My Turn: Budget details should be a warning flag to local governments, school districts

For the Monitor
Published: 10/15/2019 7:00:13 AM

New Hampshire finally enacted a state budget last month, nearly three months after the last one expired. While there are many aspects, both good and bad, within the budget, there is one area that should concern every property taxpayer in the Granite State.

The new budget takes nearly $110 million in surplus from the last budget and redirects these funds to cities and towns ($40 million) and to local school districts (over $68 million). This is a one-time payment to communities of non-repeating revenue that is the result of federal tax reform, according to the state’s Department of Revenue Administration. While it’s possible that the state’s revenue picture could match those levels again soon, the odds are against it, based on the first three months of tax receipts for the new fiscal year.

This reality should be a giant red flag to every municipality and school district across New Hampshire. Using one-time revenue to pay for current operations, to build out new programming or to add new staff expenses is a recipe for setting up property taxpayers for massive increases when, as expected, this new spigot of funding gets shut off.

There is a recent precedent that towns and districts should consider. During the Great Recession a decade ago, local aid was the first thing the state cut. Operating as if that won’t happen again would be foolhardy.

Accordingly, communities must prepare to treat this as one-time money that won’t be around in the future. The best approach would be to use the “extra” money for a round of property tax relief. The next best solution would be to use it for non-recurring expenditures that yield dividends, such as technology upgrades, boosting energy efficiency in government buildings or a rainy day fund. The worst strategy would be to use the money to backfill existing holes or to create new programs for which no future funding source exists. That would be a recipe for big tax increases or painful cuts, just as we saw 10 years ago.

That’s why it’s concerning to see Berlin build its school budget on this one-time funding, even before the state budget was enacted. While many towns with low property-tax revenues and rapidly declining student enrollments are facing stark choices, using “free” money to deal with today’s problems without a long-term solution is simply delaying decisions that will need to be made eventually.

Using these dollars to for long-term projects would be building future budgets on a foundation of sand.

Leaders of both parties championed this budget as an opportunity for property-tax relief for our residents. But relief won’t materialize if local elected officials fail to exercise fiscal responsibility and simply spend the windfall. It is up to citizen activists to remind these leaders to do the right thing when the next local budgeting season comes. Right now is the time to ask those running for local office what their plans are for the money.

We encourage every city, town and school district to be exceedingly cautious about these newfound but temporary resources that won’t be available beyond next year. They specifically aren’t meant to be permanent and, under state law, go away after 2020. Using them unwisely will set up your residents for major problems when they disappear.

(Greg Moore is state director of Americans for Prosperity-New Hampshire. He lives in Bedford.)

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