by Charles Arlinghaus
Only 4 budget options: borrowing, begging, taxing, cutting
THE CURRENT election campaign for state of fices has focused on the extraordinarily difficult fiscal situation the state finds itself in. Balancing the state budget without another federal bailout seems nearly impossible at first glance. This year, no one will come to our rescue and allow us to put off difficult decisions, so we have three basic choices: raise taxes, cut spending or borrow the money.
Over the last two budget cycles, New Hampshire’s tax revenues have been flat. In the 2006-2007 biennium, tax and fee revenues for the general and education funds were $4.47 billion while the current 2010-2011 budget is projected to be $4.45 billion. Despite that tiny drop, spending increased at historically average rates, growing from $4.4 billion to $5.1 billion.
That gap and the projected deficit are the same problem.
My estimate of the starting gap between spending and revenue is $691 million. The gap still exists because instead of solving the problem and bringing taxes and spending into line with each other, we borrowed $156 million and used a $351 million federal bailout and other onetime revenues, like the sale of state property for $90 million.
Can we just grow our way out of the deficit? As everyone understands, economic growth helps our financial picture. If general revenues, aside from the ones that are fixed payments, were no longer flat, but grew at a historically reasonable rate of 3 percent per year, we would shrink the deficit by $166 million. Similarly, spending growth of the same 3 percent per year (a bit less than the growth over the last four years) would add $232 million to the shortfall.
My estimate of $691 million in the hole assumes no spending or revenue growth. So if we did have reasonable economic growth, even if we held spending to a zero increase for two straight years, a feat achieved only once in the entire post-World War II history of the state (Steve Merrill’s second term), the remaining hole would still be $525 million.
Elected officials and wouldbe elected officials should be asked about the four choices they have. First, will you borrow more money to pay operating expenses? In the last budget, we borrowed money to pay the state’s building aid program, and we borrowed from the future to pay for debt service.
Ask them if more borrowing is on the table, or if we can, as we should, dismiss it as a one-time bad idea.
The second option is to beg the federal government to borrow more money to send us another bailout. At this point, I don’t think anyone honestly believes another bailout dime is coming from a federal government one step removed from bankruptcy. So assume begging Washington is off the table.
That leaves us with taxes and spending. I think we all agree that whatever recovery we’re in is precarious. Taxes are essentially a price on economic activity. And while we all pay some price, few of us are prepared to raise the price of any economic activity right now. If your favorite official is unwilling to rule out raising the price of economic activity, ask which ones they are considering.
The final choice is spending cuts. At this point, every politician of any stripe is at least talking about cutting spending.
Of course, it being election season, my cuts are reasonable and prudent. Yours are the height of insanity.
Across the country, 37 states cut their spending in response to the decline in tax revenue.
New Hampshire was not among them. It is reasonable then to think we can make some of the tough decisions the other 37 have made.
One objection to cutting is that about 45 percent of general and education fund spending is some form of municipal or school aid. My deficit estimate includes about $120 million of municipal aid reductions that are scheduled to come back next year. When politicians say they won’t cut local aid, are they counting that $120 million? By the way, if those cuts were continued and we had the revenue, but no spending as we talked about above, then flat spending otherwise would leave us “only” $400 million short.
For those of you keeping score at home, $400 million is 8 percent of the total general and education fund spending in the last budget. If we cut every department and program by an average of 8 percent — some more, some less — the budget is balanced. If you won’t cut spending that much, you must either tax or borrow; those are the choices.
But now is the time to ask when politicians are listening to you, not the lobbyists. Will they borrow again? Will they raise taxes? Will they cut spending?
Or are they just hoping for the best?
. Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a freemarket think tank in Concord.
10.27.2010
10.19.2010
New Hampshire's precarious fiscal state.
BY Charles M. Arlinghaus
In the midst of ongoing political debate over deficits, shortfalls and fiscal management, one important truth about New Hampshire's fiscal state of affairs is impossible to obscure. We're a mess and it's getting worse not better.
The governor and his opponent spout dueling budget histories and have defenders of their numbers. The governor's tells us correctly that what is labeled general fund in the current budget is a smaller number by 1 percent than the items labeled general fund in the last budget.
What gets left unmentioned is that $248 million that was labeled general fund in the last budget has been moved off-budget to make it appear to be cut even as we continue to spend the money.
A good example: liquor spending was called general fund in the last budget. This year we still spend $90 million but we label it as liquor fund. If you consider relabeling a spending cut, then the general fund is down. If not, it's up.
