Anti-business lawmakers must be stopped now

Foster's editorial page weighs in on the New Hampshire Senate's budget, and its decision to tax New Hampshire businesses during a recession:

New Hampshire's reputation as a state with a business-friendly environment is at risk. It might mean a slower recovery from the recession than was previously thought. We may be in for many more months of hard times. And it is all because of an irresponsible legislative proposal.

The Senate Finance Committee wants the Legislature to suspend the business enterprise tax credit. Why? Because members of the committee and others in the Senate and House are afraid to engage in common sense government — afraid to attack the $11.5 billion budget for 2010 and 2011 from the spending side. The lawmakers have turned to what they see as an easy escape from the budget woes created by runaway spending and overestimations of revenues.

Lynch looking to tax home improvements

Tom Fahey reports in his Under the State House Dome column in the Union Leader that Governor John Lynch is looking to expand the Real Estate Transfer Tax to cover not only when you sell your house, but also when you refinance:

The basic idea is to pull refis into the existing tax, and to lower the current 1.5 percent tax rate. Eleven other states already have a similar tax in place. It's not clear if the proposal will be ready by the time the Senate meets to vote on a budget plan on Wednesday.

Another idea in the wings is to look closely at limited liability corporations, which can be structured to escape business taxes on big payouts to owners.

The Senate Finance Committee directed the Department of Revenue Administration to comb through tax laws to find every little hole a potential taxpayer could slip through and find a patch. Lynch spokesman Colin Manning said the refi tax idea is one result of the DRA's work. (Emphasis added)

The change would hot homeowners who look to refinance in order to get a better rate, but also those who add a second mortgage to pay for college or starting a business, or anyone who takes out a home equity loan to fix up the homestead.

It looks like any money you keep in your pocket is now being treated by the Governor and Senate Finance Committee as a little hole that you've slipped through.

Imagine is they put this much effort into cutting spending in a recession as they did to looking for ways to get more money out of taxpayers.

Budget unreality: Spending without looking

The Union Leader editorial page looks at how the House and Senate set budget priorities, and is not impressed:

Last Thursday, the Senate Finance Committee passed a budget that could be balanced only with the addition of new revenues. Its members also increased taxes and fees, but replaced the revenue generated by the House's not-yet-existent new taxes with revenue generated by not-yet-existent slot-machine casinos.

Each of these budgets is based upon the Dan Eaton Principle. During the House budget debate, Republicans objected to the leadership's plan to pass a spending bill first, then go for the tax hikes needed to pay for it. They said, reasonably, that the state should budget like families do, by first determining how much money is available, then deciding how to allocate it. House Majority Leader Eaton rebuffed the criticisim with an aphorism: "It makes sense to know how much you're spending before you decide how much money to raise."

The Anti-Stimulus

Arnold Kling, whose writing on health care is fantastic, takes a look at the stimulus package as it's being implemented. Kling aruges that aside from the pork projects and bad decisions, the basic structure of this stimulus package is counter-productive:

As we know, most of the stimulus spending does not take place until next year and beyond, so the short-run gains are puny. On the other hand, the big increase in the projected deficit creates the expectation of higher interest rates, which raises interest rates now. These higher interest rates serve to weaken the economy.

According to this standard analysis, the stimulus is going to hurt GDP now, when we could use the most help. Much of the spending will kick in a year or more from now, with multiplier effects following afterward, when the economy will need little, if any, stimulus.

This is the flaw with using spending rather than tax cuts as a stimulus. The lags are longer when you use spending.

White House moves to restrict criticism of stimulus projects

Mark Tapscott looks at the White House's growing frustration with criticism of the stimulus package, and the Administration's moves to shut people up:

A new White House policy on permissible lobbying on economic recovery and stimulus projects has taken a decidedly anti-First Amendment turn. It's a classic illustration of Big Government trying to control every aspect of a particular activity and in the process running up against civil liberty.

Check out this passage from a post on the White House blog by Norm Eisen, Special Counsel to the President on Ethics and Government Reform (emphasis added):

"First, we will expand the restriction on oral communications to cover all persons, not just federally registered lobbyists. For the first time, we will reach contacts not only by registered lobbyists but also by unregistered ones, as well as anyone else exerting influence on the process. We concluded this was necessary under the unique circumstances of the stimulus program.

"Second, we will focus the restriction on oral communications to target the scenario where concerns about merit-based decision-making are greatest –after competitive grant applications are submitted and before awards are made. Once such applications are on file, the competition should be strictly on the merits. To that end, comments (unless initiated by an agency official) must be in writing and will be posted on the Internet for every American to see.

"Third, we will continue to require immediate internet disclosure of all other communications with registered lobbyists. If registered lobbyists have conversations or meetings before an application is filed, a form must be completed and posted to each agency’s website documenting the contact."

The End of the Affair

In the Wall Street Journal, P.J. O'Rourke looks back on the place of General Motors in late-century America:

The phrase “bankrupt General Motors,” which we expect to hear uttered on Monday, leaves Americans my age in economic shock. The words are as melodramatic as “Mom’s nude photos.” And, indeed, if we want to understand what doomed the American automobile, we should give up on economics and turn to melodrama.

Politicians, journalists, financial analysts and other purveyors of banality have been looking at cars as if a convertible were a business. Fire the MBAs and hire a poet. The fate of Detroit isn’t a matter of financial crisis, foreign competition, corporate greed, union intransigence, energy costs or measuring the shoe size of the footprints in the carbon. It’s a tragic romance—unleashed passions, titanic clashes, lost love and wild horses.

Not Vital: Nix Needless Commissions

The Union Leader editorializes against a constant drain on the taxpayers, New Hampshire's endless maze of advisory commissions:

Members of the Senate Finance Committee were trying to decide Wednesday night whether to continue funding the Commission on the Status of Women, established in 1969. Sen. Kathy Sgambati, D-Tilton, said she supports the commission's work, but she voted to cut its $148,000 appropriation because in these tough times senators have to decide "what is the most vital service? What is the most vital need?"

That is true. But it is no more true now than in good times. Sgambati's willingness to fund the commission except when times are tight suggests that she knows it really doesn't do essential work. And the state should not take taxpayer money to fund activities that are superfluous.

Craig T. Nelson Shrugs

Here's Glenn Beck's full interview of Craig T. Nelson, who says "No Taxation Without Representation.

Ayn Rand would be so proud:

BET credit suspension plan draws fire

New Hampshire Business Review reports on the backlash from businesses facing double-taxation under the Senate budget:

The Business and Industry Association of New Hampshire has launched a “full-court press” to defeat a proposal passed by the Senate Finance Committee early Thursday morning to suspend the business enterprise tax credit against the business profits tax.

But the committee’s chair, Sen. Lou D’Allesandro, D-Manchester, said the suspension was temporary, better than alternatives and was subject to compromise.

“This is one of these difficult choices. We are in difficult economic times,” D'Allesandro told NHBR. “If everybody plays a role we might be able to get through and save some people’s services.”

D’Allesandro emphasized that the suspension in the credit, while “painful,” would be offset by the 10 years proposed to recoup any credits, as opposed to the current five. And it was preferable to a capital gains tax, the estate tax and putting off a planned decrease in the insurance tax -- all of which were contained in the House budget, but eliminated by the Senate Finance Committee.

The BIA opposes those taxes as well and argues that businesses already contribute enough. Any more could further damage a deteriorating economy.

Stimulus=Boondoogle

How much does it take to change the lightbulbs at a Veterans Home in New York?

$109.5 million.

To be fair, it's not just for light bulbs. They are putting in more effecient motors, too. All for just $109.5 million of your money.

These figures come from the Administration's own report on stimulus funding.

