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Saturday, October 31, 2009

Another perspective on the Pelosi Health Care Bill

Here's a look at the most commonly used words in the 1,990 page Affordable Health Care for America Act, as introduced by House Speaker Nancy Pelosi this week.

Wordle: Pelosi Health Care Bill Word Cloud

Thanks to Steven Allen Adams at the West Virginia Examiner for the source document, and Lynn Walsh at the Buckeye Institute for the idea.

Biden concedes stimulus numbers not 100% accurate

Ya think? Thanks to Andrew Brietbart for combing C-SPAN so we don't have to.

Municipalities had no choice but to sue

The Nashua Telegraph says that New Hampshire cities and town were right to take the state to court over cuts in municipal retirement subsidies, whether or not they win the case.
The state took $50 million from cities and towns in the form of suspended state revenue-sharing payments. That, as far as we know, is resented but not being challenged.

It then handed municipalities a bill for $27 million. That’s the estimated cost of reducing the state’s contribution to public employee retirement funds from 35 percent to 30 percent next year and to 25 percent in 2011. The reduction, which is the subject of an impending lawsuit, will cost Concord taxpayers between $300,000 and $350,000 over the next two years.

The municipalities are right to challenge the state’s unilateral abrogation of a longstanding agreement. They may not win, but given what’s at stake, they must fight the state’s move, one that could have been avoided by raising more revenue.

Pelosi vs. NH: Wrecking the state budget

The Union Leader argues that the new health care bill unveiled this week by House Speaker Nancy Pelosi would be bad for New Hampshire.
Under Pelosi's bill, families earning up to 150 percent of the poverty level are to be covered by Medicaid! That huge increase would have a disastrous effect on New Hampshire's budget.

This bill ought to draw an automatic "no" vote from Reps. Carol Shea-Porter and Paul Hodes. It would explode the already out-of-balance New Hampshire state budget and almost certainly result in a state income or sales tax. But Shea-Porter was on the stage with Nancy Pelosi, beaming with delight, when the speaker unveiled the plan. Maybe Hodes and Sen. Jeanne Shaheen will have more sense than to support this budget buster.

Friday, October 30, 2009

TGIFriedman- How to Cure Inflation Part II

Here's the second of three installments on how to cure inflation from Milton Friedman.

Dozens in Congress under ethics inquiry

The Washington Post has obtained a copy of a report on the ongoing ethics investigation into more than 30 Members of Congress. The report was inadvertantly left on a public server before being sent to the Post.
Many of the broad outlines of the cases cited in the July document are known -- the committee announced over the summer that it was reviewing lawmakers with connections to the now-closed PMA Group, a lobbying firm. But the document indicates that the inquiry was broader than initially believed. It included a review of seven lawmakers on the House Appropriations defense subcommittee who have steered federal money to the firm's clients and have also received large campaign contributions.

The document also disclosed that:

-- Ethics committee staff members have interviewed House Ways and Means Chairman Charles B. Rangel (D-N.Y.) about one element of the complex investigation of his personal finances, as well as the lawmaker's top aide and his son. Rangel said he spoke with ethics committee staff members regarding a conference that he and four other members of the Congressional Black Caucus attended last November in St. Martin. The trip initially was said to be sponsored by a nonprofit foundation run by a newspaper. But the three-day event, at a luxury resort, was underwritten by major corporations such as Citigroup, Pfizer and AT&T. Rules passed in 2007, shortly after Democrats reclaimed the majority following a wave of corruption cases against Republicans, bar private companies from paying for congressional travel.

Weekend Reading: Affordable Health Care for America Act

Here's the entire 1,990 page House Health Care Bill, courtest of our friends at West Virginia Watchdog.

Affordable Health Care for America Act

Thursday, October 29, 2009

WMUR looks at Manchester Spending Cap

WMUR's Adam Sexton looks at both sides of the argument for and against a Spending Cap to protect Manchester taxpayers.
"This would give taxpayers a voice at the table," said Grant Bosse of the Josiah (Bartlett) Center for Public Policy. "The board of aldermen isn't willing to control spending themselves. This would tell them, 'You need to control spending.'"

The proposed amendment to the city's charter would enforce limits on tax rates and spending, with any increases capped at the rate of inflation.

"If there's a real emergency and a real need to increase spending faster than the economy is growing, you can do it," Bosse said. "You just have to justify it to taxpayers."

How does New Hampshire spend our money?

New Hampshire's monthly revenue reports are among the most anticipated public documents for State House insiders and those of us who cover them. The Department of Revenue Administration posts how much money the state took in from its various taxes, and how this total compared to its revenue plan. But the Granite State lacks a similar mechanism to track state spending. Lawmakers, including the Governor, are frustrated at not knowing how state agencies are spending money, and whether or not they are on target to meet their budget.

The Eagle-Tribune's Terry Date reports on efforts from long-time revenue hawk Norm Major to track state spending every month.
Major's bill would require state administrators to report monthly on what money was spent. The state now does that for revenues, but not expenditures.

"How can you consider a budget if you do not know what has been expended?" Major said. "We've been working with budgets, and we have not had that information available."

Legislative budget assistant Jeff Pattison said Major's point is well taken.

"That has been a long-existing weakness in the financial system in New Hampshire," Pattison said, "and a lot of people have wanted to be able to monitor expenditures on a tighter basis."

The Wal-Mart Economic Stimulus Plan?

Mark Perry at Carpe Diem reports that Wal-Mart is doing its part to put America back to work, in spite of the government's best efforts.
1. In just a three-week period from October 7-27, Wal-Mart announced the opening of 22 new stores and expansions of existing stores that have added 5,340 new jobs to the local communities in 18 different states.

2. Wal-Mart recently announced Hundreds of Millions of Dollars in Price Reductions, with unprecedented savings each week this Holiday season.

3. Wal-Mart also recently announced that total capital spending for the fiscal year ending Jan. 2010, is projected to be between $12.5 to $13.1 billion, up from $11.5 billion in fiscal year 2009. Total capital spending for the fiscal year ending Jan. 2011 is projected to be $13.0 to $15.0 billion. Note: More than 50% of Wal-Mart's capital spending is for its U.S. operations.
Wal-Mart's relentless efforts to find efficiency in the supply chain, and the pressure its efforts put on other retail outlets, helped fuel America's economic boom in the 1990's. Now, it is leading the recovery through reinvestment and price cuts. Just like in the 90's, politicians will be happy to take credit for the economci growth provided by those greedy corporations they like to attack.

Death by Government: Swine Flu Vaccine

Scott Gottlieb writes in the Wall Street Journal that three flawed policy decisions have led to a shortage of swine flu vaccine in the United States.
The first fateful policy decision, made last spring, was to forgo vaccine additives—called adjuvants—that activate the immune system and make shots more potent. Adjuvants allow a smaller supply of vaccine stock to be stretched across more doses. These adjuvants are included in H1N1 vaccines world-wide, but not in the U.S.

Why do adjuvants matter? An adjuvanted H1N1 vaccine being used in Europe contains 3.75 micrograms of vaccine stock. The same vaccine in the U.S., without the adjuvant, requires 15 micrograms of vaccine for equal potency. If we used adjuvants, we could have had four times the number of shots with the same raw material.

The second cautious decision was to require that the H1N1 vaccine be a single shot. The government demanded single-dose syringes because they contain smaller amounts of thimerosal than multi-dose vials. This mercury-containing vaccine preservative continues to stir concern it can trigger childhood autism, even though this has been firmly disproven.

The third policy decision was to stick for too long with a proven, but slow process for making flu shots that uses chicken eggs to grow the raw vaccine material. Shots can be made much faster using mammalian cells to grow vaccine, and this process is already being used in Europe. The cell-based vaccines are unlikely to be approved in the U.S. Our precaution when it comes to vaccines means we don't easily embrace novel technologies, even if the Europeans would part with some of their limited supply.
Once again, we see that overregulation, passed in the name of public health, is actually preventing people from getting immunized against the flu. The hype over swine flu is likely overheated, but it is a particularly nasty strain. Does anyone doubt that the private sector would have been able to distribute vaccine faster and cheaper than government, had it been given the opportunity to do so outside of burdensome and counterproductive regulations?

State to expand liquor stores, add fast food at I-93 rest stops

The Union Leader's Dan O'Brien reports on efforts to add services to the Hooksett rest stops on I-93 in order to generate more revenue for the Liquor Commission.
The state Department of Transportation is taking bids from developers to expand the site into an inclusive rest stop for motorists, which would include fast food restaurants, expanded informational centers, restroom facilities and renovated liquor stores.

