Legislative Alert / Rep. Bill Johnson

Winston Churchill is credited with the admonition that “democracy is the worst form of government except for all those others that have been tried” — the best of a bad bunch. I would argue that this same thought can be used to describe the biennium budget passed by the legislature last week. Certainly everyone can find something in the budget (or missing from it) they don’t like. The budget manages to spread the pain across a wide spectrum.

Let’s start with the “dislikes.” Significant layoffs for state employees or the possibility of furloughs. The rooms and meals tax was increased by 1-percent and extended to campgrounds. The Corrections Department and the judiciary received cuts that may jeopardize prisoner safety and a timely justice system. A variety of programs for low-income and elderly households were either cut or reduced. The budget relies on “one-time” money such as the economic stimulus funds and the surplus from the medical malpractice fund. The municipalities will not receive revenue sharing. We pay for state services by “nickeling and diming” the public. There’s no expansion of gambling, but a new 10-percent tax on gambling winnings.

Is there anything good to say about the budget? Well, we will fund school adequacy for the first time and keep the state Supreme Court off our backs. There’s no significant increase in business taxes, resulting in the last minute support of the budget from the Business and Industry Association. The school districts will receive building aid (although you may not like how the state will fund it). There’s no gas tax, although you may not like the fee increases necessary to replenish our highway fund. The budget employs Federal funding in a way to avoid major cuts in medical assistance and increases in social service caseloads. We managed to extend the caps on county sharing of elderly care, avoiding higher local property taxes. There’s no expansion of gambling. Interestingly, this finds its way into both the world “dislikes” and “likes!”

I voted to approve the budget. Like Churchill, I found it to be the best of a bad lot. First, we were dealt with the worst economic scenario in 60 years that has driven state revenue down a major hole, while increasing the demand and necessity for state service much higher. Unlike the private business world that can reduce costs as profits lag, the state experienced a “perfect storm” of sharply falling revenues and rising costs due to higher unemployment, lose of medical insurance and other social service needs.

If the bad news is that the pain was widely spread, the good news is that the wide spread avoids overly penalizing any particular group. We will be able to maintain a reasonable level of state services despite the state of the economy. According to the non-partisan N.H. Center for Public Policy, General Fund expenditure increased approximately 5-percent, much lower than one would expect with the greater demand for services and much lower than historical increases. We will avoid any damaging taxes on state business, hopefully allowing for a business resurgence out of our current recession

So what could have been the alternatives? The House and/or Senate could have voted down the budget recommended by the Committee of Conference. It only passed the Senate by two votes and the House by 19 votes on HB-1 and 18 votes on HB-2. A continuing resolution based on a 2/3 vote would have allow the state to “remain in business” while the negotiations began anew. Based on legislative history, these negotiations would have continued for at least three months at a cost to the state of about $11-million a month, leaving an even bigger hole to fill. And what if the continuing resolution doesn’t pass, you ask? The state government would come to a stop — a possibility that’s unthinkable given the need for state services. We would also have lost a significant amount of Federal stimulus dollars. Finally, distribution of funds to the cities and towns would have been, at best, delayed and more likely been significantly reduced..

The issue of expanded gambling warrants additional comment. It’s been no secret that I have been a long-time opponent of this method of funding state services. Having lived in New Jersey for a number of years, I was able to witness the failed promise of gambling in Atlantic City. The development of casinos was supposed to end the state’s need for increased taxes and rehabilitate the slums of the city. It never happened for either the state nor the city.

I considered the Senate’s version of new gambling especially onerous. It would have given a state monopoly to a small number of companies without competitive bidding, there would not have been adequate regulation (the Attorney General’s office would have had only a few months for background checks), and there was no House review of the specifics. Further the proposal did not provide for revenue sharing with the towns and cities, especially important given the increased law enforcement and welfare costs that expanded gambling would surely bring. However, the revenue estimates were badly flawed. Despite proven experience from other states that required a minimum of two years to be “up and running,” this proposal used a 6-month timeframe. This would not have been the budget fix that it’s proponents promised.

A couple of procedural issues remain “stuck in my craw.” First, the process of reaching agreement of a compromise budget required much last minute cuts in spending and new or expanded taxes and fees. The changes to the liquor commission’s mission were not well planned or thought-out, the extension of the rooms and meals tax to campgrounds was not vetted adequately, and the use of significant “one-time” funds detrimental to proper long-term planning.

Representatives of the committee of conference scheduled a presentation of the compromise budget for the entire House. As there were a number of significant changes from the original House and Senate versions of the budget, I thought it important to go and listen to the discussion and debate. However, only about one-half, or approximately 200 state representatives, bothered to show up. The attendance of Belknap County representatives faired better; I counted about twelve, or two-thirds of our delegation. You have to wonder how those missing from the presentation form their important decision-making.

Finally, the problems of funding state government in New Hampshire remained rooted in the lack of a significant, dependable source of revenue. The fact that our revenue streams do not keep up with expenditure growth equate to a continual structural deficit that law-makers must confront even in good times. The problem is exacerbated in times of economic distress, as this year proved. Until this issue is resolved, our legislature and governor, whether controlled by either party, will be forever scrambling, in the words of Huey Long, “to tax the man behind the tree.”

At this stage, I’d normally just wish you and your families a great summer, as the session is over until the fall. However, the aforementioned surplus ($110-million) in the state’s medical malpractice fund is now tied up in the courts. If the courts rules against the state, we’ll be back at it. So, enjoy your summer, but stay tuned!

(Bill Johnson is a State Representative from Gilford representing Belknap County District #5 which includes Alton, Barnstead, Belmont and Gilford. He can be reached at billjohn4@metrocast.net or 524-8949.)