Avoiding some of those games, challenger John Stephen proclaims total spending is up 24 percent over the last two budgets. Former candidate Mark Fernald has criticized the number for not including cuts and for including a lot of spending that he wouldn't count (retirement contributions or federal funds for example). But again, if you compare apples to apples and back out of each number spending reductions, lapses and other budget deductions, the increase is 23.7 percent not 23.6 percent.
But at the end of the day, bickering over the precise number is much less important than explaining the problem. Let's go ahead and leave out all the federal dedicated funds and state dedicated funds that the governor and Mark Fernald want us to. How then does the state operating budget look, the programs supported with general tax and fee revenues?
In New Hampshire, as in most states, state spending be paid for by hook or crook. Once we spend we must tax, borrow, or do something else to find the cash.
Because taxes have been flat the last few years, the government was only able to increase spending by finding the money through borrowing and bailouts.
The current budget uses $156 million in borrowing to pay for operating expenses, mostly school building aid grants and to pay the interest on debt.
In addition, we used $351 million in federal bailouts. One kind of stimulus money went to specific projects like a bridge or road paving but another pot of money was a bailout for state governments to put in their operating account. New Hampshire's total was $351 million.
Finally, we used another $90 million of one-time revenues like the money the state hopes to reap from selling off unused or unwanted state assets — not a bad idea but you can only sell something once.
Those three categories of special revenue total $600 million and won't happen again. We can't sell a second time, there won't be another state bailout, and borrowing again is regarded as insane across party lines.
So when people speak a deficit next year, they mean that the starting point for the next is a gap between revenues and existing spending that must be closed.
That $600 million won't recur so it must be replaced or spending cut to a lower level.
In addition to that $600 million one-time revenues, the legislature made some temporary cuts.
For example, aid to municipalities under a program that began when the business profits tax took over local revenue sources in 1970 was suspended. But we told towns not to worry that it was just for two years. Get through this budget and the program returns.
A series of similar temporary reductions that are by law scheduled to come back amount to $159 million in the current budget.
Because of implementation, revenue growth, and differences between the first and second year of the budget, my own estimate of the starting deficit is about $691 million. Some analysts are 10 percent higher or lower, but at the same order of magnitude.
The point is not to argue about the precision of the number to three decimal points. Rather we need to understand that we are in a bad place. While the majority of the states cut spending to close a gap, we used borrowing and a federal bailout. It means that the most difficult decisions are still to come.
Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free-market think tank based in Concord. He can be reached at Arlinghaus@jbartlett.org
In the midst of ongoing political debate over deficits, shortfalls and fiscal management, one important truth about New Hampshire's fiscal state of affairs is impossible to obscure. We're a mess and it's getting worse not better.
The governor and his opponent spout dueling budget histories and have defenders of their numbers. The governor's tells us correctly that what is labeled general fund in the current budget is a smaller number by 1 percent than the items labeled general fund in the last budget.
What gets left unmentioned is that $248 million that was labeled general fund in the last budget has been moved off-budget to make it appear to be cut even as we continue to spend the money.
A good example: liquor spending was called general fund in the last budget. This year we still spend $90 million but we label it as liquor fund. If you consider relabeling a spending cut, then the general fund is down. If not, it's up.
Avoiding some of those games, challenger John Stephen proclaims total spending is up 24 percent over the last two budgets. Former candidate Mark Fernald has criticized the number for not including cuts and for including a lot of spending that he wouldn't count (retirement contributions or federal funds for example). But again, if you compare apples to apples and back out of each number spending reductions, lapses and other budget deductions, the increase is 23.7 percent not 23.6 percent.
But at the end of the day, bickering over the precise number is much less important than explaining the problem. Let's go ahead and leave out all the federal dedicated funds and state dedicated funds that the governor and Mark Fernald want us to. How then does the state operating budget look, the programs supported with general tax and fee revenues?
In New Hampshire, as in most states, state spending be paid for by hook or crook. Once we spend we must tax, borrow, or do something else to find the cash.
Because taxes have been flat the last few years, the government was only able to increase spending by finding the money through borrowing and bailouts.
The current budget uses $156 million in borrowing to pay for operating expenses, mostly school building aid grants and to pay the interest on debt.
In addition, we used $351 million in federal bailouts. One kind of stimulus money went to specific projects like a bridge or road paving but another pot of money was a bailout for state governments to put in their operating account. New Hampshire's total was $351 million.