If the project is completed, it would be the only such highway rest stop in the state.
The I-93 rest stops are a great location for a restaurant catering to hungry tourists on their way to and from lakes, mountains, and racetracks. Leasing the public space to private companies makes sense, though local fast food operators won't be happy with the competition subsidized by the state's prime real estate. The real problem with the deal is that Governor Lynch has already planned on spending the 30 years of lease payments immediately. Auctioning off such a valuable asset for a one-time boost in revenues is recklessly irresponsible. Let's hope the state takes a more responsible approach, and spends the lease revenue over the life of the lease.

Union Leader pulls political columns from web

The Union Leader posts a web banner this morning announcing that they will publish their three influential political columns, John DiStaso's "Granite Status", Scott Brooks' "City Hall", and Tom Fahey's "Under the State House Dome" only in their print edition from now on. Political junkies will no longer be able to read the must-read columns online Thursday and Sunday mornings, and blogs as this one will no longer be able to link to interesting tidbits from the columns.

The move is prompted by the stunning circulation drop seen by every major newspaper in the country. First, Craigslist took their classified ad revenue, and then the Internet took their readers. Newspapers have responded by posting their content online, but reading a story on your computer screen doesn't get you to read the expensive print ads purchased by the newspaper's advertisers. In order to continue charging for ad space, newspapers like the Union Leader need people to get the print edition delivered to their home, or pick up a piece of dead tree on the gas station on the way to work.

Taking its most valuable content offline is a risky move for New Hampshire's largest and most influential newspaper. By walling off its political coverage from the Internet, the Union Leader risks becoming irrelevant in the modern political climate. The influence of a political column isn't just on those who read it regularly. It is from sharing and spreading that information far and wide in order to set the convention wisdom within the political world.

Distaso's column, easily the most powerful political real estate in New Hampshire, now becomes less so because it will be so much harder to share his stories across the state and beyond. His column can no longer to linked to in a campaign newsletter or emailed to immediately to potential donors across the country. If a political story isn't on the Internet, it won't show up in search engine results or be part of the archive of political memory. A lot more people use Google than Lexis-Nexis.

By telling its audience that political news will no longer be available at UnionLeader.com, the paper also risks driving its best sources to other journalist. DiStaso, Fahey, and Brooks are fine reporters, but every political reporter relies extensively on tips and leads sent in by campaigns and their supporters. As a press secretary and a candidate, I often gave leads to John in hopes of making it into his column on Thursday morning. Now, it might make more sense to call Kevin Landrigan in hopes of making his Sunday column in the Nashua Telegraph. The paper's circulation might be smaller, but being able to link to it makes it a lot easier to distribute it far and wide.

The Union Leader hopes that the political influence of its columnists is too large for New Hampshire's political class to ignore. They will be forced to either pick the paper in the morning, or subscribe to the e-edition of the Union Leader, an online reproduction of the print edition available for $1.50 per week or $59.99 per year. But the Wall Street Journal and New York Times both found out that their readers wouldn't pay a premium to read their opinion pages, and dropped their subscription walls. We'll see if the Union Leader can't buck that trend.

Voting with their feet

Our friend Earl Glynn of Kansas Watchdog reports on a local entreprenuer moving out of state to save on taxes. And he only had to move 100 feet.
Normally the opening of a new QuikTrip store is not a news item. But, tomorrow the QuikTrip Convenience Store at 27 Southwest Blvd will reopen in Kansas City, Missouri after ”moving” about 100 feet from Kansas to avoid higher taxes and more burdensome regulations in Kansas.

In late August the store closed its operation in Kansas and was torn down. The store was then rebuilt on the same site, but with the store, cash registers, and gasoline tanks on the Missouri side of the state line.

Wednesday, October 28, 2009

Concord residents respond to incentives

Concord recently started charging resident for each trash bag they drop off at the dump. Since the price went up, the amount of trash being dumped has gone down. Amy Augustine reports the figures in this morning's Concord Monitor.
In the first three months of Concord's pay-as-you-throw program, overall trash volume has dwindled, recycling rates have soared and the city has saved itself a significant chunk of change, according to figures released yesterday.

Comparing quarterly figures from July to September of 2008 with the same period this year, the preliminary report shows Concord's solid waste volume is down nearly 50 percent - to 2,118 tons from 4,151 tons. Recycling is up about 75 percent to 888 tons collected in 2009 from 508 tons in 2008.
We've been critical of Concord's efforts to force local grocery stores to subsidize their new trash fee scheme. But we never doubted that increasing cost would lower demand. Concord residents are recycling more, and finding other ways to reduce trash volume. Maybe they reducing the amount of waste they produce, or they may be avoiding the trash bag fees by using private garbage services or finding a place to get rid of their trash outside city limits.

WMUR covers Stop the Spending Summit

Watchdogs sound alarm on spending

Kevin Landrigan writes up yesterday's "Stop the Spending Summit", featuring some of the leading state budget experts in New Hampshire who are also my boss.
Charles Arlinghaus, president of the Josiah Bartlett Center for Public Policy, said lawmakers in 2012-13 face a shortfall of $637 million when one-time stimulus grants totaling $550 million go away as well as other one-time fixes.

To close the current budget, lawmakers deeply cut aid to cities and towns for revenue sharing and retirement costs but those get restored after July 1, 2011.

“That’s the starting problem for the budget next year,” Arlinghaus said. “I don’t know how many of you have decided to run for re-election or not; God help you.”

Presentations from "Stop the Spending Summit"

The House Republican Office has posted the powerpoints from Steve Norton, Charlie Arlinghaus, and John Stephen from yesterday's "Stop the Spending Summit".

Steve Norton's is full of great charts showing how New Hampshire spends money compared to the rest of the nation. John Stephen's contains specific suggestions for curbing spending growth in New Hampshire. And Charlie Arlinghaus looks at the size of New Hampshire's budget hole both this biennium and next.

SEA got $74 per hour stat from DAS

Yesterday, we linked to DAS Commissioner Linda Hodgden's op-ed claiming that the State Employees Association was using faulty information, including the claim that some part-time workers were making $74 an hour. SEA President Gary Smith posted his response in the comments section of the Union Leader article.
The numbers for how many part time state employees and what they're paid came straight from Administrative Services (Commissioner Hodgdon) in reporting to the Legislature for the Fiscal Note in HB 662. Follow the below link to look it up for yourself.



AN ACT relative to paid sick leave for employees.


The Department of Labor states this bill will increase state expenditures by an indeterminable amount in FY 2009 and each year thereafter. The Department of Administrative Services, New Hampshire Association of Counties, and New Hampshire Municipal Association state this bill may increase state, county, and local expenditures by an indeterminable amount in FY 2009 and each year thereafter. This bill will have no fiscal impact on state, county, or local revenues.


The Department of Labor states this bill requires employers to provide paid sick leave for employees. The Department states a poster, rules, and forms would need to be developed, increasing the Departments costs by an indeterminable amount. The Department currently has a process for filing complaints and holding administrative hearings, including administering civil penalties. However, because the Department has no data to estimate how this activity may increase under this bill, the full fiscal impact cannot be determined at this time.

The Department of Administrative Services states this bill will allow paid sick leave for both full-time and part-time employees. The state does not provide leave accrual for part-time employees at the 40-hour amount identified in this bill. Because the Department cannot estimate the number of employees taking sick leave, or the extent to which additional human resources will be required to cover sick employees, the fiscal impact cannot be determined at this time. However, the Department estimates if every part-time employee took the full sick leave amount and each employee was required to be covered by another employee at the average pay for that position, the cost for a 40-hour week would be as follows:

Type of PT Employee
Number of Employees
Average Hourly Wage

Adjunct Faculty

Classified Employees

Judicial Branch

Non-classified Employees

The New Hampshire Association of Counties states to the extent full and part-time county employees are not already provided 40 hours of paid sick leave each calendar year, or to the extent employees are not currently allowed sick leave for all of the reasons identified as allowable reasons in this bill, county expenditures may increase if other personnel are required to cover the sick days. As the Association cannot estimate the number of employees without sick leave or how many may require coverage by other personnel, the fiscal impact cannot be determined at this time.

