New Hampshire’s Budget — A Primer

By Blake Neff ’13

As Oscar Wilde once put it, “Anybody who lives within their means suffers from a lack of imagination.” One institution which will certainly never be accused of lacking imagination is the American government, with its impressive ability to dream up new things to spend money on while only occasionally implementing the taxes needed to pay for them. It’s hardly surprising that most state governments, just like their federal counterpart, find themselves staring down massive budget gaps as revenues fall far short of what is needed to fulfill obligations.

      Sadly, New Hampshire is no different. Although the state claims to have turned a surplus this year, current estimates suggest a budget gap of several hundred million dollars for the next budget, no small sum for a state of just 1.3 million residents. The state’s attempts to deal with upcoming shortfalls have triggered a public response from many different sources. One such response is the Granite State Fair Tax Coalition. The group, which seeks to raise awareness about the state’s fiscal issues and promote more progressive taxation, is sponsoring a series of panel discussion entitled “Putting Our Money Where Our Mouth Is: New Hampshire Priorities and Budget.” One such panel was held on October 5 at the Rockefeller Center.

      When the author was assigned this piece (as the only person foolish enough to feign interest in state budgets at a Review meeting) he found it quite interesting that the College was sponsoring the event at all. The vast majority of students seem completely detached from state politics that do not involve alcohol, and even for the remaining twelve people who do care about local issues, budgetary matters probably rank just above occupational licensure laws in terms of interest. The author supposes that events like this exist more for the general community than the student body.

      Such suspicions were quickly confirmed upon arrival at Rockefeller 3. A quick glance around revealed only a handful of people manifestly under the age of 30, and the only other students appeared to be covering the event for The Daily Dartmouth. So much for youthful civic engagement, it seems. Perhaps a few more could have been drawn by free pizza.

      The panel consisted of three people able to provide a range of perspectives. Steve Norton, the executive director of the New Hampshire Center for Public Policy Studies, was present as an expert on the nature of the state’s fiscal situation. Brian Walsh, Chairman of the Board of Selectmen in Hanover, was able to comment on the relationship between the state budget and local communities. Lastly, Merilynn Bourne, the Executive Director of Listen Community Services, a private non-profit, provided her perspective as one who works actively with the state’s poorer residents who are heavily affected by state budgeting decisions. Serving as the panel’s chair was Dartmouth professor Richard Winters, three-time chair of the Department of Government.

      The panel opened with a brief PowerPoint presentation by Norton, who outlined the situation of the state’s budget. He demonstrated that those taxes which existed in 1988, totaling $543 million in revenue, have only grown to about $900 million today. State spending has grown far faster, though, so the state has implemented a variety lesser taxes to keep pace. Nevertheless, with tax receipts down and no more federal stimulus money immediately forthcoming, the state faces a budget gap that could reach as high as $600 million over the next two years (New Hampshire has biannual budgets).

      The causes for the budgetary imbalance are the same culprits seen in bankrupt statehouses across the nation. The state’s Medicaid expenditures grow by millions every year, as do funds allocated to various retirement programs. Special education and aid for the building of schools have both received significant increases, as has the prison system. Without reforms, these costs will keep rising and continue to crowd out other parts of the budget, such as investment in infrastructure.

      Following Norton’s presentation was a brief speech by Walsh. As a Hanover selectman familiar with how towns interact with the state government, Walsh focused on how the state’s current reaction to the growing budget gap has been harmful to communities. He argued that, due to the great aversion by legislators towards tax increases, the state has simply cut aid to communities and forced local government to pick up the slack.

      The result has been a statewide increase in property tax rates, including a 2.5% boost in Hanover.

      Walsh pointed out that forcing local communities to raise taxes is essentially a “hidden tax boost,” and one which disadvantages those with lower incomes. Poorer individuals struggle to keep paying taxes on whatever property they have, while poorer communities must contend with a weak tax base from which to draw money. Counties are a source of hidden costs as well, as an overloaded judicial system and decreased mental health aid increases the strain on county jails.  Although Walsh did not provide any direct solutions to the problems he outlined, he did make a reasonably solid case for how a lack of true solutions in Concord has damaged communities.

      While the first two speakers did a solid job of raising awareness for the various issues faced by the state, the last speaker, Bourne, felt rather out of place.

      Instead of discussing the nature of the state’s budget shortfall or potential solutions, her comments were essentially an emotional tract pleading for more welfare in the state. Instead of general statistics, she cited anecdotes such as the colossal tragedy of a 25-year-old single parent who was unable to receive food stamps with an income of $25,000, since that is only 175% of the poverty rate and food stamps are supposed to be available up through 185%. She also implied that New Hampshire may only have a low poverty rate because the state’s poor people flee for more generous states, which they then presumably infect with poverty. While admitting that she was “not an economist,” Bourne claimed that the fear and insecurity from moderately reduced welfare programs would translate into drug abuse and crime, and argued that the state should raise taxes and alter the tax structure in order to increase equity. Whatever the merits of this argument in general, Bourne unfortunately did not relate it to the state’s overall budget issues, or provide any comparison of the value of welfare spending as opposed to spending on schools or infrastructure.

      Following the prepared remarks, there were some questions both from Professor Winters as well as from the audience. Unfortunately, these questions did not really add much to the discussion. When prompted by Winters to suggest solutions to the problem all claimed existed, they focused on issues that seemed rather superficial.  Norton emphasized the need to analyze more closely how worthwhile different types of spending are, while Bourne merely reiterated her belief in the need to shore up social programs. Only Walsh came close to outlining a true path towards improved fiscal health, indicating support for a new statewide tax (possibly one on income) to relieve the burden on local communities.

      While improving public knowledge about the budget process and improving transparency about the budget are both admirable goals, the panel suffered from the same problem that all “awareness-raising” campaigns do: a lack of concrete solutions to the stated problem.

      Aside from Walsh’s suggestion for a new statewide tax, nothing in the panel pointed towards a concrete solution to the problem of New Hampshire’s structural deficit. The supplementary materials on an outside table weren’t much better. The fundamental problem for achieving change in any situation isn’t convincing people a problem exists, but rather providing a clear path to a solution and motivating people to pursue it. The Granite State Fair Tax Coalition may greatly increase awareness of the state’s growing structural deficit and overreliance on property taxes, but it will struggle to achieve any change if the best advice it can give is for voters to “ask candidates and office holders for real solutions” or “host a discussion group,” as one pamphlet suggests. Problems are not fixed by stewing over them, but by offering a true plan of action which voters can urge politicians to support.

      Perhaps the best hope that the panel had for effecting change, then, is that they can sway those politicians who were actually present in the audience. Several members of New Hampshire’s massive 400-member House of Representatives were there, and it’s reasonable to assume that a similar situation will occur at other GSFTC events. If these officeholders can be convinced to make a legitimate effort towards fiscal restructuring, New Hampshire may avoid a major budget crisis like those which have brought states like California to the brink of ruin.

            If not, the efforts of the GSFTC may be little more than sound and fury, signifying nothing.