Finally, we used another $90 million of one-time revenues like the money the state hopes to reap from selling off unused or unwanted state assets — not a bad idea but you can only sell something once.
Those three categories of special revenue total $600 million and won't happen again. We can't sell a second time, there won't be another state bailout, and borrowing again is regarded as insane across party lines.
So when people speak a deficit next year, they mean that the starting point for the next is a gap between revenues and existing spending that must be closed.
That $600 million won't recur so it must be replaced or spending cut to a lower level.
In addition to that $600 million one-time revenues, the legislature made some temporary cuts.
For example, aid to municipalities under a program that began when the business profits tax took over local revenue sources in 1970 was suspended. But we told towns not to worry that it was just for two years. Get through this budget and the program returns.
A series of similar temporary reductions that are by law scheduled to come back amount to $159 million in the current budget.
Because of implementation, revenue growth, and differences between the first and second year of the budget, my own estimate of the starting deficit is about $691 million. Some analysts are 10 percent higher or lower, but at the same order of magnitude.
The point is not to argue about the precision of the number to three decimal points. Rather we need to understand that we are in a bad place. While the majority of the states cut spending to close a gap, we used borrowing and a federal bailout. It means that the most difficult decisions are still to come.
Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free-market think tank based in Concord. He can be reached at Arlinghaus@jbartlett.org
10.18.2010
Man of the people? I think not.
By Jerry McConnell
Whenever I see a poll showing Obama’s popular support, I seethe a little bit at his audacity, and frankly his attitude of taking people for granted is narcissistic to the extreme. This man is so sure that he is a ‘man of the people’ and loved by all but a few malcontent Republicans that he can do no wrong.
I know he gets his news from the biased and also deliberately under-informed Mainstream Media, (MSM) which is so slanted in his favor that he actually believes he is adored instead of the pariah that he really has come to be.
This case of self love and imagined adoration of a fawning public is strictly in his own narrow mind as poll after poll proves on a daily basis. Take the Rasmussen poll of January 2009 when he first took office he had a 62% Approval rating. But by September 2010, it reported that 44% of the nation’s voters Strongly DISAPPROVE of Obama’s performance, while only 27% Strongly APPROVE. In poll terms, that indicates Obama to have a negative Presidential Approval Index rating of Minus 17.
That is a negative rating in ANY person’s opinion and it is an opinion from a professional and well qualified polling service, not a part of the MSM. Yet he keeps on smiling and going against the majority of the country’s citizens. I didn’t say the ‘country’s residents’ because that would include the 20 or more million illegal aliens within our borders who now reside here without proper permission and are not included in the poll numbers.
Obama has a history of being on the wrong side of important issues with regard to a great majority of our country’s citizens. Phyllis Schlafly of EagleForum.com in her August 27, 2010 column states that “the Democrats wring their hands over Barack Obama’s tone deafness about political reality.” She added that while it is entertaining to Americans “their despair about Obama is so painful that they are even calling on George W. Bush to come back and rescue Obama from his own mistakes.”
But he has given this country so much negative leadership as to even call it ‘no leadership at all’. His zealous desire to spend money is becoming legend. It’s as though he has come into money for the first time in his life and he is going to spend every dime of it not matter what.
He is enjoying being the lucky guy who just won the multi-million dollar lottery, or in his case, the multi-TRILLION dollar lottery, perhaps more precisely the LOOTERY of taxpayers’ dollars, probably little of which had been paid in taxes by himself. He is looking to buy out just about any major corporation or financial system or healthcare organization and under the guise of “reforming” or “restructuring” it, bring it to the brink of Destruction and bankruptcy.
Job losses in the multi-millions are just a small nuisance factor and another reason to blow away more millions and billions trying to adjust to a more favorable level. But like his campaign rhetoric looking for change, it is not happening except in a negative way. Not very bright.
Or as Phyllis Schlafly stated in her EagleForum.org article “Obama Versus Majority Public Opinion” on August 27, 2010, “The Democrats are reluctant to admit the truth that Obama is not a smart politician.
Obama is a radical ideologue determined to “transform America” into the socialist mold regardless of voter retaliation against Democratic candidates.”
Schlafly cites his unpopular moves that have caused his plummeting ratings such as his unprofessional version of medical healthcare that according to the latest polls is disapproved by about “60 percent of the people and various states are opting for legislation that would make any mandatory provisions of the healthcare bill invalid.”