The New Hampshire Municipal Association states to the extent full and part-time municipal employees are not already provided 40 hours of paid sick leave each calendar year, or to the extent employees are not currently allowed sick leave for all of the reasons identified as allowable reasons in this bill, local expenditures may increase if other personnel are required to cover the sick days. As the Association cannot estimate the number of employees without sick leave or how many may require coverage by other personnel, the fiscal impact cannot be determined at this time.

This bill does not include an appropriation or establish positions.
- Gary Smith, Concord NH

Time has run out on the budget


Last week it was a tax summit, this week a spending summit. With all the talk about taxes and spending, you might think New Hampshire had another budget problem. And you know what? You'd be right.

New Hampshire often has a budget problem. In this year's version, we have both an immediate problem and a longer term problem. We have to find another $200 million to save in the next few months and then face another $600 million deficit going into the next budget.

With those sorts of extraordinary numbers on the table, no one party, branch of government or side of the bargaining table is going to be able to provide a solution. The economy isn't going to grow its way out of the problem; the federal government won't bail us out; and there isn't one silver bullet to fix everything.

The current budget includes fixing the shortfall at the end of Fiscal Year 2009 and balancing the current two-year budget. There are a lot of smaller issues that could add to the size of the problem, but there are three big issues that make up about $200 million.

First and foremost is the medical malpractice raid. The state is counting on taking $110 million from the malpractice fund known as the Joint Underwriting Agreement (JUA). Some of the money is for last year and some for the current budget, but all of it would have to be replaced. The Superior Court has ruled that the money is private property and can't be seized by the state simply because the state wants it. The governor and legislators are banking on the Supreme Court overturning the ruling.

If the ruling stands, as is more likely than not, the state is $110 million short of its budget. In addition, to balance the 2009 figures the state moved $18.4 million in stimulus funding forward from 2010, leaving the current budget another $18 million short. On top of that money, state revenues are coming in below the estimates used to balance the budget.

Based on the first quarter of returns, we will likely end the first year of the two-year budget $40 million short. Because the 2011 revenue growth was built off the 2010 base, that same shortfall would occur again in the second budget year unless the economy recovers more rapidly than expected.

The revenue shortfall, stimulus and JUA issues combine to create a $200 million gap between currently expected revenue and projected spending.

The problem is all the more important because of a fiscal time bomb waiting for us in the next budget. The current budget was balanced with hundreds of millions of one-time stimulus dollars from the federal government. Regular revenues and regular spending are $188 million apart in Fiscal Year 2011.

In addition, the budget includes a number of one-time spending reductions that are delays rather than cuts. For example, borrowing money to pay for construction aid isn't a spending cut, and municipal aid was suspended only for the current biennium. All told, the temporary reductions are $251 million over the biennium. That money is restored in the next budget.

The operating imbalance ($376 million for two years) and the temporary spending reductions mean the next budget starts out with a $625 million deficit -- if we manage to first cut $200 million out of the current budget and don't add to the problem.

The governor has suggested that a return to normal revenue growth in a robust economy will solve the problem. However, 4 percent revenue growth would mean just $92 million in 2012. Worse, because of the imbalance, typical growth in taxes and also in spending would make the deficit worse, not better. Three percent growth in spending and in taxes actually adds $18 million to the deficit. Economic growth only helps if spending is also restrained.

The good news is that the immediate problem we face will actually help us deal with the $600 million problem on the horizon. Spending cuts made to the current budget will have a triple effect. They reduce spending in the current budget and then in each year of the next two-year budget. So $100 million in cuts has a $300 million effect.

The size of the state's budget problem is as large as we've faced in our history. Last year, we faced the same problem but were able to delay it for two years because of the extraordinary federal bailout. That bailout or stimulus plan didn't fix anything. It merely bought us time. And now time is up.

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

Tuesday, October 27, 2009

Time to Eat the Dog: The real guide to sustainable living

This would be humorous if only the authors weren't trying to be serious. Does anyone really believe that a mid-sized dog is more polluting than a Toyota Land Cruiser? It seems that some environmentalist do.

And please don't shoot the messenger. I'm a long time dog owner. We adopted our current dog, a Great Dane, from a shelter. And we love him dearly despite his large (and often muddy) carbon paw-prints.
Eat a Dog, Save the Earth.
Thursday, October 22, 2009

SUVs owners are often castigated by treehuggers for their Earth-unfriendly lifestyle. A new book argues that pets are just as bad.

New Zealand authors Robert and Brenda Vale's book, "Time to Eat the Dog: The Real Guide to Sustainable Living" is an exhaustive analysis of the environmental impact of common pets such as cats and dogs. The authors studied the carbon emissions created by pets, including the ingredients in their food and the land required to grow it. And the results don't bode well for Fido, who compares poorly to that SUV. (more)

Live Blogging the "Stop the Spending Summit"- Gene Chandler

Representative Gene Chandler, Senior Assistant Republican Leader, former Speaker, NH House

Chandler says the crowd far exceeded expectations, which shows that people are agreeing that spending is the problem. He notes that unlike the Tax Summit, this event was open to the public to attend and ask questions.

Representative Norm Major urged the audience to attend next week's briefing on the national and state economy at the State House, and to support his bill to require "Truth in Budgeting".

The Stop the Spending Summit is wrapping up ahead of schedule.

Live Blogging the "Stop the Spending Summit"- Neal Kurk and Doug Scamman

Representatives Neal Kurk and Doug Scamman- House Finance Committee

Neal Kurk says over the past 15 to 20 years, he's concluded that there are great ideas to control spending, but says they are not getting implemented because of the budget process. He says the House has four to six weeks to review and approve the budget, which prevents long-term planning and reform.

He says New Hampshire is relatively effecient not because the Legislature micro-manages the budget, but because it forces department heads to manage their budgets with "back of the budget" cuts.

Kurk says major changes will require building a consensus now for the next budget process. He says working with Democrats to reduce demand through "Community Corrections" could reduce the prison population over six years. He says there isn't the information or time to do these reforms during the budget process.

He says the Legisalture should ask if current programs are fulfilling their mission. He says his sacred cow is L-CHIP, but he agreed to slaughter it this year. He says HHS killed the Multiple Offenders Program because it allows offenders to get their licenses back without paying for the program. But Kurk says he doesn't know if the program gets results. He says the state doesn't know if alcohol and drug abuse prevention programs actually work. He says an outside consultant found no difference between having the program, and not having it. But he says the Legislature won't cut funding for it.

Kurk argues that the Legislature need the political will to say "We can't afford feel-good." He would change the dynamics of programs to pay per service, versus per outcome or per patient. He agrees that transparency will give voters and lawmakers better information heading into budget season.

Doug Scamman says anyone who doesn't believe that New Hampshire has a very severe problem shouldn't have come, and that anyone who wants to solve it by raising taxes in sadly mistaken. He is concerned about continued bonding for school construction, which will push spending into the future for projects that have already been built.

Scamman says the $627 million shortfall in the next budget will actually grow as frozen state positions come back into the budget. He says if the state had gone without a position being filled for two years, it shouldn't have to fill it now.

He argues that the Legislature goes through the budget very carefully to find small areas of savings, but that without these "hunt and peck" savings, there will be no overall savings. He says this oversight helps Department heads to find more savings in their operations.

Scamman says state government can be more effecient by looking at its programs from the beginning, rather than relying on past practices. He says the Legislature in the last session never set budget goals, or set a process to meet them. He says by drifting through the budget, the Finance Committee failed to find savings, but some responsible agencies brought forward good ideas. He says the Legislature can reduce spending, and has no need to increase taxes.

Live Blogging the "Stop the Spending Summit"- John Stephen

John Stephen- Former Commissioner, New Hampshire Department of Health and Human Services

Stephen says his experience as Commissioner of the state's largest department convinces him that New Hampshire doesn't have a revenue problem; it has a spending problem.

He's worked as a consultant in other states, and says New Hampshire should adopt the best practices nationally to control spending. He says there isn't a lack of will to reign in government, but that the "tyranny of custom" prevents new, innovative ideas from taking hold.

Stephen says the state accounting system prevents managers from getting good information. He says New Hampshire is being left further behind other states, which have improved how they deliver services. Catching up would allow New Hampshire to lower its high business tax burden.

He says New Hampshire should be a leader in innovation. He says the state had to both decide if its should provide a service, and be sure it knows how to measure the outcome. He suggest a top to bottom review of state government.

Stephen says Medicaid spending increases from 2004 to 2007 averaged 1% per year, down from double digits averages in previous years. That shows that there are savings to find.

Stephen wants departments to submit 5% reduction budgets each biennium, a constitutional amendment to give the Governor a line-item veto, a cap on dedicated funds. He says services, such as legal departments, can be consolidated across state departments.

