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Delegation has used fund balance to create artificially low tax rate

To The Daily Sun,

Budget time is here again in Belknap County. The delegation, acting as the Belknap County Convention, has the final say-so. The Board of Commissioners advise, the delegation appropriates. But prior to their final county budgetary decision, the delegation has participated as legislators in Concord in decision-making that significantly impacts the county budget. There they decide how much in county taxes will go to pay the non-federal share of Medicaid for needy seniors from the county. This has nothing to do with county nursing home operational costs. Rather it is what is generally viewed as the state's share of Medicaid payments for the care of needy seniors, either in-home or in a licensed nursing home.

Between 2010 and 2016, the Medicaid costs charged to Belknap County taxes increased by about 30 percent from $4,559,024 to $5,894,163, while taxes that the delegation has authorized to be collected from county taxpayers has decreased by 10 percent, from $14,333,387 to $12,963,440.

These curiously conflicting trends have been accompanied by a disturbing trend concerning the Belknap County Fund Balance (hereinafter Fund Balance), or what our state Legislature has long referred to as the "Rainy Day Fund." Simply put, this is the balance left in the county's bank account at the end of the year.

Its primary purposes are:

1. Reduction in unexpected upward spikes in county taxes.

2. To provide a reserve to cover unexpected financial emergencies.

3. To maintain or improve bond ratings to ensure low future interest rates on long-term bond debt.

The Governmental Finance Officers Association, a private non-governmental association of local and state finance officers, which establishes "best practices" in governmental fiscal policies, recommends maintaining a fund balance of at least two months of operational costs, which for Belknap County would be approximately $5.5 million.

From 2011 through 2014, our fund balance was slowly trending down, from approximately $5.3 million to less than $4 million, because it was being used to reduce the amount of county taxes being raised to operate the county. When the amount paid out is greater than the surplus being accumulated, the fund balance decreases. A temporary stop occurred in the downward trend at the end of 2015 (Commissioner DeVoy and my first year on the Board of Commissioners) when the fund balance was increased from $3.8 to $4.5. Reversal of the downward trend was short-lived.

In 2016, with an election coming up and a desire to claim credit for a cut in county taxes, a majority of the delegation, over my objection and that of Chairman DeVoy, dramatically increased the amount to be taken from the fund balance to reduce taxes to be raised. The net effect of this artificially created tax reduction was a 6 percent average decrease in county taxes.

To put this in a more realistic perspective, the decrease generated an average annual reduction of approximately $13 on a $200,000 property. The reduction was artificial in that it was clearly an unsustainable decrease going forward; when the Fund Balance is being depleted at a significantly greater rate than it is being replenished, a day of reckoning is coming. The arrival of that day was dramatically moved up by the imprudent tax-cut decision of 2016.

While the consequence of the cut on the taxpayers was slight, the impact on the fund balance was considerable. From $4.5 million at the end of 2015, the fund balance has dropped to approximately $2.4 million at the end of 2016. Based on essential operational needs and further use of the fund balance in an effort to keep the money raised from the taxpayers at close to the same level as last year, it is projected that at the end of 2017, our fund balance will be between $550,000 and $600,000.

Not only will there be no taxpayer help possible from the fund balance, the amount that will remain is dangerously low in an operational context. In 2016, the Belknap County budget was very tightly calculated. At the end of the year, on the expenditure side, the county ended up with a $300,000 surplus. All should be mindful, budgeting is projecting. It is a matter of prediction, not clairvoyance. With this in mind $300,000 provides a thin margin for error on a $27 million budget. Clearly, no matter what, little, if anything, will be available for taxpayer relief. More frighteningly, an unexpected emergency could produce the need for a supplemental appropriation.

How did we arrive at this near crisis point? On this important question, it is informative to compare our county financing of operations with that of other counties. In 2016, of all 10 New Hampshire counties, Belknap County raised the second lowest amount of money from its taxpayers. Sullivan County, with approximately 25 percent less population, raised $18,478 less than Belknap did from its taxpayers.

The significance of this comparison becomes more apparent when one calculates the per household cost of the county taxes raised in the two counties. In Sullivan the cost was $733.05 per household. In Belknap, the per household charge was $553.27. If Belknap had raised county taxes at the same per household rate as Sullivan, our total raised would have been $18,030,830, 72 percent higher than it actually was.

In addition to the $733.05 collected per household, Sullivan used $2.9 million from their Fund Balance to supplement the money raised in taxes. According to their published audit report, Sullivan County was left with an unassigned fund balance of $5.9 million.

Several points become clear when the last few years of Belknap County fiscal history are examined. First, the county is being required by legislative action to pay an increasing amount each year for the care of our needy seniors. At the same time, our legislative delegation is providing less and less money for actual county operations. At the same time, the delegation has used the fund balance to create an artificially and unsustainably low county tax rate. As a result, the fund balance is drying up. Reality is at the door, and must be faced.

Hunter Taylor
Belknap County Commissioner, District 3

Alton

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Entering office, Trump has an historically low approval rating

To The Daily Sun,

The man to be inaugurated on Friday is suffering from historically low approval ratings for an incoming president. Not only do most Americans view Herr TrumpenGroper unfavorably, they disapprove of how he is building his administration.

A recent Quinnipiac University poll shows his favorability at 37 percent. Washington Post polls put Presidents Obama and Bush favorability ratings at this time in their transition at 79 percent and 62 percent respectively. Obama's current approval rating is 55 percent.In both the CNN/ORC and ABC News/Washington Post polls, only four in 10 approve of the way the present transition is being conducted.

James Veverka
Tilton

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