And Obama’s strong desire to get Congressional action for a law granting amnesty to the roughly estimated 20 million illegal aliens who are burrowed in here in the United States is another example of his flying in the face of the public which is against such action. In fact, even a “CBS poll found that 57 percent of Americans think the Arizona immigrant law was “about right” while Rasmussen polled and found 65 percent of Americans favored the law. A Zogby poll found that 58 percent of Americans nationwide want their own state to adopt a law similar to Arizona’s.”
Schlafly points out another area where Obama and the country are at great odds and that is on the subject of a Muslim mosque being built near the site of Ground Zero in New York City “even though 61 percent of Americans are against it.”
This litany of so many incidences of flaunting his assumed authority and disdain for the people who elected him, and believe me, there are many more that could be shown, has to make a person wonder if he is in the same world as the rest of us. Has the grandeur and glitz of the “rich life” gone so far to his head that he actually now BELIEVES that he is some anointed savior of mankind?
No wonder the Democratic Party is in freefall and knows not where they will land after November 02, 2010. That’s what comes from placing too much trust in an unknown factor.
Whenever I see a poll showing Obama’s popular support, I seethe a little bit at his audacity, and frankly his attitude of taking people for granted is narcissistic to the extreme. This man is so sure that he is a ‘man of the people’ and loved by all but a few malcontent Republicans that he can do no wrong.
I know he gets his news from the biased and also deliberately under-informed Mainstream Media, (MSM) which is so slanted in his favor that he actually believes he is adored instead of the pariah that he really has come to be.
This case of self love and imagined adoration of a fawning public is strictly in his own narrow mind as poll after poll proves on a daily basis. Take the Rasmussen poll of January 2009 when he first took office he had a 62% Approval rating. But by September 2010, it reported that 44% of the nation’s voters Strongly DISAPPROVE of Obama’s performance, while only 27% Strongly APPROVE. In poll terms, that indicates Obama to have a negative Presidential Approval Index rating of Minus 17.
That is a negative rating in ANY person’s opinion and it is an opinion from a professional and well qualified polling service, not a part of the MSM. Yet he keeps on smiling and going against the majority of the country’s citizens. I didn’t say the ‘country’s residents’ because that would include the 20 or more million illegal aliens within our borders who now reside here without proper permission and are not included in the poll numbers.
Obama has a history of being on the wrong side of important issues with regard to a great majority of our country’s citizens. Phyllis Schlafly of EagleForum.com in her August 27, 2010 column states that “the Democrats wring their hands over Barack Obama’s tone deafness about political reality.” She added that while it is entertaining to Americans “their despair about Obama is so painful that they are even calling on George W. Bush to come back and rescue Obama from his own mistakes.”
But he has given this country so much negative leadership as to even call it ‘no leadership at all’. His zealous desire to spend money is becoming legend. It’s as though he has come into money for the first time in his life and he is going to spend every dime of it not matter what.
He is enjoying being the lucky guy who just won the multi-million dollar lottery, or in his case, the multi-TRILLION dollar lottery, perhaps more precisely the LOOTERY of taxpayers’ dollars, probably little of which had been paid in taxes by himself. He is looking to buy out just about any major corporation or financial system or healthcare organization and under the guise of “reforming” or “restructuring” it, bring it to the brink of Destruction and bankruptcy.
Job losses in the multi-millions are just a small nuisance factor and another reason to blow away more millions and billions trying to adjust to a more favorable level. But like his campaign rhetoric looking for change, it is not happening except in a negative way. Not very bright.
Or as Phyllis Schlafly stated in her EagleForum.org article “Obama Versus Majority Public Opinion” on August 27, 2010, “The Democrats are reluctant to admit the truth that Obama is not a smart politician.
Obama is a radical ideologue determined to “transform America” into the socialist mold regardless of voter retaliation against Democratic candidates.”
Schlafly cites his unpopular moves that have caused his plummeting ratings such as his unprofessional version of medical healthcare that according to the latest polls is disapproved by about “60 percent of the people and various states are opting for legislation that would make any mandatory provisions of the healthcare bill invalid.”
And Obama’s strong desire to get Congressional action for a law granting amnesty to the roughly estimated 20 million illegal aliens who are burrowed in here in the United States is another example of his flying in the face of the public which is against such action. In fact, even a “CBS poll found that 57 percent of Americans think the Arizona immigrant law was “about right” while Rasmussen polled and found 65 percent of Americans favored the law. A Zogby poll found that 58 percent of Americans nationwide want their own state to adopt a law similar to Arizona’s.”