He argues that current law mandated a "maintenance budget" prevents departments from cutting unnecessary programs. New Hampshire is one of just seven states without a line-item veto. He points to efforts in New York and Wisconsin to consolidate financial management, human resources, and other overhead services across state departments.

Stephen says capping the more than 250 dedicated funds in the budget would give the Legislature more flexibility over the budget, rather than walling off millions of dollars in fund surpluses.

He says Lousiana has done great work on transparency through LaTrac, and proposes New Hampshire do the same.

Stephen says popular but unnecessary programs should be cut, and that the state incurs huge indirect costs through its contracts, which are not reviewed by the Legislature. He wants to state to divest itself of unused buildings and property, and cut down on the vehicle fleet. He also proposes eliminating the Certificate of Need Board.

He says policy changes in Medicare and Medicaid would save the state money, and proposes giving all departments the same flexibility that he used at DHHS. He says the Legislature has to eliminate programs if they can't demonstrate or measure their results.

Stephen says New Hampshire spends more per beneficiary than the national average for a range of health services. Other states have adopted a managed care approach to lower costs, while maintaining patient choice. He says these reforms have allowed Oregon and Texas to lower their state medical costs by managing the disease rather than responding to emergencies.

Live Blogging the "Stop the Spending Summit"- Charlie Arlinghaus

Charlie Arlinghaus- President, Josiah Bartlett Center for Public Policy

Arlinghaus looks at the spending pressures within the New Hampshire budget. He breaks down the state budget in federal funds, tax revenues including the General Fund and Education Trust Fund, and dedicated funds such as Highway, Turnpike, and Fish and Game Funds.

He says inflation over the past twenty years has been 74%, General Fund spending has gone up 154%, and adding the Education Trust Fund means spending has gone up 311%.

He says the current budget problem has resulted from revenues coming in short of expectations, a shift of ARRA funds from 2010 to 2009, and the probable loss of $110 million from the JUA Lawsuit. He says the likely problem will be $208 million.

But Arlinghaus argues the budget hole in the next biennium starts out at $627 million, once the state stops getting stimulus money and restores one-time spending reductions. He says that assumes the Legislature addresses the current budget hole of $208 million.

He quotes Governor Lynch's argument that the state could grow its way out of its budget problems with 4% annual growth. But Arlinghaus says that rate of growth would only produce an additional $92 million per year. He says if taxes and spending both grow at the same rate, the problem gets worse.

He says there are two strategies for cutting spending; Hunt and Peck or Directed Management. He says the Legislature should find small ways to save money like cutting the Film Commission, But he says the large savings comes when the Legislature directs Commissioners to find better ways to provide services at lower costs. Arlinghaus recounts the experience of Governor Walter Peterson, who asked his department heads to come up with savings. He says the Commissioners who came back with realistic program cuts were on his side, and those who proposed cutting the most popular programs are not being helpful.

Arlinghaus argues that the way to control spending is to put pressure on state agencies to spend less, build coalitions for lower spending, and take every dollar in savings every time we can, no matter how small. He says victory is at the margins. Since the economy and budgets are like a roller coaster, the Legislature has to be strict in supporting its Rainy Day Fund and pass a better Balanced Budget Bill. He says transparency is a great way to get the public on the side of smaller government, and says the Josiah Bartlett Center will be working to put the state's budget, spending, and revenue information online for the public to see.

Live Blogging the "Stop the Spending Summit"- Steve Norton

Steve Norton- Executive Director, NH Center for Public Policy Studies

Norton says the primary dynamic in New Hampshire's budgets is that we've spent more money than we've raised. He shows that General Fund spending under HB 1 has increased by an average of 9.2% each biennium since 1990. That represents the amount the Legislature intended to spend, rather than the amount actually spent.

He says the General Fund budget is not always the best indicator of what's actually being spent. He says looking at Total Funds is a better barometer. That has increased by 14% per biennium since 1990.

Norton says revenues have declined considerably while spending has increased. He says the budget hole in the next biennium will likely require hard choices.

Norton says that New Hampshire government is just above the national average in state employees per capita, but fourth lowest in per capita state spending. He breaks down state spending by function, with most going to education and health and human services, followed by Justice, General Government, and Transportation.

He says is the Legislature wants to get a handle on rising costs, it has to address education, health care, and the pension system. He says there are real ways to reduce spending, such as eliminating programs, and not so real ways, such as reducing appropriations in areas where the spending is mandated by law, such as HHS caseloads.

Norton outlines some of the drivers of state spending. He says New Hampshire prisons spend slightly more than the national average per prisoner, but the state corrections system spends less than the New England average. He says the state is reaching a decision point on whether to build a new prison.

On Medicaid, Norton says New Hampshire's expenditures have risen more slowly than the rest of the country. He says New Hampshire is slightly less generous in granting Medicaid eligibility, and reimburses providers at the national average. He says the real cost driver is that New Hampshire spends much more per beneficiary than the national average.

He says the NH Retirement System has been hit hard by stock market losses, and has funded just 67.8% of the system.

On education, he says New Hampshire spends slightly more than average per pupil, but that the Claremont Lawsuit has caused New Hampshire's state education spending to grow at the fastest rate in the nation.

He says the way to control spending is to follow Executive Orders put in place to cut down on last year's budget, claiming that the state saved $200 million from what it had planned to spend.

Norton says there are ways to address Medicaid, Retirement, Corrections, and Education, and those are the major cost drivers in the New Hampshire budget. He says the state does not measure how much it spends on a monthly basis, and that you can't manage what you can't measure.

He says lawmakers should ask what is the price of government, what outcomes they want to achieve, and how well they are delivering them.

Live Blogging the "Stop the Spending Summit"- Sherm Packard and Peter Bragdon

House Republican Leader Sherman Packard (R-Londonderry) welcomed a packed room to the "Stop the Spending Summit" at the Grappone Conference Center in Concord. The House Republcian Office is sponsoring the event in response to the Democratic House Leadership's Tax Summit last week.

Packard says the large turnout emphasizes how much people care about spending in New Hampshire.

"We do not have a revenue problem in Concord. We have a spending problem."

He says Democratic leadership planned last week's summit as a step on the road to an income tax, but thinks it backfired as most speakers argued against higher taxes during a recession.

Bragdon quoted Governor Mel Thomson's adage, "Low taxes are the result of low spending." He argues that the state should address spending before it tackles taxes.

Bragdon outlined spending by the State Senate itself. He says inflation for the past two years has totaled 0.5%, but the Senate Budget has gone up 38% over the same time. House spending has gone up 53% over those three years. Bragdon argues that if House and Senate leadership can't control their own spending, we can't expect them to control spending for the rest of the state.

Linda Hodgdon: Faulty information harming SEA members

Department of Administrative Services Commissioner Linda Hodgden writes a column in this morning's Union Leader claiming that bad information is harming members of the State Employees Association.
The union claimed that the state has part-timers earning $74 an hour, which is simply not correct. Part-time employees are paid a range of salaries depending on whether they are part-time judges, adjunct faculty at a community college, cleaning staff or toll attendants. The most recent data from 2009 indicates the average rate of pay for a part-time classified employee to be $14 per hour.

The union claimed the number of paid consultants has increased in this budget, which is also not true. Consultant salaries did not increase 40 percent. They are simply being reported in a much more transparent way under the new financial system that went into effect in July. A large portion of departments' contract expenditures are now correctly reported as consultants. The biggest change was at the Department of Transportation.

Live Blogging the "Stop the Spending Summit"

We will be providing updates to the "Stop the Spending Summit", held by the House Republican Office, throughout the morning.

9:30am Welcome, Rep. Sherm Packard, House Republican Leader
Sen. Peter Bragdon, Senate Minority Leader

9:40am Steve Norton, Executive Director, NH Center for Public Policy Studies

10:10am Charlie Arlinghaus, President, Josiah Bartlett Center for Public Policy

10:50am John Stephen, former Commissioner of Health and Human Services

11:20am Representatives Neal Kurk and Doug Scamman, House Finance Committee

11:45am Wrap-up, Rep. Gene Chandler, Senior Assistant Republican Leader

Monday, October 26, 2009

Arts Funding in Stimulus- State by State

The National Endowment for the Arts has posted how it has distributed nearly $50 million under the stimulus to each state, and to indepenent non-profits, for art programs.