The New York State Veteran’s Home at St. Alban’s, in Jamaica, New York, is using $109.5 million in Recovery Act spending to install more efficient motors, variable speed drive units, lighting, ballasts, lighting sensors, daylight sensors and to replace incandescent bulbs with compact fluorescent bulbs. All of these improve the energy efficiency of the facility, lower costs, and lessen its impact on the environment.

Thanks to Bill Allison at the Sunlight Foundation for bringing this to light.

Sunset the hikes: Brief fix for a brief problem

Ronald Reagan used to say that there is nothing so permanent as a temporary government program. The Union Leader editorializes that temporary tax increases shouldn't be permanent either:

Gov. John Lynch and legislative leaders have told us for about a year now that fee and tax increases are necessary to cover revenue lost to the recession. When some House members were agitating for a sales or income tax, Lynch warned them not to propose a permanent solution to this temporary loss of revenue. That was good advice then, and it is good advice now.

Any fee increases and tax hikes approved this year need to sunset in two years. If the governor and legislators are right that these increases are necessary to balance the budget because of an extraordinary and temporary reduction in revenue caused by the recession, then they should have no problem making the increases expire at the end of that recession, or at least at the end of the budget cycle.

Budget Coverage

The Senate Finance Committee has sent the $11.5 billion dollar, two-year spending plan to the full Senate, after increasing both taxes and spending late into the night.

In the Nashua Telegraph, Kevin Landrigan leads with the fact that a Hudson golf course was left out of the racino sweepstakes:

Proponents of a casino destination resort in Hudson said Senate budget writers "surprised and disappointed" them, crafting a two-year state budget that only legalized slot machines at three racetracks and two North Country sites.

Thomas Friel, co-owner of the Green Meadow Golf Club site, said he thought the Senate Finance Committee plan would permit gambling at slot machine parlors and a casino-style resort to legally co-exist.

The final amendment, surfacing after midnight Wednesday, allowed up to 13,000 slot machines at five sites to generate $185 million over the next two years.

In the Union Leader, Tom Fahey also leads with gambling, and also reports on an increase in business taxes:

House Finance Chairman Rep. Marjorie Smith, D-Durham, said she thinks both House and Senate "agree on the overwhelming majority of what's in the budget."

Besides gambling, she said, sticking points will be changes to the Liquor Commission, funding for highways and the suspension of the Business Enterprise Tax credit against business profits tax liability, she said.

Lynch spokesman Colin Manning said the governor will examine the business tax change, which just made its first appearance this week.

"Obviously, the governor has a lot of serious questions about what this would mean for businesses, how it would impact the economy and future revenues," Manning said.

Currently, New Hampshire pay the Business Enterprise Tax or the Business Profits Tax, whichever is higher. The Senate plan would whack businesses with both.

In the Concord Monitor, Lauren Dorgan highlights the differences between the Senate and House budgets.

Slots aside, the Senate budget closely followed the stark budget plan unveiled by Gov. John Lynch this winter and the one recommended by the House Finance Committee earlier this year; like Lynch, senators would close several district courts, the Tobey School in Concord and the Laconia prison, and lay off scores of state workers. Final numbers weren't available yesterday, but the total likely topped 200.

One major difference: With the recession continuing, senators now expect the state to draw about $200 million less in revenue than Lynch predicted in February. Meanwhile, senators funded some programs Lynch did not, including $1.2 million for a catastrophic illness program and $14 million to help people with developmental disabilities who are on a waiting list for state services. They also voted to fund $87 million worth of aid to local school districts; Lynch had urged lawmakers to borrow that money, and House lawmakers, balking at Lynch's plan to borrow, didn't fund the program.

TGIFriedman

Here's your Friday Friedman, explaining the Invisible Hand:

Amendment X: Grim Ferry Tales in Washington

Scott St. Clair of the Evergreen Freedom Foundation has been investigating Washington's taxpayer-subsidized ferry system, which drew the attention of a local TV station:

One page reads: "Ferry Tales: A tragicomedy about failure, folly, and
foolishness at Washington State Ferries."

Volunteers have been handing out the pamphlets to passengers waiting in line at ferry docks.

Scott St. Clair, who did the research that went into "Grim Ferry Tales," says the goal is pull back the curtain and give people a glimpse of how their tax dollars are being
used and misused at W.S.F.

"We wanted to take a look at some of the issues inside the ferry system," he said.

The pamphlet hammers WSF for letting unions control what hours ferries and the ferry repair shop operate.

It also goes after the ferry system for not building the boats that were promised after a gas tax hike six years ago.

U.S. Energy Secretary calls for White Room

Glad to oblige:


Oh, he said White Roof. Never mind.

Professor Steven Chu, the US Energy Secretary, said the unusual proposal would mean homes in hot countries would save energy and money on air conditioning by deflecting the sun's rays.

More pale surfaces could also slow global warming by reflecting heat into space rather than allowing it to be absorbed by dark surfaces where it is trapped by greenhouse gases and increases temperatures.

Actually, having a white roof makes a lot of sense if you're trying to reflect solar energy rather than absorb it. Having a black roof makes more sense in cold climates when you're trying to hold on to as much heat as possible. It's actually a pretty good idea, as long as Chu doesn't get caught up in the Obama Administration's fetish for micro-management and start offering tax credits for Nevada homeowners to repaint their roofs.

Greg Moore: A NH capital gains tax would hit more than the wealthy

Greg Moore writes in the Union Leader about how raising taxes on capital gains will do more than soak the rich:

Capital gains come from good investments. These could be stock options at work, your 401(k) plan or your house that was improved with sweat equity or a new addition. If the risk you take pays off for your retirement, your home or your investment, the capital gain is the difference between the price when you bought and the price when you sold.

The House wants the state to be a silent partner to your successes, taking a portion of your hard-earned investment.

He also examines how taxing success would hurt New Hampshire towns and make the state less competitive:

This new tax would also hurt local communities. A detailed study by the National Bureau of Economic Research shows that capital gains taxes reduce asset values. Thus, an income tax on capital gains would depress sale prices for homes across New Hampshire, which would lower property assessments and reduce the tax base for these communities. Many cities and towns would respond by raising their property tax rates, hurting low- and middle-income homeowners, especially people on fixed incomes, like seniors.

Read the whole thing.

Budget Coverage

It was a late night for the Senate Finance Committee, which sent an $11 billion budget to the full chamber.

In the Union Leader, Tom Fahey leads with the many tax increases included in the plan:

An extra $10 for a license, $15 for each car registration and $15 on each vanity plate are just part of the Senate package that includes higher fees for everything from canoe registrations to court fees. The higher auto fees are a way to replace revenue a House-passed gas tax increase would have produced. Gov. John Lynch wants no part of the 15-cent tax hike and threatened to veto it.

In the Concord Monitor, Lauren Dorgan looks at how changes to state funding formulas could disqualify New Hampshire for federal stimulus money:

Senators also clashed on whether or not to pare $20 million from a "catastrophic aid" program by which the state reimburses schools for extraordinary expenses paid to serve special-needs students. Some senators argued that since schools will receive an influx of money through the federal stimulus program, some of it for special education, that will more than make up for the change.

Officials projected that if the cut becomes law, schools would likely be paid about 50 cents on the dollar for their catastrophic aid claims.

But Deputy Education Commissioner Mary Heath, called in from home yesterday evening, told senators that the situation wasn't that simple, because stimulus moneys come with the requirement that they "supplement not supplant" existing programs.

And in the Nashua Telegraph, Kevin Landrigan reports that the panel has put the Milford District Court back on the chopping block:

Senate Republican Leader Peter Bragdon of Milford was surprised to learn this week that Milford’s court was again on the chopping block, with all cases to be transferred to Merrimack District Court.

