending and cause “dramatic increases in local property taxes.”

You see, John Stephen wants to cut state spending 10% which is dangerous, we’re told. The more noble John Lynch has asked his department heads for 5% cuts. Apparently the night and day line is somewhere between 5 and 10. A mere 5% is fiscal stewardship of the highest order which will lead to a new Golden Age of Camelot. The dreaded 10% is a scorched earth policy which threatens local governance.

By Charles M. Arlinghaus
From the print edition of the Union Leader

In the 1980s, Sen. Warren Rudman taught us the lesson that politicians need externally imposed discipline when dealing with the budget. Our federal politicians need the incentives created by a new Gramm-Rudman law to keep them from bankrupting the country. New Hampshire lawmakers should lead that effort.

Then just as today, the deficit was growing and seemed unsustainable. The deficit in 1983 was 6% of gross domestic product (GDP). Something had to be done. By comparison, today’s deficit is 10.6% of an economy that is more than four times as large as it was in 1983. While a lot of politicians don’t much care about the deficit today, there was widespread consternation in the 1980s.

By Charles M. Arlinghaus
From the print edition of the Union Leader

The first positive budget news in months managed to grab the headlines last week. Yet that one positive tidbit’s struggle against the tsunami of bad news illustrates what a disaster the state’s fiscal future really is.

We were treated last week to the news that revenues for the fiscal year that closed June 30 were just horrible instead of really horrible. During the special legislative session last month, lawmakers feared revenues would be $120.9 million less than the amount counted on to balance the budget when originally passed. The preliminary June revenues bounced up a little and we are currently “only” $85 million below budget.

This week, state department heads submitted capital budget requests that would amount to a 500% increase over the amount they borrowed in the last budget. The request is theater not reality but is representative of the absurdity that has grown to characterize New Hampshire’s budget process.

In the two-year budget adopted last year, legislators approved $133 million of borrowing in what’s called the capital budget. In addition to that, they borrowed $91 million to pay for school building aid and approved another $65 million of borrowing in the so-called budget fix approved in a special session earlier this month.