Grants to State Arts Agencies and Regional Arts Organizations

Number of Grants: 63 Total Amount: $19,800,000

Stimulus Funding to Independent Organizations

Number of Grants: 630 Total Amount: $29,725,000

Total Arts Funding in stimulus: $49,525,000

NH spends $230,000 in stimulus on art programs

The New Hampshire State Council on the Arts has handed out $230,000 in federal stimulus money to help preserve jobs in the arts. The money from the American Recovery and Reinvestment Act is the first round of $293,100 in total arts funding for the Granite State under the $787 billion stimulus package.

The Arts Council claims that the money will save 42 jobs at 12 music, theater, and visual arts and crafts organization throughout the state. The Governor and Council approved the grants last week:
  • Arts Alliance of Northern New Hampshire, Littleton, $20,000
  • The Children’s Museum of New Hampshire, $20,000
  • Friends of the Arts Plymouth, $20,000
  • Friends of the Colonial, Bethlehem, $20,000
  • Haverhill Heritage, Inc., Haverhill, $20,000
  • League of New Hampshire Craftsmen, Concord, $20,000
  • Monadnock Music, Peterborough, $20,000
  • N.H. Theatre Project, Portsmouth, $20,000
  • North Country Center for the Arts, Lincoln, $20,000
  • Prescott Park Arts Festival, Portsmouth, $20,000
  • Saint Kieran Community Center, Berlin, $10,000
  • Sharon Arts Center, Sharon, $20,000

This round of arts funding also includes a $50,000 grant to the Currier Museum in Manchester from the National Endowment for the Arts designed to support job retention in the arts workforce.

A report last week from New Hampshire's Office of Economic Stimulus found that so far the stimulus has created or saved just over 3,000 jobs throughout New Hampshire, almost all in the public sector. That's well behind White House projection of 16,000 jobs for the state, even though New Hampshire has spent roughly half of the federal money available. State stimulus director Orville "Bud" Fitch told the Legislative Fiscal Committee last week that he actually expects the job total to drop when the next report comes out in January because funding for many of this summer's construction jobs will have ceased.

The arts grants average just under $5,500 for each job that the Arts Council claims to save. Jane Eklund is the Programs Information Officer with the State Council on the Arts. She says each organization had to identify how many jobs would be supported by the grants when it applied for the federal money.

"Each fund a permanent position, or artists that the organization is contracting with," Eklund said. "Some are full-time, some are part-time, some make of these grants turn part-time positions into full-time."

Eklund explains that the Arts Council will hand out the remaining federal grant money later, but that "this is the bulk of it."

Washingto Favor Factory turns earmarks into campaign cash

The Washington Post examines the close ties between a little-known Congressman, a lobbying firm, and millions in federal money flowing to campaign contributors.
In rapid succession, the three-employee technology firm, NanoSonix, filed its incorporation papers in Skokie, Ill., and hired a Washington lobbying firm, K&L Gates, which boasted to clients of its close relationship with Visclosky. A week later, Visclosky wrote a letter of support for a $2.4 million earmark for NanoSonix from the House Appropriations Committee's defense subcommittee.

"I understand how this can look from the outside," NanoSonix chief executive Sean Murdock said in an interview, describing his company's rush to get research funding to develop night-vision goggles. "My belief was we had to pursue government funding if this technology was going to see the light of day."

Murdock's company was not the only one to find a winning formula in pursuit of federal earmarks through Visclosky. The congressman sponsored or supported at least $44 million in earmarks in fiscal years 2008 and 2009 for more than 15 technology firms that had hired K&L Gates as lobbyists. None of the companies operated in Visclosky's home state, but nearly all of them donated to Visclosky's campaign just before or soon after receiving the promise of federal money.
The Post reports that federal investigators are also looking into K&L Gates efforts to market itself with its close ties to Visclosky and whether a campaign aide solicited campaign contributions with the promise of federal funding.

Towns to sue over retirement cuts

Karen Langley reports in the Concord Monitor on New Hampshire municipalities suing the state for cutting the state subsidy for local retirement benefits.
The state has long provided 35 percent of the payments into the state retirement system for local employees including teachers, firefighters and the police. But the state budget reduced that contribution to 30 percent this fiscal year and to 25 percent for fiscal year 2011. The association estimates the change will cost municipalities and school districts $27 million over the two years.

Groups representing municipalities, school districts and counties are crying foul. The organizations wrote to their members highlighting the budget change and informing them of the pending lawsuit. The suit will argue that the reduction in state payments violates a ban on unfunded mandates in the state constitution. In effect, the ban mandates that the state obtain municipal permission to impose or expand programs that will require local money.

FOX and Obama: An abuse of power

The Union Leader editorializes that the Obama Administration's efforts to delegitimize its critics, including press coverage it doesn't like, goes over the line.
In power, this team has taken that paranoia to new heights. The administration aggressively demonizes critics, undermines opponents and bullies anyone viewed as a potential enemy. (Just ask General Motors and the U.S. Chamber of Commerce.)

The message is clear: Fall in line, or we'll use our power to attack and undermine you. That's not merely unbecoming of a President. It's unacceptable behavior for any government.

The True Costs of ObamaCare

The Washington Post takes on the crippling costs of ObamaCare as a pair of columnists write that the plan costs much more and delivers much less than it promises.

Robert Samuelson

The promise of the public plan is a mirage. Its political brilliance is to use free-market rhetoric (more "choice" and "competition") to expand government power. But why would a plan tied to Medicare control health spending, when Medicare hasn't? From 1970 to 2007, Medicare spending per beneficiary rose 9.2 percent annually compared to the 10.4 percent of private insurers -- and the small difference partly reflects cost shifting. Congress periodically improves Medicare benefits, and there's a limit to how much squeezing reimbursement rates can check costs. Doctors and hospitals already complain that low payments limit services or discourage physicians from taking Medicare patients.
Fred Hiatt
The claim merits skepticism. If, as advocates sometimes argue, a public plan operates without favoritism, it will be simply one more entrant in the marketplace. Like other companies, it will have marketing and administrative costs. In some markets served by few private plans, it could offer a useful alternative. But it won't radically reduce costs.

If, as advocates argue at other times, the point is to insure sick people whom private companies, despite all regulatory efforts, find ways to shun, the public plan could offer a valuable safety net. But that wouldn't save money.

And if, as seems likeliest -- and as House legislation mandates -- the plan uses government power to demand lower prices from hospitals and drug companies, those providers may lower quality or seek to make up the difference from private payers. Private companies would have to raise their rates, so more people would choose the public plan, so private rates would rise further -- and we could end up with only the public option and no competition at all. Single-payer national health insurance may be the best outcome, but we should get there after an honest debate, not through the back door.

Harry Reid trying to hide cost of ObamaCare

Jack Kelly reports at Real Clear Politics on the machinations of Senate Majority Leader Harry Reid to hide the true cost of the ObamaCare health care reform, and last week's vote in the Senate to prevent such a massive fraud from happening.
There was a problem with this gimmick, though. Mr. Baucus proposed to save money in Medicare by gutting the Medicare Advantage program, in which 23 percent of seniors are enrolled, and by slashing the payments doctors and hospitals receive for treating Medicare patients.

Medicare currently reimburses doctors only 94 cents for each dollar of health-care services provided. To slash payments another 21.5 percent, as Mr. Baucus proposed, would not be popular with doctors. And if payments were slashed, many doctors who now treat Medicare patients would stop seeing them, which would not be popular with Medicare patients.

To fix this problem, Sen. Debbie Stabenow, D-Mich., proposed to block the Medicare reimbursement cuts for 10 years. The logical thing to do would have been to offer the Stabenow proposal as an amendment to the Baucus bill. But if that were done, the cost of the Baucus bill would rise by $247 billion over 10 years, according to the CBO. Democrats could no longer claim it was deficit neutral.
13 Democrats joined the entire Republican caucus to reject Reid's cowardly attempt to fool the public on the real costs of the bill. If the Senate wants to spend well over a trillion dollars over the next ten years to take over the health care industry, at least they can have the decency to be honest about it.

Mass. gambling push may force N.H.'s hand

Robert Cook reports in Foster's that backers of expanded gambling in New Hampshire are trying to beat Massachusetts to the table.
That argument has been part of the gambling debate in Concord for years, but Massachusetts hasn't previously been quite so close to rolling the dice.

Massachusetts House Speaker Robert DeLeo, D-Revere, in October named Massachusetts State Rep. Brian Dempsey, D-Haverhill, the point person for developing a casino bill.

