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June 10. 2014 11:42PM

Charles M. Arlinghaus: Fixing our real budget problem will take teamwork


 

IN THIS newspaper last week, Department of Resources and Economic Development Commissioner Jeff Rose made a strong plea for his economic development bailiwick. His rationale, however sensible, minimizes a very real problem and is an accidental example of the problem state government faces.

The state may or may not face a budget crisis, depending on whom you believe. In the face of what she thinks is a crisis, the governor imposed the mildest of spending restrictions on every part of state government. Until we know the problem better, she decided to impose the time-honored first step: a freeze on new hiring and out-of-state travel. It doesn’t save much money in the short term, but it’s symbolic.

Very quickly, some criticized the governor because while out-of-state travel is banned, she herself will still go on a long-planned trade mission to Turkey. While there is clearly a political element to the brouhaha, there are lessons to be learned.

Rose, the state’s leading economic development official (and, I should add, all around decent guy and a friend of mine), took to the state’s newspapers to defend the Turkey trip as appropriate and good for economic development. He mentioned that the state budget situation really isn’t very bad.

Commissioner Rose makes a good case for the value of trade to the state’s economy and the utility of missions such as this in developing business. He sounds like a good commissioner who has thought through the strategic value of a trip and can successfully engage in its defense. But, on some level, Rose’s skill is part of the problem.

Every commissioner and director has — usually — good cause for his or her own individual programs. The appeal of the trip or the persuasive power of the guy making the argument ought not influence our opinion. The simple fact is that, despite the commissioner’s attempt to minimize the fiscal turmoil of the state, we face a real problem.

Revenues, which we track on a monthly basis, are more or less right on budget. They are $0.8 million ahead of budget, so therefore some would claim there is no issue. But two short months ago (nine months into the first fiscal year of the two-year budget) revenues were $25.5 million ahead of schedule. The rapid deterioration of revenues is not “mildly troublesome.” Rather it is quite alarming.

And yet revenues are the most optimistic half of the story. State spending is more than a little scary. Remember that to balance this budget, the executive branch must manage spending in such a way that it does not spend $50 million that had been approved. The governor herself told the Legislature’s Fiscal Committee that we are very unlikely to come close to meeting our budget target.

And I haven’t even added in the costs that will get carried forward to next year to pay for the MET lawsuit settlement.

Budget crises come and go in New Hampshire, but there is only one way to solve them: together. I told legislative leaders in 2011 that real spending cuts were necessary, but possible only if everyone shared in the effort. Everyone must cut or everyone will battle to be the exception. That same dynamic should apply to the current situation.

If constraints like travel and spending freezes are to be imposed, they must apply to everyone. The more important and glamorous trips should not be an exception, but an example from leadership of everyone being in the boat together.

Perhaps we were too far down the road to Turkey to cancel (plans already made, etc.). But that’s a different argument than “this project is really important compared to the other boring stuff the state does.” Going forward, all parts of the government, however exciting or well argued, should be part of fixing a very big problem by sharing in the travails.

Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free-market think tank in Concord.


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