“We thought we were out of the woods but once again are part of the process,’’ Bragdon said. “I am hopeful that we can make the case that Milford is unique, that it is efficient, it holds night court and many of the towns affected are a long distance away from Merrimack.’’

The Senate budget would close Milford and Colebrook courts the House had wanted to keep open but would keep open courts in Keene and Plaistow the House had wanted to close.

Sonia Sotomayor- What you need to know

Sonia Sotomayor is the President's nominee for the Supreme Court seat being vacated by Justice David Souter's retirement. Here's what you need to know:

Here's a comprehensive and continually updated biography of Sonia Sotomayor at Judgepedia.

The understandable glowing White House bio page.

Her controversial 2002 lecture, "A Latina Judge's Voice" along with comments from Orin Kerr.

Jeffrey Rosen's article in the New Republic, "The Case Against Sonia Sotomayor", which questions the judge's temperment and command of legal technicalities.

Walter Olsen's essay in Forbes comparing Sotomayor's brand of liberalism to Ginsburg.

The controversial race case currently pending before the Supreme Court.

Sotomayor's bad decision on private property rights.

Sotomayor's good decision on private property rights.

Sotomayor's position on free speech.

Sotomayor's position on the Second Amendment.

For ongoing coverage, the best legal blog in the country, The Volokh Conspiracy, and the best Supreme Court blog, SCOTUSblog.

Video of Sotomayor claiming that the Appeals Court is were "policy is made":


The members of the Senate Judiciary Committee, who will be deliberating Sotomayor's nomination.

A historical analysis of the Senate's Advise and Consent powers.

Read through these links for about 15 minutes, and you'll surely know more than most of the people yelling at each other about the nomination on the cable news shows. In fact, it probably won't take that long.

The Washington Post is making sense

Missed this Tuesday, but the Washington Post is taking a stand against the Obama Administration's blatant thuggery in the U.S. automotive marketplace:

IN THEORY, a government bailout should provide a short-term infusion of cash to give a struggling company the chance to right itself. But in its aggressive dealings with U.S. automakers, most recently General Motors, the Obama administration is coming dangerously close to engaging in financial engineering that ignores basic principles of fairness and economic realities to further political goals.

Hattip: Cafe Hayek

The economic consequences of luggage

Don Boudreaux at Cafe Hayek has an amazing mind. He sees the economic consequences in everything:

I'm on the road today. As I checked out of my hotel room -- rolling my suitcase behind me -- I wondered how many bellmen jobs were destroyed by the innovation that put wheels on luggage.

Boudreaux misses the obvious policy implications. Simply pass federal legislation banning all roller bags. Imagine the economic stimulus we'd create when all those bellmen jobs come back. It certainly makes as much sense as mandating paid vacation.

Not exactly breaking news

The Financial Times reports "Exploding debt threatens America":

Under President Barack Obama’s budget plan, the federal debt is exploding. To be precise, it is rising – and will continue to rise – much faster than gross domestic product, a measure of America’s ability to service it. The federal debt was equivalent to 41 per cent of GDP at the end of 2008; the Congressional Budget Office projects it will increase to 82 per cent of GDP in 10 years. With no change in policy, it could hit 100 per cent of GDP in just another five years.

You need to register at FT.com to get the full story.

There must be no hike in the gasoline tax

Foster's Daily Democrat uses its editorial page to make the case against raising the gas tax:

The House has proposed a hike of 15 cents in the gasoline tax, a levy that presently stands at 19.6 cents per gallon. The House wants to burn the state's motorists and businesses affected by the gas tax with a 76.5 percent jump in the levy.

The House is either out of touch with the reality of today's economy or it simply does not care. Whichever it is, the Senate ought to reject the proposal without hesitation and the voters' eyes should be tightly focused on the call of the roll when it is taken.

In what kind of make-believe world does the House live? What kind of leadership exists in what is sometimes called the lower chamber?

Manifesto for Banana Republicans

New Hampshire's own P.J. O'Rourke has a piece in The Weekly Standard on the Obama Administration's habit of adopting tactics reminscint of tin-pot dictators:

The other day a journalist friend of mine in Washington got a phone call from a colleague in South America. "How's it feel to be a fellow citizen of the Third World?" my friend's friend asked.

"What?" said my friend.

"You know," said the Latin reporter, "the new government gets in office, the old government goes to jail."

The caller was referring, of course, to the prosecution--or threatened prosecution or mooted prosecution or proposal for prosecution to be publicly disavowed but tacitly permitted to go forward--of six Bush administration officials involved with the legal issues concerning "enhanced interrogation techniques."

I recommend reading the whole thing, and anything else O'Rourke writes.

China warns Federal Reserve over 'printing money'

This doesn't seem like good news. The Telegraph reports that we're being lectured by China on fiscal discipline:

Richard Fisher, president of the Dallas Federal Reserve Bank, said: "Senior officials of the Chinese government grilled me about whether or not we are going to monetise the actions of our legislature."

"I must have been asked about that a hundred times in China. I was asked at every single meeting about our purchases of Treasuries. That seemed to be the principal preoccupation of those that were invested with their surpluses mostly in the United States," he told the Wall Street Journal.

Charlie Arlinghaus: We Should Be More Like Canadians

By CHARLES M. ARLINGHAUS

Why can't we be more like Canada? Politicians across the political spectrum fret that fiscal responsibility is old-fashioned and not realistic in today's world. But we need only look northward for an example of what to do.

Ten years ago, we and they were in the same boat. Our two paths diverged in the woods, and we took the profligate one.

The recent fiscal history of the United States has shown that politicians will find an excuse not to be responsible if they are not forced to be. A recent study from the Cato Institute contrasts the dismal situation in the United States with what might have been -- what the Canadians did instead.

In the early 1990s, federal governments in both Canada and the United States were running deficits. The Canadian deficits were larger as a percentage of their economy. Both countries slowly worked back to surpluses in the mid-1990s. In Canada, it was the Liberal Party that created what is now a liberal-conservative consensus that balanced budgets are required.

In the United States, a Democratic President and a Republican Congress helped prove that divided government is in the taxpayers' best interest by creating the surpluses. One-time Reagan official William Niskanen wrote "A Case for Divided Government," in which he observed that spending increases three times as fast when one party has control than when divided government checks the impulses of each party.

Canada has maintained a consensus for balanced budgets while one-party control with no fiscal checks has led the United States down the road to ruin. Since the surpluses of the Clinton era, we've gone on a spending spree unchecked by the simple discipline of not spending what we don't have. There is now a bipartisan consensus for piling on debt into the foreseeable future.

When George W. Bush took office, public debt was $3.3 trillion. We had just finished up four years of surpluses, which saw the public debt decline by about $400 billion. The Bush years saw the debt grow by $2.5 trillion. Fiscal year 2009, which covers Bush and Obama spending, will add another $2.5 trillion by itself. Then the Obama budget would add another $5 trillion over the next seven years.

As a percentage of the economy, debt would increase from 40 percent to 80 percent over the next 10 years. In contrast, our Canadian friends don't spend more than they take in. Their debt has declined from 70 percent of gross domestic product to around 32 percent. And to make us look even worse, while our Social Security system has a huge unfunded liability, Canada has been setting money aside, and its system is fully funded.

The incentives that lead us to financial ruin are obvious when you consider the current economic crisis and the state responses to it.

In general, the federal government doesn't balance its budget because it doesn't have to. Politically, there is always a good excuse to spend more money or refrain from the tough decisions required to bring spending and taxes in line with each other. If I can spend just a little bit more, there's every reason to do so and no political points to be scored by saying "we just don't have the money."