The legislation, which Bay State lawmakers could vote on as early as January, could allow slot machines at Boston-area race tracks, including Suffolk Downs, Wonderland Greyhound Park, Raynham Park and Plainridge Racecourse. Suffolk Downs also has publicly expressed an interest in getting a full casino license.

Law stings laid-off workers, employers

Tom Fahey reports in his Under the State House Dome column on higher unemployment claims leading to higher taxes for employers and longer waits for benefits for employees.
Employers will pay higher taxes in 2010 to help sustain the system, and workers will see a one-week delay in their benefits.

Under a change in state law, Gates said, a worker who is furloughed for two weeks will receive a one-week benefit. A worker out of work for 15 weeks will get 14 weeks. A worker furloughed for one week will be out of luck.

With the higher taxes employers will be paying, Gates said, "it was felt that employees ought to participate in some manner in the solution." Cutting benefits would have jeopardized a $25-a-week federal benefit enhancement, he said.

Sunday, October 25, 2009

SEA chief re-elected to 6th year

Karen Langley reports in the Concord Monitor that SEA President Gary Smith has re-elected to another year at the head of the union.
Union delegates meeting in Nashua yesterday cast 120 votes for Smith and 93 votes for opponent Ed Hager, said SEA spokesman Mike Barwell.

The election was the outcome of a Department of Labor investigation into complaints made by Smith's opponents after the union elections last year. The Department of Labor and the union settled with no admission of fault and an agreement to hold new elections for the second year of the term.

Smith said yesterday the vote was a vindication.

"We ran a fair and open campaign and election last year. We ran a fair and open campaign and election this year," he said. "It ought to clear up any doubt about the veracity of our process."

Beauty School Dropouts

Following yesterday's story on stimulus money going to beauty schools, Charlie Arlinghaus reminds me that STEWARD was on this story a while ago.

Beauty Schools Across Granite State Net More Than $300,000 Through Federal Spending Program

LACONIA CITIZEN – “The Empire Beauty School in Laconia was also the recipient of $250,000 in nonreimbursable direct financial aid.” (Gail Ober, “Laconia gets more than $6.5m from fed stimulus,” Laconia Citizen, August 30, 2009)

FOSTER’S DAILY DEMOCRAT – “Further south, The Portsmouth Beauty School received $18,600 in ‘direct financial aid.’” (Adam D. Krauss, “Seacoast gets $45m in aid from feds,” Foster’s Daily Democrat, August 30, 2009)

Sunday Book Review- Governing the Commons

Oliver Williamson and Elinor Ostrom shared this year's Nobel Prize in Economics for their very different studies of regulations and voluntary action.

Last week, we looked at Oliver Williamson's 1985 work The Economic Institutions of Capitalism. This week, we examine Elinor Ostrom's Governing the Commons: The Evolution of Institutions for Collective Action.
"In this ambitious, provocative, and very useful book Ostrom combines a lucid theoretical framework with a series of diverse and richly detailed case studies...she tightly reviews and critiques extant models of cooperation and collective action and argues powerfully that communities of actors are sometimes able to maintain a common resource for long periods of time without outside intervention." Contemporary Sociology

"Ostrom's book is an important contribution to the problems of Commom Property Resources that is, the lack of well-defined property rights over a certain resource. Elinor Ostrom convincingly shows that there are many different viable mixtures between public and private, in particular self-organization and self-governance by the users of the common property resource. The book makes fascinating reading, particularly as it is well written." Bruno S. Frey, Kyklos

"This is an important book that deserves to be read widely in the policy community as well as the scholarly community....this analysis leaves us with provocative questions whose examination promises to broaden and deepen our understanding of human/environment relationships at many levels." Oran R. Young, International Environmental Affairs

"Cambridge University Press has published an impressive series called 'The Political Economy of Institutions and Decisions.' Elinor Ostrom, Professor of Political Science at Indiana University, has made an important contribution to the series with Governing the Commons....In large part, the book is a fascinating and detailed examination of common ownership of various natural resources." Dean Lueck, Constitutional Political Economy

"Students of common-property resource regimes will find much of great interest in the volume." Barry C. Field, Land Economics

"...timely, well-written, and a useful addition to our understanding of the challenges of natural resource management....useful for undergraduate and graduate students as well as field practitioners interested in the development of scientifically based research. It provides a firm grounding in the theoretical underpinnings that should guide empirical investigations....Ostrom offers a unique source of information on the realities of resource management institutions coupled with the challenge for continued examination of institutions in order to develop better ways to address the CPR challenge." Gordon L. Brady, Southern Economic Journal

"Ostrom's book makes an important contribution to the emerging literature on analytical institutional economics. Her work reminds us that analysis of institutions and institutional change is an important aspect of a broader political economy that underlies meaningful economic policy advice." Daniel W. Bromley, Journal of Economic Literature

"This is the most influential book in the last decade on thinking about the commons. For those involved with small communities...located in one nation, whose lives depend on a common pool of renewable resources....Governing the Commons has been the intellectual field guide." Whole Earth

"A classic by one of the best-known thinkers on communities and commons." Yes! A Journal of Positive Futures

Saturday, October 24, 2009

$2 million in stimulus to Tampa beauty schools

I'm a little overdue for a haircut, which means I'm not doing my part to support the backbone of the American economy, hairdressers. The St. Petersburg Times reports that $2.3 million from the stimulus package has gone to beauty schools in the Tampa area alone.
The stimulus money being spent to train hairstylists to craft a French braid is administered through Pell Grants to area vocational training facilities. Several beauty schools have received between $250,000 and $1 million in public money to help cover tuition that can run up to $12,000 a year — more than tuition to attend the University of Florida for a year.

Never mind that even professionals in the hairstyling business say there are few job opportunities. In determining how to allocate stimulus dollars, the federal government inexplicably does not conduct an assessment on which job skills are in demand and focus on funding training in those in more needy areas. How shortsighted. How wasteful. How mystifying.
Such ridiculous results are inevitable when you throw $787 billion at the economy with little thought or deliberation. Hairdressers perform a needed service, and I don't mean to take a slap at them. But I also have no wish to give them some of my money so that members of Congress can buy their re-election.

Keep talking about state's tax structure

The Concord Monitor wishes that critics of this week's Tax Summit are right, and that it was a step closer to an income tax in New Hampshire.
Yesterday, lawmakers attended the second day of a two-day summit held by the House Ways and Means Committee to hear testimony about New Hampshire's tax structure. Because the committee's chairwoman, Democratic Rep. Susan Almy of Lebanon, has voiced support for an income tax in the past, some Republicans, including Hess, saw the event as part of a conspiracy to kill the so-called New Hampshire advantage that comes with not having a general sales or income tax.

The committee was careful to ensure that the representatives of both sides of the issue had a chance to air their views. That didn't quiet critics who treat the state's unfair tax structure like previous generations treated suicide, cancer and divorce, something that should not to be discussed in public. But silence allows ignorance to prevail and problems to worsen. Putting all the options as all parties see them on the table, as the committee did, is a wise approach.

SEA realism: It's about time

The Union Leader blasts the State Employees Association for changing its tune on job losses.
The lead contract negotiator for the State Employees' Association, who previously urged SEA members to reject a job-saving employment contract because it didn't guarantee that no employees would be laid off during the recession, now says it's time for state employees to get realistic.

"This is not a time for people to expect raises to come out of a contract agreement. This is the time to save jobs, and if the administration doesn't want to save jobs, I don't know what we'll be looking at," Diana Lacey told The Associated Press.
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This is the time to save jobs? The time was weeks ago and the SEA leadership blew it.

Friday, October 23, 2009

A Spending Summit: Let's Have One

The Union Leader argues now that the Ways and Means Committee has held a two day Tax Summit, it's time for legislative leaders to put the same attention into spending.
We were happy to see that so many competing points of view were presented at this week's tax hearing. We'd be surprised if any Ways and Means Committee member had his or her view changed, but at least there was a wide-ranging discussion of how the state's revenue structure works and how the state would change if its tax base changed.

Legislators would benefit from a similar, but not identical, hearing on spending. The thoughts of analysts and economists are useful. And we might be able to learn a thing or two from the experiences of other states. But given the economic reality facing the state -- revenue declines with no end in sight -- the most useful presentations might come from administrators and other employees tasked with finding better ways to spend what money we have.

Charlie Arlinghaus talks taxes on Bulldog Live

Josiah Bartlett Center President Charlie Arlinghaus will join Bulldog Brian Tilton this afternoon at 1:05pm to talk about the recent Tax Summit.

