In the article below Mr. Arlinghaus discussed the budget crisis that came to be under Governor Lynch's watch and the Democratic controlled house and senate. On the Union Leader website a democrat claims that republicans always say to cut spending but they never say where.
A number of readers responded with solutions including Jim.
I have a very specific recommendation. Get Concord out of the education business. Return all education funding, spending, and (most importantly) decision making power to local government.
If we don't, Concord will do for education what it has done for every other function it seeks to control: Drive up costs, lower quality, and deficit spend.
Educrats have worked hard over many years (think Claremont, Londonderry, HB927, and "educational adequacy") to place control of education in the hands of the state. This allows for one-stop influence shopping to drive costs sky high.
Every function we can move from state control to local control will save us money. We'll waste billions if the NEA/AFT crew gets its way on this issue.
- Jim Peschke, Croydon, NH
The Union Leader has a great piece by Charles Arlinghaus titled "State borrow-and-spend budgeting is worse than we thought."
THE STATE government's version of a credit card spending spree is the most serious threat to New Hampshire's traditional fiscal stability. The recent effort to borrow $80 million to help address a potential $200 million revenue shortfall has been in the news. Less widely known is that the state's highway trust fund is only balanced in the current budget because it borrowed another $60 million to pay operating expenses.
In general terms, the state budget is required to be balanced. The state may spend no more than it collects from taxes and other revenue sources. The state's balanced budget law also prohibits the use of "bonded indebtedness to fund operating appropriations."
While bonds -- borrowed money -- are used to pay for buildings and similar capital investments over time, the money used to pay for the state's regular budget may not be borrowed.
As we saw last month, the way around that weak law is to merely assert that the expenses paid for are not operating expenses. The $80 million borrowing authorized last month will be used to pay for an expense that has always been in the operating budget, that was included in the operating side of both budgets Gov. John Lynch proposed, and was an operating cost in the budget the Legislature passed. Nonetheless, the borrowing passed.
When the budget was originally passed a year ago, the state balanced the separate highway trust fund budget the same way, putting $60 million of what used to be called operating costs on the state credit card.
In New Hampshire, general state taxes pay for the state's general and education funds. Gas taxes and motor vehicle fees are segregated in a highway trust fund used to pay for roads, bridges and some other costs. This fund was the subject of a very sensible spending cap passed this year.
However, the Legislature wanted to spend more money than it had coming in from fees and gas taxes. The committee report sensibly stated that two options were to spend less money or to raise taxes. That basic premise sums up the whole of state government. Raising taxes or spending less money are the two basic options of all state budgets.
What to do when you want to spend the money but don't want to pay for it? Charge it. An additional $60 million was borrowed to pay for expenses that used to be paid out of the operating budget. The excuse was refreshingly honest. No one tried to pretend that these were really capital costs that should not have been in the budget in the first place. They forthrightly admitted they didn't want to raise taxes and didn't want to cut spending, so they borrowed the money. How very congressional of them.
The practical effect of all this is delaying the pain. Next year's budget promises to be much more difficult than this year's, and the highway budget will be worse.
Although the gas tax wasn't raised, it was shifted around. What is reported monthly as gas tax revenue includes 16 of the 18 cents of the gas tax. The remaining money is for "betterment" and goes into the highway capital fund. The extra penny, about 6.7 percent more, makes it appear that highway fund revenues are increasing, but it's really just a penny moved from one shoebox to another for the same purpose.
Some of us were surprised that revenue was increasing until we discovered the shift. Adjusting for the phantom penny, gas tax collections and usage ended the year a little less than 1 percent below fiscal year 2007. With gasoline prices about 75 percent higher than 18 months ago, a small longer-term drop in consumption will be likely.
In fact, during the last quarter of the fiscal year, the price increases seemed to be finally having an effect, albeit a very modest one. Usage for April, May and June was about 4 percent below the prior year.
The next budget will likely face flat revenues again and legislators will have to replace the $60 million borrowed. The rest of the budget will also be under pressure to replace the additional $80 million it will borrow and the other pressures of the $200 million revenue shortfall, so no help will come from that quarter.
The choices will be the same: cut spending or raise taxes. Putting another $140 million on the state's credit card should not be an option.
Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free-market think tank in Concord.
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