NH’s New State Budget is Imperfect but Plenty Good Enough

By: D.J. Betterncourt – July 2013

One of the most intriguing questions for New Hampshire that emerged out of the 2012 elections that produced a Democrat controlled House of Representatives and Governor but a Republican controlled State Senate was whether all sides would be able to find common ground on the next state budget and if so what would that budget look like.

Last week, New Hampshire got its answer when Governor Maggie Hassan signed the 2014-2015 operating budgets into law after several months of intense negotiations. Most surprising, approval of the budget received near unanimous consent from both the House and Senate. Both sides heralded the budget as a masterpiece of bipartisan cooperation and the Legislature now heads into summer and fall recess with their most consequential task complete.

Despite the good feelings of the political participants, the question still must be raised: is this a good budget? The numbers present a somewhat mixed answer. Make no mistake, no budget is ever perfect. Unless you have intimately experienced the tough choices, compromises, and emotion involved in building a state budget it is hard to fully appreciate its difficulty. While the 2012-2013 budgets, which I helped to craft, responsibly arrested a $900 million budget without new or increased taxes, it was painful and subjected legislative leaders and budget writers to harsh criticism.

However, as difficult as that process may be New Hampshire legislators are forced to do their job. As my friend and former House Chief of Staff Greg Moore reminded us in last week’s Union Leader, “Unlike the way things work in Washington…in Concord our legislators are required [by law] to pass a balanced budget. That means that legislators can’t simply put off tough decisions.”

So what are the numbers and bottom line conclusions? The 2014-2015 operating budgets spend approximately $10.7 billion and, thanks to Republican State Senators, include no new or increased taxes. By comparison, the House originally proposed an $11 billion budget while Governor Hassan originally proposed an $11.1 billion budget. The State Senate stood strong against extravagant spending or including any new or increased fees or taxes in the new budget and their position won out over the House and Governor Hassan who sought to increase a number of taxes and delay several favorable tax changes to small business.

Importantly the new budget is built on a foundation of mostly conservative revenue projections of how much New Hampshire will grow economically and receive in tax revenue over the next two years. As Moore points out, “while predicting how the economy will perform 24 months from now is always a crapshoot, the wise budgeting strategy is to take a conservative outlook on spending and not let the desire to grow government drive the estimates.” This was successfully accomplished and those aspects of the budget represent a significant victory for fiscal conservatives.

But there is some cause for concern. The next budget spends $219.9 million or 8.5% more than the previous 2012-2013 budgets. As a staunch fiscal conservative that increase is alarming, especially considering that neither our state nor national economy has grown by 8.5%. However, as the conservative Josiah Bartlett Center for Public Policy highlighted in their analysis of the new budget, the majority of that spending increase is paid for by the nearly $57 million from the surplus generated by our 2012-2013 budgets. While it would have been preferable to use that surplus to cut taxes on hardworking Granite Staters or replenish the state’s Rainy Day fund, it is difficult to characterize that spending in the new budget as reckless.

While all sides walked away from the table with an agreement, no one achieved everything they wanted. Governor Hassan failed in spectacular fashion to include expanded gaming in the budget; the House failed to increase the gas tax or get immediate expansion of Medicaid under Obamacare; and the Senate was forced to spend more than they were truly comfortable with. While all sides presented a united front in praising the final result, there is no question that this budget was a hard fought compromise.

On balance, this budget is as good as fiscal conservatives could have hoped for with a big spending liberal Governor and House. Were it to be given a letter grade, it would be a solid “B” and State Senate Republicans deserve much credit for good defense and holding the line on taxes and spending. Their position won far more often than it lost. The new budget is imperfect but it is plenty good enough.

 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 a special education academic assistant and is the Volunteer Coordinator at the Salem Animal Rescue League.