Tune into "Bulldog Live" on 107.7 WTPL, or listen live at WTPLFM.com

TGIFriedman- How to Cure Inflation

Today, our favorite avuncular economist tells us how to cure inflation. Or at least starts to tell us. We'll post the rest of his solution over the next two weeks.

Fox wars

In the Washington Post, Charles Krauthammer blasts the Obama Administration for its ill-conceived "War on Fox News".
The signal to corporations is equally clear: You might have dealings with a federal behemoth that not only disburses more than $3 trillion every year but is extending its reach ever deeper into private industry -- finance, autos, soon health care and energy. Think twice before you run an ad on Fox.

At first, there was little reaction from other media. Then on Thursday, the administration tried to make them complicit in an actual boycott of Fox. The Treasury Department made available Ken Feinberg, the executive pay czar, for interviews with the White House "pool" news organizations -- except Fox. The other networks admirably refused, saying they would not interview Feinberg unless Fox was permitted to as well. The administration backed down.

This was an important defeat because there's a principle at stake here. While government can and should debate and criticize opposition voices, the current White House goes beyond that. It wants to delegitimize any significant dissent. The objective is no secret. White House aides openly told Politico that they're engaged in a deliberate campaign to marginalize and ostracize recalcitrants, from Fox to health insurers to the U.S. Chamber of Commerce.

No quick-fix on state tax issues

Tom Fahey wraps up two days of Tax Summit with a story in the Union Leader, in which he turns to a certain think tank for a little history on tax reform in New Hampshire.
Josiah Bartlett Center on Public Policy president Charles Arlinghaus said it's been more like 40 years since the last real tear-down of state tax code. The work in 1970 produced the business profits tax, now a mainstay of state revenues. He said the BPT "created a sea change" by shifting state tax policy to encourage business investment, and set the stage for an economic boom that lasted through the 1990s.

Arlinghaus said he takes issue with the conservative Tax Foundation's rankings that put New Hampshire at the bottom of the heap in terms of business taxes. He said the foundation, in its rankings, doesn't count a key business enterprise tax credit that companies can take.

AP: NH's workers sue to get 'bumping' rights back

The Union Leader runs the AP story on the State Employees Association going to court to restore bumping rights for senior state workers.
The State Employees' Association filed suit Thursday in Merrimack County Superior Court arguing that the Legislature violated senior workers' constitutionally protected contract rights when it suspended bumping rights as part of the budget.

The union argues bumping rights are protected for employees with at least 10 years experience even though bumping is part of personnel rules, not in the union's contract with the state. The union says senior workers have an expectation of the right as part of their overall compensation.
New Hampshire governors from both parties have tried with little success to get rid of bumping rights, which prevent allow highly-paid employees to take the jobs of more junior colleagues if they get laid off. The practice delays the savings from any layoffs, possibly forcing more drastic cuts down the line, and sets off a chain on demotions through state government.

White House Press Corps Backs Fox News over Obama Administration

In a great sign for the independence of the American press, the White House Press Pool backed up Fox News as the Obama Administration tries to kick them out.

Government can not, and should not, be able to pick the press that covers it. The Obama Administration's efforts to demonize Fox News have been ham-handed and counterproductive. It's refreshing to see the other networks, which have been far less critical of the Administration and stand up for a free and independent press.

Thursday, October 22, 2009

Live Blogging the Tax Summit- Final Thoughts

The House Ways and Means Committee has concluded its two day State Revenue Information Session. We've posted extensive summaries of each panel and speaker, as well as links to their documents and audio of all eight panels.

We've covered this event without editorial comment in order to provide both real-time insight into the proceedings and an independent public record of the Tax Summit. Now that it's over, I'd like to share a few thoughts on the two days of tax policy discussion that just concluded.

Summarizing the event, it was an extensive look at New Hampshire's revenue structure. While the Ways and Means Committee is limited in dealing only with taxes and fees, discussing state revenues without addressing spending can only take you so far.

Ways and Means Committee Chair Susan Almy was criticized for inviting a liberal tax group, ITEP, which is already on record in support of an income tax for New Hampshire. However, the that panel also featured two right-leaning think tanks with much more conservative perspetives.

The first day of the Tax Summit was dominated by economists, of several persuasions. Given that these panelists were working from the same data, they did duplicate each other somewhat, emphasizing that New Hampshire is more highly reliant on property taxes for state and local spending, has an overall low tax burden, and has increased its business taxes significantly.

Later panels took a more hands-on approach to New Hampshire taxes, bringing in the experiences of New Hampshire businesses both large and small. Particularly telling was Andy Sanborn long list of every tax he pays to keep his restaurant open.

The only panel without appreciable balance was Thursday's 10:30 panel featuring Brad Cook, Larry Kelly, and Laurel Redden. All three hammered the property tax, and called for a tax system based more on an ability to pay. Taken by itself, this panel showed a heavy pro-income tax bias that critics had feared when Almy announced her intentions last month. Taken as one of eight panels across two days, the Committee did receive a balanced and extensive stream of information from a variety of perspectives.

The only obvious ommission from the Tax Summit was an invitation to any of New Hampshire's many active taxpayers groups. A representative from the Coalition of New Hampshire Taxpayers, Granite State Taxpayers, or the New Hampshire Advantage Coalition would have both provided needed balance to the Granite State Fair Tax Coalition, and helped address criticism of Almy and House Speaker Terie Norelli, both long-time income tax supporters. Failure to include the voice of a single taxpayer group unnecessarily fueled distrust that Almy and Norelli were simply using the Tax Summit to generate ammunition for their preferred solution, an income tax.

After two days of discussion, and spotty media coverage outside of NH Watchdog, the Tax Summit is unlikely to change many minds on tax policy. Supporters and opponents of broad based taxes heard enough to bolster their current opinions. Hopefully, members of the House and Senate Ways and Means Committee took away the need to make tax policy in a more open and transparent fashion, to resist the urge to pick winners and losers through the tax code, and to evaluate taxes on their ability to raise revenues with the least disruption to the New Hampshire economy.

Next week, the House Republican Caucus will hold a "Stop the Spending" summit in Concord. This event will address some of the important questions not addressed at this week's Tax Summit. We encourage more high profile discussions of public policy. We believe that open and robust debate leads to better policy decisions, and that bad ideas deserve to be evaluated alongside good ones.

Live Blogging the Tax Summit- Recap

Joe Magruder- former New England news editor for the Associated Press.

Magruber is recapping the large amount of information heard by the Committee over the past two days.

He says that that the sheer volume of information conveyed shows that the event was a success. He says that the Committee asked all the speakers to keep the focus on revenues, and Magruber says that it happened, though the Committee also heard from many speakers on the related issue of spending.

He hopes that there will be equal enthusiasm for a comprehensive look at how the state spends money over the next biennium. He says as tough as it has been to debate income taxes, he can't wait until someone tries to get rid of local fire departments and school boards.

Multiple speakers reminded the Committee of the 1992 KPMG study concluding that New Hampshire has a structural deficit, where given spending trends outpace the growth of revenues. He mentions that Charlie Arlinghaus argues taxes have grown over the years faster than Gross State Product, while an earlier speaker took the opposite view.

Magruber says some applaud the structural deficit because it forces the Legislature to take a close look at the budget every two years. He says General Fund revenues have fallen significantly as a segment of the total state budget.

Magruber predicts that while the recent budget debate was tough, the next budget is shaping up as even tighter. He asks if the current economic downturn is a temporary crisis, or if New Hampshire is facing a long-term need to restructure its finances.

Magruber was struck by the depth of concern over the state's ability to generate jobs when it comes out of recession, which may not be for 6-12 months. He says some potential vulnerabilities in the New Hampshire economy predate the recession, and may be masked by the current climate. He recalled Russ thibeault's concern that lower job growth may be "the new normal" for New Hampshire.

Magruber says that troubling demographic trends on migration and aging show New Hampshire's economy is changing, which will make future revenues scarce, and fiercer competition among states for high-tech jobs.

He says that the ultimate goal of economic development, through tax policy and other means, should be attracting highly educated and talented employees and the companies that hire them. New Hampshire has traditionally this through low taxes, a high quality of life, and being business friendly. He pointed out that New Hampshire doesn't have low property or business taxes, but still has a low tax burden overall.

He says panelists largely agreed that New Hampshire's tax system should be simple, competitive, transparent, adequate to cover spending needs, and fair. Getting to those goals will always be a source of disagreement, for the Legislature to decide.

