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NH's balance: A budget law benefit

July 27. 2011 10:44PM

Why is Washington locked in a vigorous fight over the debt ceiling while New Hampshire legislators are back home doing whatever it is they do in their private lives? Simple: New Hampshire law requires the state budget to be balanced.

The state does borrow money. It issues bonds for construction projects. But it doesn't borrow for operating expenses. Well, it didn't until the last budget, when Gov. John Lynch did exactly that with some creative budget tricks, setting a bad precedent that might have led to even worse borrow-to-spend budgeting in the future. Thankfully, legislators rejected that approach this year and created a budget that balanced in reality as well as on paper.

New Hampshire's balanced budget law has been critical in keeping the state from following Washington's lead and going deep into debt so politicians can provide more services than the state can afford. In the last few budgets, Gov. Lynch and Democratic legislators did manage to spend more than the state took in. They did so by inflating revenue estimates. That made the budgets look balanced on paper when in fact they spent more than was coming in.

To keep the spending going, they raised taxes and fees, claiming that the hikes were necessary to pay for all of the important programs and services on which they had spent so much more money than before. Lynch also cut spending in spurts, leading to a chaotic couple of years in which the budget went up, then back down, then up, then back down.

Legislators put a stop to that fiscal mismanagement this year. The budget they passed was a tough one. It reduced state spending by about 11 percent. But it did so in compliance with state law and with taxpayer demands that the budget be balanced with spending cuts, not tax hikes.

Even with the balanced budget law, politicians have sought ways to spend more than the state takes in. Just imagine how bad it would be if we didn't have that law.


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