In New Hampshire, we face one of the worst budget shortfalls in our state's recent history. The reason the budget deliberations are so difficult is that the law requires the final budget to be balanced. Lawmakers are not permitted to spend just a little more than they have because this year is different. They can't say we'll run a little bit of a deficit this year and fix it the next.

It forces them to make difficult decisions, but we know that if permitted to spend outside the lines this year, every year will turn into an exception, just as it did at the federal level.

Even with an imposed balanced budget discipline, lawmakers turned to bailouts from the federal government in the form of "state fiscal stimulus" programs to fund programs we don't have the money for when the federal deficit financing runs out. The government of California is putting off decisions by looking to the federal government for a $20 billion bailout, a drop in the bucket of $10 trillion or $12 trillion of federal debt. They and we look for that free federal money so we can put off decisions until the next budget.

I remember when those of us who wanted a federal balanced budget amendment to the Constitution were called naive. But we just don't seem to have the discipline of Canadians.

Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free-market think tank in Concord.

First round of stimulus funds is quickly putting some people back to work

Bob Sanders reports in the New Hampshire Business Review that New Hampshire is ahead of its neighbors in spending federal stimulus money, especially the NH Department of Transportation:

Indeed, the money is flying out the door so fast, that government regulators have had trouble keeping up with it. The Office of Economic Stimulus has been placing bidding opportunities on its Web site, a hodgepodge of links to other government agencies. It wasn’t until May, at NHBR’s request, that it published a list of who is getting the work.

Of course, New Hampshire is light years ahead of the federal government when it comes to disclosure. Despite President Obama’s assurance that the spending of stimulus money would come with “an unprecedented level of transparency and accountability so that every American will be able to go online and see where and how we're spending every dime,” the federal sites have yet to specify who is getting the money, or how many jobs they will create.

The federal government won’t even require that information until October. Indeed, states can’t even report it to the federal government if they wanted to. The federal Web site, federalreporting.gov, which was supposed to be the portal for the accountability demanded, is still “currently under construction.”

Fortunately, so are some of the roads and bridges in New Hampshire. Most experts expected that the most “shovel-ready” projects would involve building and paving highways, and New Hampshire, where the 10-year highway plan has been a wistful wish list for more than a decade, was ready.

Blackmailing your way to higher taxes

In Columbus, OH, the police chief is threatening all sorts of dire consequences if voters don't pass higher taxes:

Nearly 300 Columbus police officers will be laid off next year if voters don't approve an income tax increase Aug. 4, Columbus Police Chief Walter Distelzweig said this morning.

"If we receive additional revenue, these cuts would not be made," Distelzweig said.

The 2010 budget that he unveiled this morning is based on current revenues. It says the Police Division would shrink by 324 officers, with 297 layoffs and 27 retirements.

Of course, the police department and other branches of Columbus government could set priorities and cut spending elsewhere, but that's not scary enough. When facing a budget crunch, always threaten the most popular programs first.




Hattip: Lynn Walsh, Buckeye Institute for Public Policy Solutions

Defending the New Hampshire Advantage

The Union Leader editorial page points to more evidence that New Hampshire's low-tax status helps the state in good times and bad:

The New England Economic Partnership's latest study, released last week, projected that Rhode Island would suffer the most in the current recession, New Hampshire the least. New Hampshire would not only come out of the recession sooner than the other states, but it would have the lowest unemployment throughout. Our peak unemployment is expected to hit 7.1 percent; Rhode Island's 10.9 percent. New Hampshire is expected to be the only New England state to maintain an unemployment rate lower than 8 percent during the recession.

The reason Massachusetts, Maine, Vermont, Connecticut and Rhode Island will all suffer worse job losses and a longer economic slump than New Hampshire is not because God likes us more (although He does). It's because New Hampshire taxes its people and businesses less and is a generally more business-friendly state.

And in the Concord Monitor, former State Senator David Currier pens a letter to the editor defending the New Hampshire Advantage:

I believe strongly that these trends apply in the business community as well. Laffer and Moore also reported that "we also found that over these same years the no-income tax states created 89 percent more jobs and had 32 percent faster personal income growth than their high-tax counterparts." The Legislature should think twice before they put in place any additional capital gains taxes.

As a little side note, when I was chairman of the Senate Finance Committee in 1996, the state budget was $5.2 billion, and it is now fast approaching $11 billion.

I added emphasis on that late bit. Remember that when you hear that the Legislature has kept spending in check.

Stimulus money gets kick

The Concord Monitor runs David Tirrell-Wysocki's piece for the AP on New Hampshire'a ability to spend federal money quickly:

The U.S. Transportation Department said the state is among the top 10 in the percentage of stimulus money for transportation already put to work.

Overall, more than $145 million has been contracted for areas such as transportation, insulating homes and boosting unemployment benefits.

To get there, the state has sped up contract approvals, changed laws and designated a statewide stimulus director, Bud Fitch, who requires every stimulus-funded proposal to be topped with a green cover sheet signifying "Go."

"Everyone has been instructed . . . grab the green ones, they go to the top. Try to turn them around in a day," instead of the typical several days, Fitch said.

Sonia Sotomayor getting Nomination

Politico breaks that the White House will nominate New York appeals court judge Sonia Sotomayor to the Supreme Court.

n Sotomayor, Obama has chosen a nominee who will greatly please two powerful constituencies in his own party – women and Hispanics — that had openly lobbied for one of their own to replace Justice David Souter.

Of the four widely reported finalists, Sotomayor was the one Republican said they would complain most loudly about, and conservative legal groups attacked within minutes after Obama’s selection was reported.

Read more: http://www.politico.com/news/stories/0509/22962.html#ixzz0GcRkzSV1&B

Wow, it's nice to get one right. While I'm on a roll, let's make some even easier predictions. The confirmation battle will have little to do with Sotomayor's judicial temperment or legal mind. It will have a lot to do with identity politics, and whether she will be an "activist" judge or an "empathetic" judge.

Veterans in New Hampshire

Josiah Bartlett Center for Public Policy
For Immediate Release
May 25, 2009
For more information: Grant Bosse (603) 748-3659

Josiah Bartlett Center Releases "Veterans In New Hampshire"
Charts service of Granite State's 122,000 Veterans

(CONCORD) As the nation marks Memorial Day, the Josiah Bartlett Center for Public Policy today released its latest report, "Veterans in New Hampshire", which charts the service of the Granite State's 122,000 veterans.

Using information from the U.S. Census Bureau, the Josiah Bartlett Center estimates that over 122,000 veterans currently live in New Hampshire. 124 veterans served prior to World War II, 13,600 during World War II, more than 41,5000 during the Vietnam Era, and 6,600 since September 2001. The U.S. Census Bureau bases its estimates the annual American Community Survey, and calculates that 122,646 veterans lived in New Hampshire as of 2007, the last year for which data is currently available. The overall survey results have a margin of error of +/- 4,350.

"As we remember those who gave their lives to defend our freedom, we're proud to salute those heroes who came home," said Lead Investigator Grant Bosse, who authored the report. "We're proud to live among the thousands of our neighbors who put their lives on the line to defend America and make the world a safer place."

To download the report, go to NH Watchdog. This report may be reproduced with attribution to the Josiah Bartlett Center for Public Policy.
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Memorial Day

We mark Memorial Day, and those who died to protect our freedom, by taking a moment to recognize those who served and came home. The U.S. Census Bureau estimates that over 122,000 veterans currently live in New Hampshire. Here's when they served:

You can also download the complete New Hampshire veterans report.

The New Hampshire Advantage in Action

Kevin Landrigan looks at how the New Hampshire economy is fairing compared to our neighbors in the Nashua Telegraph:

The state's relatively limited revenue structure also means that while it was late going into a recession, New Hampshire is usually late coming out, too, D'Allesandro said.

