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July 09. 2013 4:50PM

Charles Arlinghaus: Everyone's OK with budget, but look out


 

Don't believe everything you read about the state budget. It is something that no one loves or hates. It also includes two time bombs that will explode in a few months and release a plague of locusts to consume all political vegetation.

New Hampshire's budget process was difficult this year because we have little experience with government quite so divided. The House and Senate are controlled by different parties and had very different budget ideas. New Hampshire's past experiences with divided government typically involved either overwhelming legislative majorities that ignored the governor or working coalitions of general ideological compatibility.

With polar opposites in each legislative chamber this year, the final product would be a compromise that pointed to the wisdom of Margaret Thatcher. Thatcher, a conviction politician who worked hard for things she believed in, famously derided mythological political consensus: "To me consensus seems to be the process of abandoning all beliefs, principles, values and policies in search of something in which no one believes, but to which no one objects."

Early in the process, members in each chamber trimmed their sails a bit, knowing that what they really wanted would be objectionable to the other side. The political rhetoric pretended there was a wide chasm, but in reality the two budgets to be reconciled spent almost identical dollar amounts on almost identical priorities. They reached agreement with little real difficulty.

Gov. Hassan had attacked the Senate budget, but she was nonetheless fulsome in her praise of a compromise that was as close to the Senate version as peas at the opposite ends of the same pod. The governor penned an editorial that used the word "innovate" only five times — anything under 10 is a sign of her apathy — to praise this budget mostly as a break from the supposedly terrible past. Apparently the last budget (which cut spending) threatened our economy and this rights that wrong.

The last budget was in fact a break from an almost unending stream of budget increases. Prior to 2011, the budget went up every biennium but one in the modern era. The two prior budgets had each authorized total spending to increase by more than $1 billion (increasing from $9.3 billion to $11.5 billion over two budget cycles). But revenues in a recession didn't come close to keeping pace.

The 2011 Legislature cut spending to the point that we spent only what we raised. That was either draconian or common sense, depending on your outlook. One state representative of that year told me "we spent every dollar we had, we just didn't spend any we didn't have."

In total funds, that meant authorizing $1 billion less — $10.5 billion instead of $11.5 billion. The cut in funds raised by and spent from general state taxes (the "general and education" funds) was 6 percent.

The current governor thinks that reduction "undermined our economy and our people," but her predecessor and role model John Lynch thought it was acceptable enough to let it become law, albeit without his signature.

In terms of reversing that supposed catastrophe, the current budget increased spending by $310 million (after the previous budget was dropped by three times that amount). Although the money spent from state taxes went up by 4.2 percent, we'll be at a level below that of four years earlier. Those numbers can be spun as a victory for either side and have been spun just that way for both.

But two big issues in the budget have been delayed rather than resolved. The state didn't adopt an expansion of its Medicaid program, but the budget includes a legislative committee to study the issue. The governor expects the issue to be studied in short order and quickly implemented, not exactly approaching the issue with an open mind, but honest about her priorities (I've been appointed as an outside member of that committee). Expect a big political push for expansion in October.

The other delayed debate is over gambling. Gambling expansion dominated much of the discussion during this year's session until it failed in the House. But the budget includes a committee that will write all the regulations for gambling if it were to happen. The lack of clear regulations was a significant factor in the demise of gambling. Next year's inevitable gambling bill will be a closer battle.

As Lady Thatcher predicted, this year's budget has been one of those compromises that nobody hates all that much. But there are two pitched battles on the horizon that aren't susceptible to a we-both-win solution.

Charles Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free market think tank based in Concord. He can be reached at Arlinghaus@jbartlett.org.


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