Editorial: Raiding dedicated funds diminishes faith in government
Last week, in a gesture akin to flicking a piece of lint off a shoulder, the New Hampshire House killed a bill that called for a committee to study whether the state Constitution should be amended to prevent the diversion of money raised for one purpose to be used for another – namely balancing the state’s chronically underfunded budget.
So let the sweeping of the dedicated funds called for in Gov. Maggie Hassan’s budget proceed with as few screeches and howls as possible. The Legislature has shown itself once again to be just as irresponsible on this topic as generations of governors.
Dedicated funds are bait-and-switch operations. They consist of the creation of a new tax or fee whose revenue is targeted for a worthy purpose, like funding the Fish and Game Department or paying for smoking cessation, energy efficiency and conservation programs. But that revenue is inevitably drained by lawmakers for other uses because that’s just the nature of government in a state averse to raising revenue in a straightforward way.
Dover Rep. Peter Bixby’s bill might better have been framed as a proposal to amend the Constitution rather than create a study committee, but his point remains. Raiding dedicated funds diminishes faith in government. It is a deceit perpetrated on those whose objections to new taxes and fees might have been more strenuous if they knew the money would go to the general fund and not a specific mission.
That’s certainly the case with the $25 surcharge on real estate transactions. It was sold as a way to provide a steady source of funding for the state’s Land and Community Heritage Investment Program. Yet since 2008, when the surcharge was instituted, lawmakers have swiped more of the dedicated revenue than they have allowed the popular conservation program to keep. The tally isn’t even close, according to Hooksett Rep. David Hess, an LCHIP supporter: $16 million for the general fund, $6 million for LCHIP.
The dedicated funds for boater and motorcyclist education, $13.5 million dedicated to a scholarship program for needy residents, money for alcohol treatment, and money for energy conservation raised by the state’s participation in the Regional Greenhouse Gas Initiative have all been, let’s say, re-allocated. The RGGI fund is a prime target for another raid because it’s big – $15 million with another $15 million or $16 million expected in June – and its use for renewable energy purposes has been controversial. But a raid would amount to another hidden tax on electric customers by lawmakers intent on avoiding accountability for tax increases.
Because they are so misleading and because they are designed to shield some programs from the biennial battle for their share of general fund appropriations, dedicated funds are not ideal. They can serve a valuable purpose by providing some hope for funding continuity for programs that need consistent support to be worth doing at all. That’s particularly true in a state that budgets biennially, has a two-year term for governor and a Legislature with high turnover. But they need more protection.
Higher-than-expected state tax revenue in March suggests that Hassan’s projected $41 million raid on dedicated funds could be much smaller. But the ease with which the governor looked to the dedicated funds to resolve her budget problems suggests that, to keep the system honest, amending the state Constitution to require a two-thirds majority to divert dedicated funds should be considered. There’s certainly no honor in the way such funds are handled now.