New Hampshire and Alaska are the only states without either a state sales or income tax. When a recession begins to end and companies are hiring more workers, states with income taxes see a more dramatic increase in state revenues than New Hampshire does, he said.

"We are slow to go in and slower to come out,'' D'Allesandro said.

D'Allesandro's point in that state revenues are slower to recover here than other states, not our low-tax economy.

NH Senate cutting state budget

In this morning's Nashua Telegraph, Kevin Landrigan reports that Senate budget writers have pared back some of the increased spending approved by their House colleagues:

The dilemma facing Manchester Democratic Sen. Lou D'Allesandro, the chief budget writer, is twofold.

One, the worsening economy hasn't become better and that's bad for state revenues.

Two, as a result of one, for the second time this spring state officials told key legislators that their estimates for how many will need public assistance in the next two years has to go up.

Tilton Democratic Sen. Kathleen Sgambati told the Senate budget panel that those higher caseload estimates add $125 million in state spending to what the House had already figured on.

On Friday, Sgambati proposed a list of spending reductions totaling $95 million that would virtually strip away the added spending that the House had included in its plan over what Gov. John Lynch had first proposed.

Landrigan also outlines some of the specific programs that would see less state money, and handicaps the chances of casino-style gambling making it into the budget.

Lynch Comes Out Against Gas Tax

In the past, NH Watchdog has criticized Governor John Lynch for downshfiting the cost of the stat budget onto cities and towns, threatening the New Hampshire bond rating by borrowing money for operational costs, and for using highway spending gimmicks.

So we're happy to praise the Governor when he has not only gotten out in front of an issue, but made the right decision, according to Norma Love's AP article in the Union Leader:

Gov. John Lynch said Friday he would veto the state budget if it contained a gas tax increase.

Lynch said he told legislative leaders he would not accept the 15 cent tax increase passed by the House and under consideration in the Senate. Lynch and lawmakers are at odds over how to fund badly needed repairs and maintenance to the state's highways and bridges.

"In very difficult economic times, the last thing we should do is increase the gas tax," he said.

Lynch's announcement makes it much less likely that the Legislature will pass a gas tax, which is good news. It also makes it more likely that it will adopt some of Lynch's bad ideas, such as toll increases and a raid on the Turnpike Fund.

Stimulating the Economy

Our friend Jim Scarantino at the Rio Grande Foundation has found one part of the country that is being helped by the radical expansion of government: Washington DC.

The city shines more now than it did two decades ago. It is young, hip and sexy. But it is still a parasitical city, feeding off the energy, hard work, and patriotism elsewhere in the country. Every dollar that ends up here came from someone's pocket elsewhere, mostly against their will through coerced tax payments and other less visible transfers of wealth. This city does not serve us any longer. The rest of the nation exists to serve its voracious appetite for our life energy. Its belly is never filled.

This city is now in the import-export business. It has burned through our domestic capital. Now it imports foreign capital to fund its self-serving expansion of power. It collects the principal from those loans, and the vigorish, the interest payments, from Americans elsewhere, then exports their monetized life energy to foreign banks and capitals. Its major product is now debt and red ink.

As this city rises, somewhere else in America falls a little bit. Someone has to surrender a dream somewhere else to feed the dreams that power this imperial capital.

Honoring New Hampshire's Veterans

As we mark the sacrifice of those who died to protect our freedom, we also thank those veterans who came home. In New Hampshire, we live among more than 120,000 of these heroes. Based on estimates compiled by the U.S. Census Bureau's 2007 American Community Survey, the Josiah Barlett Center for Public Policy has put together the following graph showing when New Hampshire's veterans served:
NH Veterans by Date of Service

Publish at Scribd or explore others: Humanities Research grant bosse New Hampshire

These estimates, which were part of the U.S. Census Bureau's 2007 American Community Survey, show that more than 15,000 World War II veterans are still living in New Hampshire. More than 16,000 served during Korea, nearly 40,000 during Vietnam, 14,000 during the First Gulf War, and 6,600 since 2001. THese figures include all veterans, regardless of where they served or combat status. In total, the estimated 122,000 New Hampshire veterans represent one in every nine Granite Staters.

To all New Hampshire veterans, thank you for your service.

The Next Supreme Court Justice: Sonia Sotomayor

Unofficial word around DC is that President Obama is a lock to nominate Sonia Sotomayor to replace Justice David Souter on the U.S. Supreme Court.

Meanwhile, here's an interesting roundup on the vacancy from Reason.

TGIFriedman

Here's your Friday Friedman, on voluntary cooperation:

Jeanne Shaheen: A federal budget to get our economic house in order

Sen. Jeanne Shaheen pens a column in this morning's Union Leader claiming that the Obama Administation's proposed budget increases spending in the short term, but controls deficits long term:

Fiscal discipline is the New Hampshire way, but for far too long it hasn't been the Washington way.

Over the past eight years, politicians in Washington turned a record budget surplus into a record deficit. Federal spending doubled, and our national debt soared to more than $10 trillion. This fiscal recklessness helped fuel the current economic crisis. And now, at the very moment when there is finally the political will in Washington to tackle the debt, we have to spend money to stimulate the economy.

It's the right thing to do in the short term. But in the longer term, we need to get back on the path to a balanced budget. The budget resolution recently passed by Congress addresses both our short-term and long-term economic needs.

There is no credible way to claim that this proposed budget cuts the deficit, short-term, long-term, or ever:

Why Journalists Deserve Low Pay

The Christian Science Monitor tries to ruin my weekend:

Actually, journalists deserve low pay.

Wages are compensation for value creation. And journalists simply aren't creating much value these days.

Mandating Paid Vacation

(UPDATED) Didn't mean to play name that party. Grayson is a Democrat representing Orlando.

It's been a long time coming, but we're finally here. A Member of Congress now wants to force businesses to pay their employees to take vacations, according to Politico:

Rep. Alan Grayson was standing in the middle of Disney World when it hit him: What Americans really need is a week of paid vacation.

So on Thursday, the Florida Democrat will introduce the Paid Vacation Act — legislation that would be the first to make paid vacation time a requirement under federal law.

The bill would require companies with more than 100 employees to offer a week of paid vacation for both full-time and part-time employees after they’ve put in a year on the job. Three years after the effective date of the law, those same companies would be required to provide two weeks of paid vacation, and companies with 50 or more employees would have to provide one week.

I don't think it's a great idea, but we should do everything we can to replicate the French economic miracle.

The Results Are In: Stimulus Bill Neither Timely Nor Targeted

The Heritage Foundation has released a new report on the so-called stimulus bill, and found that the hodge-podge of rushed government spending is not delivering the economic boost that supporters promised:

Not Timely

Government agencies have spent only a tiny fraction of money planned to be spent in fiscal years 2009 and 2010. Moreover, agencies have not allocated most of the money that has been directed toward them for any named projects.

Not Targeted

Fiscal year 2010 ends September 30, 2010, but the recession could end sooner than that. Indeed, a majority of economists surveyed in April predicted the recession will end in 2009. Fed chairman Ben Bernanke also thinks the recession will end this year. The stimulus bill threatens to miss the very target it was meant to address.

Area school districts stand to lose more than $4.3m in state building aid

Adam Krauss of Foster's Daily Democrat explores how much seacoast school districts stand to lose should the Senate adopt the New Hampshire budget, and the cut in Building Aid, as approved by the House:

Twelve local school districts stand to lose more than $4.3 million combined if the state Senate doesn't restore school building aid after the House passed on it, a new study shows.

The impact has superintendents upset at the possibility, to the point one raised the potential for a lawsuit.

"I'm deeply troubled by what appears to be another reneging on a promise that the state has undertaken with local school districts that goes back many, many years now," said Dover Superintendent John O'Connor. "School districts across the state will be lining up to take the state to court" if the promise isn't fulfilled.