Schlafly points out another area where Obama and the country are at great odds and that is on the subject of a Muslim mosque being built near the site of Ground Zero in New York City “even though 61 percent of Americans are against it.”
This litany of so many incidences of flaunting his assumed authority and disdain for the people who elected him, and believe me, there are many more that could be shown, has to make a person wonder if he is in the same world as the rest of us. Has the grandeur and glitz of the “rich life” gone so far to his head that he actually now BELIEVES that he is some anointed savior of mankind?
No wonder the Democratic Party is in freefall and knows not where they will land after November 02, 2010. That’s what comes from placing too much trust in an unknown factor.
10.01.2010
ALIUN
By Dave Buhlman
In the link below is a story that the United Nations has appointed an ambassador to deal with visitors from out of space.
With apologies to "Star Trek": Space the final frontier. These are the voyages of the starry-eyed UN-ers whose 65 year mission is to destroy national sovereignty, destroy life, and to boldly go where no elitists have gone before.
Having fouled up about everything it has been involved with in its checkered 65 years history, the UN leaders figure it's time to look elsewhere, to look to the stars for friendly faces, to present to the universe the best that mankind has to offer. I wonder if they are actually expecting a visit? There has been speculation that one will occur on October 13, 2010. Maybe they're onto something. Holy Jedi!
I can picture the scene with Algore, Bill, and Obama being introduced to representatives of the Kodi race, hailing from the far reaches of the Milky Way Galaxy. Each earthbound leader gives a fifteen minute speech filled with self praise for their accomplishments. In essence it's Moe, Larry and Curly meet the funny beings - "What's Spring Like on Jupiter and Mars?". The Kodi are perplexed and ask to be taken to our real leaders.
"These are our real leaders", the embarrassed ambassador replies with her pretty face flushing red. In response the Kodi roll their eyes at each other, get in their ship and zoom off toward the sun. About halfway there, they send a laser bolt to completely destroy the planet.
"Clearly they're better off," the Kodi leader says to his team of space travelers who are nodding in agreement. "With leaders like those, a quick death is surely better than listening to an endless stream of pompous babbling. It matches the worst we have seen in all of our many millions of miles traversing the stars."
As the colorful hot bolt approaches, Algore, Bill, and Obama look up smiling. "They must have really appreciated our insights to send such a beautiful memento," Obama says, as the ocean waters start to recede. Algore wondered about how warm the bolt might be. Bill was making a move on the UN ambassador. "Not sure what that bolt means, but sure do want to go out with my best...."
In the link below is a story that the United Nations has appointed an ambassador to deal with visitors from out of space.
With apologies to "Star Trek": Space the final frontier. These are the voyages of the starry-eyed UN-ers whose 65 year mission is to destroy national sovereignty, destroy life, and to boldly go where no elitists have gone before.
Having fouled up about everything it has been involved with in its checkered 65 years history, the UN leaders figure it's time to look elsewhere, to look to the stars for friendly faces, to present to the universe the best that mankind has to offer. I wonder if they are actually expecting a visit? There has been speculation that one will occur on October 13, 2010. Maybe they're onto something. Holy Jedi!
I can picture the scene with Algore, Bill, and Obama being introduced to representatives of the Kodi race, hailing from the far reaches of the Milky Way Galaxy. Each earthbound leader gives a fifteen minute speech filled with self praise for their accomplishments. In essence it's Moe, Larry and Curly meet the funny beings - "What's Spring Like on Jupiter and Mars?". The Kodi are perplexed and ask to be taken to our real leaders.
"These are our real leaders", the embarrassed ambassador replies with her pretty face flushing red. In response the Kodi roll their eyes at each other, get in their ship and zoom off toward the sun. About halfway there, they send a laser bolt to completely destroy the planet.
"Clearly they're better off," the Kodi leader says to his team of space travelers who are nodding in agreement. "With leaders like those, a quick death is surely better than listening to an endless stream of pompous babbling. It matches the worst we have seen in all of our many millions of miles traversing the stars."
As the colorful hot bolt approaches, Algore, Bill, and Obama look up smiling. "They must have really appreciated our insights to send such a beautiful memento," Obama says, as the ocean waters start to recede. Algore wondered about how warm the bolt might be. Bill was making a move on the UN ambassador. "Not sure what that bolt means, but sure do want to go out with my best...."
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