CCRC Editorial Section

“The Emperor Has No Clothes”
3-6-09
By Tom Eaton

Now that the shock and awe of Governor Lynch’s budget address has faded and we have had a chance to look at the details of his proposed budget one fact has become very clear – the emperor has no clothes.

No one disputes that John Lynch is a nice guy. However, across the state people are coming to the same conclusion – Governor Lynch’s proposed budget is shell game. Politics aside, the budget is an example of borrowing to cover up for spending, not sound policy. What that amounts to is intergenerational theft.

It’s time to get back to the basics and err on the side if fiscal discipline. We’re not in this huge budget deficit because of the national economic downturn. This past budget cycle, the democratically controlled State House passed a
17 ½ percent budget increase. For reference, the 2003 and 2005 budgets increased by about 3.5 percent which included all essential and non-discretionary spending.  That coincided with the rate of inflation and demonstrated fiscally sound policy.

I this year’s budget, Governor Lynch claims he cut General Fund spending by $40 million dollars. But that’s not exactly true. What he really did was some creative accounting. For example, Governor  Lynch “relabeled” the State Liquor Commission budget so that it is no longer called General Fund spending. This is not a cut it is a name change. In fact, in his budget,  he’s going to increase the agency’s spending from $71 million to $91 million. But with a little creative accounting a $20 million spending increase instead looks like a $71 million spending decrease. That is not sound policy.

In his budget, Governor Lynch also proposes bonding $83 million in school building aid – money that used to be part of yearly General Fund operating costs. The program isn’t going away. The state will still send $83 million dollars to communities for building aid. But with another sweep of Lynch’s magical budget wand – poof – “level funding” an existing program looks like an $83 million spending cut. The reality is that the aid dollars were put on a “credit card” that our grandchildren will end up paying for.

Here’s another creative way to make it appear that you’re cutting state spending – the Governor announced a state agency reorganization. However, is there an actual plan to do this? And if so, where is it? Good questions. And if there was, can a plan of this magnitude really be implemented over the next two years? Another good question. How much could we actually save if there was a plan that could be implemented over the next two years? Who knows? Yet Governor Lynch’s budget includes a $28 million cut in General Fund spending due to reorganization. This is not a way to reduce our obligation going forward and demonstrates a worrisome pattern.

Governor Lynch’s budget proposal is full of these accounting gimmicks.  State spending doesn’t get cut or decrease. Many current costs are shifted or hidden. We all know that we are in the midst of a recession. This is not the time for quick fixes, yet one time federal stimulus money is earmarked for programs we used to pay for within our budget. Switching the funding source for the next two years doesn’t solve the massive budget deficit. When the next budget comes around projects with their costs will still be there, however, the one time funding will be gone and the Democrats’ huge budget deficit will be back and even greater. It is now a game of “kick the can” down the road and hope no one will notice.

Governor Lynch also claims that he kept “overall aid to property taxpayers at least level”.  That sounds nice, doesn’t it? Unfortunately that is not correct. Lynch’s budget increases education funding to cities and towns by $123 million. However Governor Lynch cuts other state aid programs to cities and towns by $166 million. That is not exactly level aid or any relief to property tax payers. This cut won’t be level on a town-by-town basis, which is what really matters to taxpayers. Some communities may see an increase. However most will see a decrease. The net result is a downshift of state spending onto local property taxpayers. That is wrong and harmful to our communities.

Even if Lynch’s cuts and increases were level it would still be bad for taxpayers. What are cities and towns going to do when their state aid is cut this year? Some will have to slash their budgets. Most will have to raise taxes to make up the shortfall. And, again, what are schools going to do in a year or two when their one time stimulus money disappears? Taxpayers will be asked to pick up the tab, of course.

Perhaps the greatest feat of  Governor Lynch’s budget is his attempt to take $110 million from a private, non-profit organization. I know that sounds too bizarre to believe. But it’s true. Lynch wants to take money that belongs to the NH Medical Malpractice Joint Underwriting Association and use it to balance the state budget. Remember this is not government money and never has been. It is money that was paid by doctors and health care facilities to private insurance companies to help keep their malpractice premiums low and it also helps retain and attract physicians and nurses. The money belongs to them. Or at least it used to before we were spent into a huge budget deficit.

The Governor needs to pay for his 11% spending increase somehow so he wants their money. That will require the legislature to change the law of course. But that’s just a minor inconvenience. If the choice is between fiscal responsibility or changing the law to get at someone else’s money which do you think the Democrats leading our state will do?

If the State of New Hampshire can take money from one private, non-profit organization why stop there. It opens the door to take money from any non-profit or charitable organization. That is a very slippery slope to start down.

The bottom line is, Governor Lynch’s budget increases total state spending by $1.2 BILLION over the next two years. So despite all the creative accounting, cutting aid to communities, closing courts and Department of Motor Vehicle offices, and hundreds of layoffs - state spending is actually going up by 11%. More shell games. It is time to get back on track: fiscal discipline, good solid policies, job stimulation. The taxpayers and citizens of New Hampshire should receive nothing less.

Thomas R Eaton

Keene, NH

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