You can also read our full report on Building Aid by school district online.

Ending New Hampshire’s Forty Year Experiment with Job Creation

By CHARLES M. ARLINGHAUS
(Here is Charlie's Union Leader column, which is printed on dead trees this morning, but not yet available on UnionLeader.com.)

Forty years ago, New Hampshire embarked on a course for economic development and job growth that has served it well and set it apart from the rest of the Northeast. Today, the governor and the legislature are considering reversing that course and falling in line with the New Yorks and Massachusettses of the world.

Not that long ago, the New England states were six peas in a similar pod. In economic terms, New Hampshire may as well have been East Vermont or Massachusetts North. In terms of economic competition, there was little to give us an advantage over our neighbors when it came to attracting jobs.

Then-governor Walter Peterson noted that our taxes on capital and merchandise and investment led to a circle of warehouses and similar institutions ringing our border. While other states had flirted with adding additional forms of taxation like sales or income taxes, Peterson went in a different direction.

He reformed business taxation in 1970 by eliminating thirteen different taxes, essentially taxes on capital and investment. In their place, he created the Business Profits Tax. New Hampshire created an incentive to invest in our state and to move capital here not by adding one tax on top of another but by repealing a host of small and large taxes and replacing them with a tax that gave us a competitive advantage.

In the four decades since, New Hampshire’s economy has benefitted from a consistent competitive advantage over our neighbors. We have led the other states in job creation and our economy has grown faster than the states we border.

As a small state with less than one-half of one percent of the nation’s population, we distinguish ourselves not by our vast marketplace but by a friendly business and tax climate.

There is a second type of experimentation in tax policy symbolized by New York. The State of New York has decided to hope that tax policy doesn’t affect behavior. They have decided to raise taxes on everyone for everything and hope only a few sourpusses get up and leave. Tax increases on haircuts and music downloads may not have the same job destroying potential but the enormous income tax increases on entrepreneurs will.

Tom Golisano has run for Governor a few times and owns the Buffalo Sabres. He’ll become a resident of Florida. But this danger isn’t unique to New York. In this week’s Wall Street Journal we learn the last decade saw more than 1,000 people per DAY leaving the nine highest income tax states and relocating to lower tax jurisdictions.

States compete against each other and little New Hampshire has an advantage over the high tax states in the region. That’s the reason jobs move here. When the economy turns and jobs begin to come back, they will move to states with an economic advantage. The only question is will New Hampshire be among those states?

Current sentiment in Concord is more inclined to follow Gov. Paterson of New York than former Gov. Peterson of New Hampshire. The incentives Paterson is creating drive wealth and job creation away. That helps explain why the ten lower tax, no income tax states created 89% more jobs than their high tax counterparts. Concord wants to tax capital gains, raise taxes on tourism (meals and rooms), cigarettes, gas, tolls, stop a planned cut in the insurance tax, create a new death tax, and has considered raising business taxes again.

Former Governor Peterson’s efforts brought jobs and prosperity to New Hampshire by creating the right incentives not by betting people wouldn’t have anywhere else to go. The world is smaller and the economy more global. Jobs can move around.

Governor Perry of Texas told the Wall Street Journal that his state needed a pro-growth tax system because they were competing for jobs with Germany and France and China as well as other states. He’s cutting taxes this year and Texas created more jobs in 2008 than the rest of the country put together.

Forty years ago, we had that attitude. We wanted more jobs not more government. We wanted the economic incentives to exist to bring jobs here. Today, the powers that be are thinking about more money, talking about more taxes, and hoping jobs won’t be affected. It’s not a good bet.

Charlie Arlinghaus is President of the Josiah Bartlett Center for Public Policy, a free-market think tank based in Concord, NH.

A Brief History of Fishing, Part 1

The Concord Monitor runs an Associated Press story by Jay Lindsey on the new regulatory regime facing New England fishermen.

Fishermen are working to switch by next year to a new "catch share" system that allocates a total allowed catch to groups of fishermen, who divide it among themselves. Today's system tries to stop overfishing by making fishermen less efficient, including by restricting the time fishermen are allowed to spend at sea.

The current system is broadly hated. Overfishing on important stocks has continued, as shown in an annual report of the status of the U.S. fisheries, released yesterday by NOAA. Also, fishermen are forced to throw away huge amounts of their catch when strict daily limits on a species are reached. The fleet has withered as the number of days fishermen are allowed has dropped to about two dozen annually for many in New England.

I'm not an expect on fishing regulations, but during my time on the National Ocean Policy Study, I learned enough to be dangerous.

The fishing grounds off New England and eastern Canada are among the richest in the world, and have providing untold millions of tons of "Cod" and other groundfish for 500 years. I highly recommend Mark Kurlansky's book for a glimpse into the history of the industry.

The open ocean is owned by no one, and no nation has jurisdiction beyond 3, 12, or eventually 200 miles beyond its coastline. For hundreds of years, fishermen headed to the fishing grounds, dropped their nets in the water, and pulled up virtually unlimited amounts of fish. They were limited only by the size of their holds, their ability to preserve their catch, and of course their will to endure a backbreaking and deadly job. But these catches exceeded the ability of the targeted species to reproduce, and fishing stocks declined.

It was a classic "Tragedy of the Commons", where a public good was exploited precisely because no one had the right to limit its use. The answer: regulation.

To be continued...

The Great Ethanol Scam

Lowering fuel efficiency, destroying your engine, and making food more expensive. And you're paying billions for the privilege. Ed Wallace rights in Business Week about my personal white whale, ethanol subsidies:

Don't let anybody mislead you: The new push to get a 15% ethanol mandate out of Washington is simply to restore profitability to a failed industry. Only this time around those promoting more ethanol in our gas say there's no scientific proof that adding more ethanol will damage vehicles or small gas-powered engines. With that statement they've gone from shilling the public to outright falsehoods, because ethanol-laced gasoline is already destroying engines across the country in ever larger numbers.

Concord, NH, faces $7M budget gap

It may only be a fraction of the state's pending budget deficit, but the capital city of Concord is $7 million in the red, according to this AP story in the Union Leader:

City Manager Tom Aspell said Tuesday several city services, programs and jobs could soon be eliminated under the plan, which includes 14 city worker layoffs.

The plan would not fill six police department spots, and a fire engine would be taken out of service. The library branch in Penacook would also shut its doors permanently.

A Call to Social Networking

We're trying to build up the community of people learning about New Hampshire policy and free market principles, and teaching others. And we need your help.

Check out the Josiah Bartlett Center's website.

Scroll through this blog, and leave your comments.

Join our Facebook Group.

Send us tips and links to your news and opinion, or articles and blog posts you find interesting.

The New Hampshire Advantage

Dan Pierce posts a great article on tax competition among states over at RedHampshire:

I wish I had a nickel for every minute I spent arguing this point in my many years on the radio here in the Granite State. Laffer and Moore have studies which back their claim that…surprise, surprise, surprise…when you raise taxes on wealthy people, they have the wherewithal to take action, like moving to a more amenable place. For Conservatives, Republicans and Libertarians (or any combination thereof) this is an argument that can be backed up with real-time data and real-life experiences. If the Massachusetts legislature goes through with a sales tax increase, we’ll see more evidence of our advantage on that front.

(Disclosure- Dan hired me for my first time job as an overnight reporter at AM610 WGIR in 1994. Whether hiring me to work midnight to 8am makes me more of less likely to think well of Dan is open to interpretation.

Net Spending Cut?

In which a candidate behaves contrary to his campaign promises:

Candidate Barack Obama, October 15, 2008, third presidential debate:

But there is no doubt that we’ve been living beyond our means and we’re going to have to make some adjustments.

