My Turn: State budget writers must start with honest revenue estimates
After 30 years of watching the sausage being made, and in particular the very successful state budget crafted two years ago, the Granite State Taxpayers organization has some advice for New Hampshire legislators as they begin to scrutinize and amend Gov. Maggie Hassan’s proposed state budget.
1. Start with honest revenue estimates.
New Hampshire receives tax revenue from many sources. Some are relatively easy to predict, such as the statewide property tax, the tobacco settlement funds and the business enterprise tax. Others fluctuate with the health of the economy, such as the real estate transfer tax and the business profits tax. Quite a bit of revenue is dependent on the whims of the federal government. For example, rules are still being written to implement Obamacare that could have a huge impact on the state budget as early as next year.
Two years ago the Legislature decided to be conservative and predicted flat revenue, even though the governor thought we’d get hundreds of millions of dollars more. That pessimism proved accurate, given the lingering Great Recession, and actual revenues have come in within a half percent of their estimates.
In years past we’ve resorted to supplemental budgets and drastic mid-term cuts when rosy revenue estimates didn’t pan out. By projecting conservatively, the past two years have been characterized by financial calm.
2. Don’t raise taxes or borrowing.
One sure way to kill the nascent economic recovery is with higher state taxes. New Hampshire’s penny-pinching ways are a major reason that we weathered the recession much better than our neighbors and gained population over the last decade. Today’s highly mobile workforce knows how to vote with their feet and can easily depart for more favorable conditions.
If anything, borrowing to cover current budget gaps is even worse than new taxes. Taxes can be cut if the economy improves, but borrowing drains the taxpayers for years. While we are not in the same class as Illinois, California or the federal government, our pension system is short billions of dollars. This is being made up with $300 million in extra taxes each year. Imagine how much easier budgeting would be had we emulated the ant and not the grasshopper over the past 25 years.
3. Confine spending to the basics.
Government has certain responsibilities: public safety, justice, roads, K-12 education and charity for those who are unable to care for themselves and have nowhere else to turn. Just doing these things well is a big enough task without compounding it with the other things that the private sector, including charities, churches and other non-profits, handle well.
Why does the state need to run ski resorts and campgrounds, staff hospitals, teach adults and lend money? Private organizations do a better job because they have the benefits of competition to keep them operating at the peak of efficiency, something not generally associated with government.
Government spending is like a weight placed on the shoulders of productive members of society. With common sense and prudence in Concord, that burden will be lighter, and those producers will create the kind of vibrant, growing economy we all want for New Hampshire.
Granite State Taxpayers wish Hassan and all of the legislators the very best in this endeavor. Their success will be good for us all.
(Jim Adams of Pittsfield is chairman of the Granite State Taxpayers.)