Magruber promises to draft amore extensive written report over the next two weeks.

The House Ways and Means Committee is posting audio of the entire session, as well as any documents handed out by the speakers on its website.

Live Blogging the Tax Summit- Richard Ober

Richard Ober- New Hampshire Charitable Foundation

Ober says the move to implement "Current Use" was a sensible tax reform that assessed property taxes on what a property was, and not on what it could be. He says its the most important environmental tax reform of the last 50 years.

As New Hampshire's largest private charitable foundation and largest private source of scholarships, he says the Foundation made $33 million in grants last year. He says the Foundation's funding decisions are a microcosm of the Legislature's budget decisions.

Ober calls the non-profit sector the third sector of the New Hampshire economy, covering one in eight New Hampshire workers and almost 15% of the Gross State Product. He says business for non-profits is booming, but revenues are not.

He argues that non-profits handle many services in New Hampshire that are covered by state and local governments elsewhere. He says that means Granite Staters are more engaged in non-profits than other states, but should not be taken to an extreme.

Ober says when the state cuts services, demand for social services shifts to cities and town, to non-profit organizations, and to the future when they will cost much more. He says this year's Town Meetings were a tough environment for the local safety net. He says non-profits are also being asked to take up more and more demand, including significant increases in applications from state agencies looking for assistance, efforts to start new non-profits to meet gaps in state services, and increased demand caused by the recession.

He argues the Legislature needs to look at economic and demographic trends to address future needs as well as current demand. He says spending now to address substance abuse or energy efficiency saves much more money later. "Spend a little now. Save a lot later."

He says the fiscally prudent thing to do it structure a tax policy that looks ahead and encourages New Hampshire. He says New Hampshire need to address its tax policy is order to retain high-tech companies and keeps it econommic edge.

Ober says three principles are adequecy of state revenues to meet the state's needs, equity and fairness of the tax policy, and competitiveness and stability of the tax structure.

Ober says that the Committee should receive more information and more perspectives on long-term problems, especially when it is not under the pressure of the Legislative Session and a deadline to have an answer tomorrow.

Live Blogging the Tax Summit- Charlie Arlinghaus

Charlie Arlinghaus- Union Leader columnist and President of the Josiah Bartlett Center for Public Policy.

Arlinghaus started by saying that taxes have grown faster than the New Hampshire economy over the past 20 years. Since 1988, inflation has totaled 85%, the Gross State Product has increased 163%, but total taxes have increased 336%

"Unrestricted revenues"are just 45% of the total budget, 35% are federal funds, and 25% are dedicated funds.

Arlinghaus gave some background on the last two major tax reforms in New Hampshire, the Business Profits Tax in 1970 and the Business Enterprise Tax in 1993.

Before 1970, New Hampshire based its local and state taxes largely on capital, which resulted in a ring of warehouses around New Hampshire and a barrier to investment in the Granite State.

The Business Profits Tax replaced 13 different taxes on capital, stock, and investment, and returned a large portion of the revenue to towns to replace the local taxes it eliminated. Arlinghaus argues that this change from taxing capital to profits dramatically changed the New Hampshire economy, and made it the engine of economic development in New England.

In 1993, Governor Steve Merrill wanted to lower the rate of the Business Profits Tax, which has increased to 8%. Since it only applied to profits, 1% of New Hampshire businesses paid 70% of the tax. Additionally, there were numerous credits and exceptions which complicated enforcement and transparency, and allowed the Legislature to pick winners and losers.

The implementation of the Business Enterprise Tax was designed to be revenue neutral, reducing the BPT from 8% to 7%, increasing the exemption level while cutting special exceptions, repealing the Savings Bank Tax and Corporate Franchise Tax, and setting the BET at just 0.25% Additionally, the BET was credited against the BPT, ensuring that businesses would not be double-taxed.

Arlinghaus stresses that if the Legislature wants to reform taxes, it must have trust that it is changing the tax structure and not merely trying to raise more money. The Legislature needs to be completely transparent when it goes about it. He says any move to increase taxes should be separated from changes to the tax code, so that each question can be debated on its own merits.

He says lacks of trust and transparency doomed Governor Shaheen's call for a Sales Tax. And it was lacking when the Legislature imposed a new tax on Limited Liability Corporations (LLC's) at the last minute in the Committee of Conference.

Arlinghaus says the biggest consideration in tax policy is jobs. New Hampshire also needs revenue to fund programs, but that taxes can not harm New Hampshire's competitive advantage. He argues that now that capital is free, no company has to locate or remain in New Hampshire. He says the Legislature can not be tempted to pick winners and losers through the tax system, and should never raise taxes simply because it can. He cites cigarette tax hikes as an example of a regressive tax that keeps passing.

Live Blogging the Tax Summit- Morning Session Audio

The House Ways and Means Committee has posted audio from this morning's panels.

10-22-2009 AM Session Audio Part 1

10-22-2009 AM Session Audio Part 2

The Committee has also posted a new page with all the materials from the State Revenue Information Session.

Live Blogging the Tax Summit- Community Perspectives II

Charlie Arlinghaus- columnist for the Union Leader and President of the Josiah Bartlett Center for Public Policy.

Richard Ober- Vice President for Community Outreach and Communication, New Hampshire Charitable Foundation

Live Blogging the Tax Summit- Laurel Redden

Laural Redden- Vice President of Board of Directors, Granite State Fair Tax Coalition

Redden argues that the current revenue system for New Hampshire is unfair, unjust, and inadequate. She says that becomes apparent when the system is exposed to public debate.

She reports that 114 towns have voted on warrant articles against the current tax structure and "The Pledge" to veto broad based taxes. 83 towns approved the warrant, or 73%.

She provided a handout of a slide show arguing that New Hampshire needs to adopt a tax structure that accounts for an individual's or business's ability to pay, lowers property taxes for low income taxpayers, diversifies New Hampshire's revenue portfolio, expands the tax base, and offers simple administration and accountability.

Redden says the Coalition has not proposed, endorsed, or opposed alternatives to the property tax. She also says her group does not discuss state or local expenditures, only revenues.

She says the property tax is a broad based tax, but it ignores your ability to pay. She says the average New Hampshire family pays 5.8% of its income in property taxes, and that the problem can not be addressed through spending cuts or heavy handed caps on spending.

The Coalition has developed a series of questions as a "lens" through which to view whether a given tax is a good idea.

The "lens" asks who primarily pays each tax, and if it's related to their ability to pay. She also wants to know whether exceptions are made for those least able to afford it, and if those with higher incomes pay their fair share.

If a tax is used to fund a specific service, has revenue kept pace with demand for that service? Does the tax place businesses at a competitive disadvantage compared to other states? Are adverse impacts easily identifiable?

She also asks if a tax encourages businesses to make decisions based on economic advantages and not on tax savings, if out of states pay their fair share, and if there is a Federal offset to the tax.

Redden also calls for simplicity, transparency, and accountability in tax policy.

Redden presented a series of charts that the Coalition uses to highlights its opposition to New Hampshire's current tax system, including its reliance on property taxes to pay for local and state government, and a study which shows that the wealthiest residents pay a smaller percentage of their income in taxes.

Live Blogging the Tax Summit- Larry Kelly

Larry Kelly- Tri-County Community Action Program (CAP)

Kelly says there are lots of taxes in New Hampshire. He says there is a large, and frequently unrelated, reservoir of revenue sources, as well as continued discussion of new taxes, such as a sales tax, income tax, or energy tax.

Kelly says he will concentrate on fairness and utility of current taxes. He says property tax is not fair. He says its has outlived its usefulness as the major revenue source in New Hampshire. He says the property tax is unfair among communities with different amounts of property wealth, and unfair to lower, middle, and fixed income individuals. He says it does not account for accidents that can reduce a family's income, but not their tax burden.

He argues current reliance on property taxes should be changed, and major adjustments should be considered. Kelly says if a sales tax is considered, the Legislature should exempt essentials such as food, clothing, and housing necessities.

If an income tax is considered, which he says is a lot fairer than a property tax, it needs to be progressive. (Progressive tax rates are not allowed under New Hampshire's Constitution.) If environmental taxes are considered, it should reduce pollution and dependence on obsolescent fuels.

Kelly says "sin taxes" on cigarettes, alcohol, and gambling help deter undesired behavior. He would dedicate the revenue from alcohol taxes to mitigating the revenue from the harm alcohol causes.