Now, what I’ve done throughout this campaign is to propose a net spending cut.

Economist Kevin Hassett, May 19, 2009, Bloomberg News columnist:

Extrapolating out the 2007 CBO forecast, our government plans to spend about $5.6 trillion more between 2009 and 2018 than was projected to be spent when the Democrats took over control of Congress.

To put that number in perspective, at the start of the 2007 budget year, Democrats inherited $4.8 trillion in outstanding government debt. That means that all of the deficits that have been run through all of history, funds that were used to finance the Vietnam War and the Iraq War and everything else in between, would be smaller than the spending increases of Democrats over the next 10 years if they are permitted to stay in power and keep up this pace.

I think this gives too much blame to the President, and not enough to Congress, for awful budget policy, but it certainly highlights how Barack Obama's campaign promise of fiscal discipline was only that.

State unemployment rate remains steady

In the Nashua Telegraph, Ashley Smith reports that New Hampshire's unemployment rate edged up 0.1% to 6.3% in April:

The N.H. jobless rate increased just one-tenth of a percentage point to 6.3 percent, despite significant increases every month from December to March. However, experts are very cautious about calling that any kind of improvement. Comparatively, 6.3 percent is still a very high unemployment rate for New Hampshire.

“It’s still pretty bad for the state,” said Annette Nielsen, an economist for the New Hampshire Labor Market Information Bureau. “Compared to last year at this time, there’s still 19,080 more unemployed people.”

Nielsen also said it’s impossible to predict an economic recovery after one month when the unemployment rate remained relatively flat.

Too big to fail

Looks like we'll be bailing out another public infrastructure project:

Actually, I have a feeling that this will be a fully operational battle station much sooner than anticipated.
Hattip: Greg Mankiw

Obama's Risky Debt

Columnist Robert Samuelson writes in the Washington Post about the high costs of President Obama's budget priorities, or lack thereof, calling this budget a "case study in political expediency and economic gambling":

From 2010 to 2019, Obama projects annual deficits totaling $7.1 trillion; that's atop the $1.8 trillion deficit for 2009. By 2019, the ratio of publicly held federal debt to gross domestic product (GDP, or the economy) would reach 70 percent, up from 41 percent in 2008. That would be the highest since 1950 (80 percent). The Congressional Budget Office, using less optimistic economic forecasts, raises these estimates. The 2010-19 deficits would total $9.3 trillion; the debt-to-GDP ratio in 2019 would be 82 percent.

But wait: Even these totals may be understated. By various estimates, Obama's health plan might cost $1.2 trillion over a decade; Obama has budgeted only $635 billion. Next, the huge deficits occur despite a pronounced squeeze of defense spending. From 2008 to 2019, total federal spending would rise 75 percent, but defense spending would increase only 17 percent. Unless foreign threats recede, military spending and deficits might both grow.

Fahey reports on budget, pensions

Tom Fahey updates us on the budget debate and pension funding shortfall in his weekly "Under the State House Dome" column in the Union Leader:

AND THE WORK GOES ON: Meanwhile, work goes on to fund a budget for 2010-11.

D'Allesandro, Senate Finance chair, has only a few weeks to finish work on the Senate version of a two-year, $11 billion spending plan. Senate sentiment runs against the capital gains and estate tax ideas the House put in its budget plan.

D'Allesandro said he agrees with the House that the state should not bond its school building aid plan, meaning roughly $83 million has to come from general funds.

Pressure is building from pro-gambling groups who see their last chance at hand. Labor groups and track owners released new surveys showing support last week.

D'Allesandro said he plans to be at the State House today -- yes, Sunday -- to handle budget work. He took off yesterday to accept an honorary doctorate from Franklin Pierce University in Rindge. That's his second, after one that Daniel Webster College gave him about 10 years ago.

- - - - - - -

PESSIMISTIC ON PENSION REFORM: Rep. Ken Hawkins, who filed a number of retirement reform bills, was discouraged last week. He said he'll urge the House to kill the last surviving piece of his proposals, which requires an extra five years of work for firefighters and police officers.

Hawkins' complaint is that the Senate boosted minimum pensions at the same time it killed a minimum retirement age of 50. A full pension after 25 years would be 62.5 percent of pay, compared to 50 percent of pay after 20 years now.

"I'm not even going to ask for a committee of conference, because this isn't going to go through. Why waste the time?" he asked.

TGIFriedman

It's our 250th post!

Here's your Friday Friedman, on the power of prices:

Enjoy the weekend!

Tax cap debate to hit Senate floor

Tom Fahey reports in the Union Leader that a move to let any New Hampshire city or town vote on a tax cap is going to get its day on the Senate floor:

A Merrimack County Superior Court ruling in March said state law and the constitution bar adoption of tax caps in municipalities that operate under charters.

Acting on a challenge that Concord officials filed, the court said the cap would interfere with a city manager's duty under state law to present a budget to city officials.

Republicans say their proposed amendment adjusts state law to satisfy the court's concerns. It protects those communities that have adopted caps, and gives voters in other towns and cities the right to decide whether they want a cap in place, and includes an override provision if voters think cuts go too far. Democrats have resisted the amendment.

The Senate Public and Municipal Affairs Committee did not consider the cap proposal yesterday in a vote proponents hoped would bring it to the full Senate.

Watchdog on the Radio- Family Edition

Grant Bosse will be on WNTK's Morning News (with Brett Bosse) at 7:20am to discuss the Josiah Bartlett Center's latest report on downshifting in the state budget.

Listen live.

Watchdog on the Radio

Grant Bosse will join "Bulldog" Brian Tilton on "Bulldog Live" at 2:05 to discuss our latest study of local tax impacts from the state budget.

Listen Live Online.

How much would your town lose?

Josiah Bartlett Center Studies Local Impact of State Budget

Josiah Bartlett Center for Public Policy
For Immediate Release
May 13, 2009
For more information: Grant Bosse (603) 748-3659

READ THE FULL REPORT

Josiah Bartlett Center Studies Local Impact of State Budget
Charts revenue lost in every town and school district in New Hampshire

(CONCORD) The Josiah Bartlett Center for Public Policy today released its study of the local impact of the state budget, as approved by the New Hampshire House. The House Budget suspends the 40-year old Revenue Sharing Program under Chapter 31-A, and provides no funds for State Building Aid. Based on 2008 revenues to each town and the amount scheduled to be awarded to each school district, the Josiah Bartlett Center is able to provide local budget writers with the projected impact of the pending state budget.

"Budgets are about choices, and as the State Senate takes up this budget, it should know the impact it would have on cities and towns," said Lead Investigator Grant Bosse, who authored the study. "Better information leads to better decisions, and we're happy to provide it."

The state Department of Education has identified $45 million in projects eligible for reimbursement in 2009-2010. Based on the $41.65 million recommended by Governor John Lynch, the Josiah Bartlett Center calculated how much each district would have received. Revenue Sharing projections were based on actual 2008 revenues received by each town, calculated by the New Hampshire Municipal Association. The State Senate may consider restoring either or both of these local revenue streams as it debates HB 1.

"The budget as it stands down shifts the state's fiscal problems onto towns and school districts that can't afford it," Bosse added. "The Josiah Bartlett Center recommends that lawmakers try harder to control state spending before passing on their budget problems to local taxpayers."

To download the report, go to jbartlett.org.

Do something about property taxes

By CHARLES M. ARLINGHAUS

This session the Legislature has a chance to do something about property taxes. More accurately, legislators have an opportunity to give you the choice to do something about property taxes.

The Senate is about to consider a bill that would allow some communities the option of voting on a tax and spending cap. It wouldn't impose a cap or automatically schedule a vote. Rather it would make clear that cities and towns with a charter form of government could place a spending cap amendment on their ballots.

