Charles Arlinghaus: Why Hassan's spending will look similar to O'Brien'sCHARLES ARLINGHAUS
December 11. 2012 6:42PM
Budgets always involve choices. This year's choices are very different from the political rhetoric that has been thrown around for the last year. Far from restoring any previously made cuts, the new Legislature and governor can't afford the current budget and will have to find additional cuts, not additional spending. Every policy wish competes against every other policy wish, and there is money for none.
Going into the budget season, lawmakers of all stripes engaged in a hopeful discussion of what spending cuts they would like to "restore." The two most common mentions on the campaign trail were restoring the university system to its previous levels and increasing hospital uncompensated care payments that had been cut.
This is wishful rhetoric that is sadly divorced from reality. In recent speeches, I've been saying that we have enough money next year to merely do what we're doing today. Nothing more. In fact, this too is a wishful exaggeration. Reality is less optimistic than I am.
The government's preliminary estimate is that in the next two-year budget cycle, taxes and fees will raise about $100 million more than they will in the two years that end in June, 2013. However, the estimated maintenance budgets are $372 million higher.
Because the costs of so many things (salaries, health care, debt service) go up, we're a few hundred million short of being able to pay for the same services we have this year. This helps explain why the new governor asked her department heads to prepare a budget at 97 percent of the current year's authorization (or roughly equal to the first year of the current budget). If every department head responds to her request, the two-year total will equal last budget's two-year total.
Debt service is going up by $17 million, and we have to pay it (after a historic jump in borrowing from 2007-2011). "Restoring" the university system to the level it enjoyed prior to the last budget would cost $100 million over two years. Restoring some portion of hospital funding could cost another $100 million.
Additions to the state's building aid program have been suspended. The revenue sharing associated with the rooms-and-meals tax is scheduled to go up by $15 million under current law. Special education aid, which for some ridiculous reason the budget calls catastrophic aid, is supposed to be $22 million higher in the next budget. Land conservation (LCHIP) is scheduled to come back at $4.5 million.
Some of the items in the preceding two paragraphs are included in the "maintenance budget," and some aren't. If we funded all of them and the projected increases to pay benefits and everything else, we'd need an additional $450 million. We will have only an additional $100 million.
Every Legislature sets priorities. The last Legislature brought spending and revenues into line. Every part of government was cut, but not equally. Because the budget passed in 2009 included a host of unusual measures, comparisons are nearly impossible, so I'll compare to 2008 to suggest the priorities the last Legislature set.
It passed a budget that was 11.4 percent lower in 2012 than in 2008. But the budget can be divided roughly in two halves. The Health and Human Services part of the budget, the part that includes programs for the most vulnerable, declined by just 3.8 percent while the rest of the budget (all the other departments of state government) declined by 17.5 percent. Even within HHS, there was a difference. Spending in the division serving people with mental illnesses ("behavioral Health") and the one for developmental disabilities actually increased from 2008-2012, while spending in the rest of the department declined.
With so many hoping for so much more funding, but very little available, it will be important to remember that every addition to the budget will require a cut somewhere else. Hospitals and the university system have generated a lot of sympathy in the last year, but what about special education? Will we freeze aid to cities and towns again?
With so many competing priorities, the governor and Legislature will have to make choices. I suspect they will resemble the choices made two years ago and that Maggie Hassan's priorities will look a lot more like Bill O'Brien's than many people anticipated.
Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free-market think tank in Concord. His email address is email@example.com.