Demystifying NH’s Budgeting Process

By: DJ BettencourtApril, 2015

New Hampshire’s budgeting process can fittingly be compared to a nine-inning baseball game. The governor bats lead off by asking their department commissioners for proposed revenue estimates and expenditures for each department in state government. With that information, the governor and their staff will begin putting their final budget together which is then presented to the legislature. This process is the first and second innings.

In the third and fourth innings, the governor’s budget is turned over the House of Representatives, specifically the Finance Committee. Simultaneously, the House Ways and Means Committee begins crafting their own set of revenue estimates to justify spending appropriations. Ideally, the Finance Committee will wait to finalize spending commitments until they have accurate revenue estimates. After all, how can you determine how much you are going to spend until you know how much money you have? Once the Finance Committee has made its changes, the budget then moves to the full House of 400 State Representatives for approval.

In the fifth and sixth innings, it is the State Senate’s opportunity to make changes to the budget that was first proposed by the governor and has since been amended by the House. Their process is the same as the House, except there are only 24 Senators who must do the same work that was shared by 400 House members. No easy task.
Unsurprisingly, throughout this process, disagreements emerge on spending priorities and taxes. It is inevitable that the House will have different priorities than the governor and the Senate will have different priorities than the House.
These differences bring us to the seventh inning, once the House and Senate have passed their versions of the budget they get together to work out their differences. They form a Committee of Conference that is comprised of four House members and three Senators. This inning involves intense and at times heated negotiations and compromises.
Once the Committee of Conference has reached complete agreement on a budget, it heads to the eighth inning. The budget goes back to the full House and Senate for their approval.

Finally it reaches the ninth inning, when the governor can close out the game by signing the budget into law or sending it into extra innings with a veto.

Unlike the persistent gridlock in Washington, DC, New Hampshire always operates under a budget and state law requires that it be balanced. The budget baseball game is always played in the Granite State. There are no rain delays or strike shortened seasons.

So what inning is the 2015 budget baseball game? Governor Maggie Hassan led things off in February with a budget that proposed to spend $11.5 billion, a more than six percent increase in spending from the current budget, which spends $10.5 billion. It also included several tax increases. Unsurprisingly, the GOP-controlled legislature was eager to make some taxpayer-friendly changes.

After an intense month of making adjustments, the House passed a budget this April that rightly eliminated Hassan’s tax increases and shaved $327 million off of her reckless spending wish list. However, according to Charlie Arlinghaus, a budget expert at the Josiah Bartlett Center for Public Policy, general fund spending (funding strictly paid for with state taxes) would increase in the proposed House budget from $2.514 billion in the current budget that ends on June 30 to $2.683 billion in the next budget, an increase of 6.7 percent. Overall, the House budget spends $11.2 billion.

As a fiscal conservative, the spending increases in both the Hassan and House budgets are troubling. They both increase spending faster than the rate of inflation and significantly more than the current $10.5 billion budget. The House also foolishly raided the Rainy Day Fund to facilitate further spending.

However, I’m not ready to angrily leave the ballpark when the game is only in the fourth inning. It is an undeniable fact that no state budget in New Hampshire history has ever been perfect or universally approved.

Despite its flaws, the House got the process headed in a positive direction by eliminating Hassan’s tax increases and extravagant spending proposals. It is also built on realistic revenue estimates.

The budget is now in the hands of the State Senate, where taxpayers can hope further cost savings can be found. It is also promising that a top priority of the Senate is the reduction of business taxes. Hopefully by the ninth inning, we will have a true fiscally conservative budget that ensures the state’s fiscal health.

D.J. Bettencourt served as a State Representative in the New Hampshire House of Representatives from 2005 to 2012 and was the House Majority Leader for the 2011-2012 legislative term. He currently works as the Director of Development and Community Relations at the Salem Animal Rescue League and serves on the Economic Development Action Committee in Salem, NH.