This bill as far as it goes isn't all that radical. Five cities have already adopted spending caps: Franklin, Nashua, Laconia, Dover and Rochester. A few more will consider spending caps this November.

Since Franklin adopted its cap 20 years ago, it was generally understood that cities and towns with charters could adopt a charter amendment by collecting petitions and having a vote on the ballot. Renewed interest in spending caps began with Laconia's successful petition drive and adoption in 2005. Since then, Dover and Rochester have followed suit.

But this year, a judge in Concord claimed that its cap would infringe on the city manager's right to bring in whatever budget he saw fit. It seems an awfully odd opinion, but you never can tell with judges these days.

So cap proponents are seeking a law to make clear that charters can be amended to include caps just as five of the state's larger communities, representing 15 percent of the state population, have done.

The law would not endorse spending caps, merely allow communities who have already chosen to have a charter form of government instead of town meeting to adopt a budgetary restriction if they so choose.

If it were me, I would go a step further. Current understanding is that only towns or cities with charters can have a spending cap. Towns with town meeting or the SB2 form of government cannot. I don't see why any town ought not to be able to adopt a spending cap if it chooses to do so.

In the last few years, supporters of an income tax have placed nonbinding resolutions on town meeting ballots expressing annoyance at our increasing property taxes. Their preferred solutions is to add an income tax on top of the property tax.

Voters in Sunapee had a better idea. Sunapee voters, annoyed at their increasing taxes, adopted the resolution. At the same time, they also adopted a nonbinding resolution urging selectmen to cap spending increases at the rate of inflation.

Because Sunapee has a town meeting, the resolution was nonbinding, but why shouldn't it, too, have the same choice as Nashua to cap spending?

Income tax supporters would have us believe that we could lower our taxes if we adopted another one. Yet history suggests otherwise. The last two states to adopt an income tax were New Jersey and Connecticut. In each case, the ostensible reason was to lower property taxes. It didn't work. The two states in the country with higher property taxes than New Hampshire are Connecticut and New Jersey. And they pay an income tax on top of it. And a sales tax.

In reality, taxes go up because spending goes up. They increase bit by bit over time when increases are a few percentage points higher here and there. Most politicians are under pressure to increase spending from existing programs, employees and people with ideas that will just cost a little bit of money.

A spending cap creates a framework for them to work within, imposing a discipline from the outside that human nature is reluctant to supply on its own. Massachusetts adopted a similar idea with its Proposition 2½. Property tax increases were capped with a provision to override the cap if circumstances called for it. Overrides happen frequently across the state, but property taxes are held in check most years. As a result, property taxes in Massachusetts went from being the second or third highest in the country to 22nd highest in the first decade of the law.

In New Hampshire, when Franklin adopted its cap 20 years ago, it had the highest property taxes in the state. Now they're below average.

The law being considered by the Senate doesn't impose caps on any community. It doesn't require a community to hold a vote. It merely allows them to do so. That seems reasonable enough.

Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free-market think tank in Concord.

Obama Administration Goes After Cheerios

The Obama Administration is chiding General Mills for claiming that eating Cheerios will lower your cholesterol:

The Food and Drug Administration scolded the makers of Cheerios about the way they promote the cereal's health benefits. The FDA sent a letter of warning to General Mills accusing them of making unauthorized health claims.

Current boxes of Cheerios are touting what the company calls exciting news -- the cereal's ability to help lower cholesterol 10 percent in one month.

Cheerios, part of this balanced breakfast, by prescription only.

What's next? Should Snap, Crackle and Pop register with the ATF? Drag Captain Crunch before the war crimes tribunal? And let's not start with Sonny the Cocoa Puffs bird and his mockery of the mentally ill.

Of course, breakfast is the most important meal of the day, and we should be used to marketing that tells us that their breakfast product will make us healthier:

What's wrong with this headline?

Obama Halves Chrysler's Planned Marketing Budget

So much is wrong, so very, very much.

Stimulating the Dead

That's some stimulus. Not only has spending billions of dollars actually increased unemployment faster than President Obama's economic advisors projected, but it's raising the dead in Maryland:

Millions of Americans on Social Security are receiving $250 checks as part of the president's stimulus plan -- including an Anne Arundel woman who died more than 40 years ago.

The woman's son, 83-year-old James Hagner, said he got the surprise when he checked his mailbox late last week.

"It shocked me and I laughed all at the same time," Hagner said. "I don't even expect to get one my own self, and I get one for my mother for 43 years ago?"

His mother, Rose, died on Memorial Day in 1967.

Here's a nifty chart prepared by the President's economists showing how the stimulus would lower unemployment rates. The two red triangles show what actually happened:
Hattip: Instapundit

Tax hike urged to cover jobless benefits

UPDATED- According to Kevin Landrigan in the Nashua Telegraph, Commissioner Reardon didn't just ask for a tax increase on her first day in office, she imposed one:

Reardon raised taxes on all businesses to shore up a slumping fund that pays weekly jobless benefit checks.

The temporary tax increase would add one half of 1 percent to the tax rate all employers pay on the first $8,000 of salary for each worker.

All employers pay unemployment tax from 0.1 percent to 6.9 percent depending on several factors with each company's history of using the fund, a key indicator.

The average employer tax rate is 2.2 percent.

For the employer paying the average rate, this tax hike increases the firm's annual cost per employee 23 percent to $216 from $176.

All businesses made their first quarterly tax payment for 2009 last month.

The increase announced Monday applies to the last three quarters starting with a July 1 payment, state officials said.

It didn't take newly swown-in Employment Security Commissioner Tara Reardon long to ask for more money. Tom Fahey reports in the Union Leader that the department will seek higher unemployment taxes to pay for benefits:

Jobless benefits payments from now through March 2010 will exceed the fund's revenues by $155 million, according to an April 24 report on the state's unemployment insurance trust fund. If the deficit occurs, the state would be forced to borrow from the federal government.

Tara Reardon, sworn in yesterday as the state's new commissioner of Employment Security, said the House Labor Committee will be asked to increase the wage ceiling on unemployment taxes, along with other changes to shore up the fund.

Fahey reports that the fund has collected more than it has paid out for six of the past eight years, and that average weekly benefits have doubled over the past 15 years.

Quadruple

Not a word you use a lot in polite conversation: Quadruple. To increase by four times.

The Bush-Pelosi-Reid budget of 2008 managed to set a record with the highest budget deficit in our nation's history. With Barack Obama taking over the Oval Office, the new team has managed to QUADRUPLE that record in just their first year:

The deficit for the current budget year will rise by $89 billion to above $1.8 trillion -- about four times the record set just last year. The unprecedented red ink flows from the deep recession, the Wall Street bailout, the cost of President Barack Obama's economic stimulus bill, as well as a structural imbalance between what the government spends and what it takes in.

As the economy performs worse than expected, the deficit for the 2010 budget year beginning in October will worsen by $87 billion to $1.3 trillion, the White House says. The deterioration reflects lower tax revenues and higher costs for bank failures, unemployment benefits and food stamps.

For the current year, the government would borrow 46 cents for every dollar it takes to run the government under the administration's plan. In one of the few positive signs, the actual 2009 deficit is likely to be $250 billion less than predicted because Congress is unlikely to provide another $250 billion in financial bailout money.

Defenders of the spendthrift Adminstration, including the White House Budget Director, claim that it's not the President's fault. It's the economy. Well, it's also the unpredecented spending. The never-ending string of bailouts and stimuli have exploded government spending in pursuit of the discredited Keynsian solution of using government spending to regulate the economy into recovery. In doing so, they have devalued the dollar, made investment in the U.S. less attractive, and doen substantial harm to our country's long-term fiscal health.