Weekend Roundup

Lots of budget talk in this weekend's political columns.

First, Kevin Landrigan writes in the Nashua Telegraph that Fred Tausch and his group, Stimulating The Economy Without Assumulating Record Debt (STEWARD) is examining how the federal stimulus bill with impact New Hampshire:

On Monday, the group will release results of an economic analysis study done by Brian Gottlob, who has his own Seacoast consulting business and produces an ongoing report on economic trends.

In the report, Gottlob identified more than $920 million in stimulus money already headed to New Hampshire. That total is incomplete, he wrote, because it doesn't include what competitive grants New Hampshire projects may win in the coming months. Here's how Gottlob gets to this massive number:

• Education: $258 million.

• Medicaid: $250 million.

• Transportation: $129 million.

• Individual income support: $79 million.

• Environment: $63 million.

• Energy-weatherization: $61.7 million.

• State fiscal stabilization aid: $36 million.

• Housing: $33.5 million.

• Health care: $9.3 million.

Gottlob noted the two largest pools of money would be used to help pay for the next two-year state budget.

Landrigan also reports that budget writers are working to restore the $83 million in building aid that the House Finance Committee killed:

The House Finance Committee decided that since Lynch wouldn't put it in his state budget, the House panel wouldn't either, and the Senate can decide where it fits in its priorities.

Lynch press secretary Colin Manning said the governor is committed to making sure it finds a home.

"It's got to be somewhere,'' Manning said.

House Finance Committee Chairman Marjorie Smith, D-Durham, noted state law makes clear that school building aid is "subject to appropriation,'' which is legal speak for anywhere up to 100 percent, depending on how much the Legislature has on hand.

Landrigan also goes department by department to identify the winners and losers in the House Finance Budget.

In the Union Leader, Tom Fahey pens his weekly Under the State House Dome column and looks ahead to this week's budget debate in the House:

On a party-line vote last week, the House Finance Committee passed a budget much like Gov. John Lynch's plan. Both versions maintain a roughly $50 million reserve, or Rainy Day Fund, after they tap it for about $40 million in June. They both have a tobacco-tax increase, a gambling tax and a hike in the Rooms and Meals tax.

But there are some key changes. For one thing, new taxes on estates and capital gains were nowhere in Lynch's plan. The House added $16 million to cut down the wait list for services to the developmentally disabled; $2 million for cancer prevention, $1 million for HIV-/AIDS programs and money for catastrophic illness victims and suicide prevention.

Lynch's plan to give the state Liquor Commission more business clout fell by the wayside. Liquor has more work to do before it can start closing marginal stores and setting up liquor sales in private stores, the committee said.

In the Concord Monitor, Lauren Dorgan's column points out that even those who wrote this budget don't like it very much. Dorgan says the budget news is much grimmer than when Lynch gave a somber budget address in February:

Now we know that we didn't know from grim. House budget-writers backed two taxes on the wealthy, an estate tax and a capital-gains tax, on top of keeping most of Lynch's cuts in place (while adding back a few social programs, like cancer prevention).

The worst part: Even then, the budget still didn't balance, leading budget-writers to call for an additional 1.25 percent across-the-board cut, leaving agencies to decide where to find the money. (The Republican alternative budget did more than that, including a 13 percent across-the-board cut at many state agencies.)

State budget plan burdens city, town taxpayers

The Portsmouth Hereld editorializes against cost-shifting in the state budget, as Governor Lynch's plan scoops up federal stimulus money slated for cities and towns:

We are rapidly learning as Lynch's budget makes its way through the Legislature that much of the federal money will be filtered through state agencies, and those agencies will be taking the majority of the funding for state projects, such as the repaving of a portion of Route 101, and precious little will be left for the cities and towns.

Add to that cuts to the rooms and meals taxes returned to municipalities, the complete elimination of revenue sharing and an decrease in the percentage the state pays into the retirement system, and town officials are becoming more and more anxious about what all this will do to the tax rates they worked so hard to keep low this year.

The Herald concludes that Lynch is attempting to balance the state budget on the backs of local taxpayers:

That the state has financial problems we have no doubt, but the governor should not attempt to rectify that situation by further burdening New Hampshire citizens already struggling to make ends meet.

Vote big boost for PSNH scrubbers

David Brooks and Kevin Landrigan report in the Nashua Telegraph about a key Senate committee voting down a move against the Bow power plant:

hursday's unanimous ruling by the Senate Energy, Environment and Economic Development Committee doesn't end the complicated debate, since the legislation must still be taken up by the entire Senate, and a legal fight is waiting to be heard by the state Supreme Court.

But the vote was a big win for Public Service of New Hampshire as well as for the unions that had rallied against the bill, which would have required the Public Utilities Commission to oversee a study about whether the scrubbers were still in the public interest.

Union officials, who packed an earlier hearing on the bill, SB 152, said the legislation might threaten at least 200 construction jobs over the next three years at the plant.

Rep. Smith's budget: The Flee to Florida Act

The Union Leader comes out strongly against the many tax hikes contained in the House Finance Committee's budget, and urges Gov. Lynch to do the same before investors and entrepreneurs flee the Granite State:

If Gov. John Lynch wants to drive investors, businesses and retirees out of the state, he should swiftly announce his support for the budget released this week by Rep. Marjorie Smith's House Finance Committee.

The committee's $11 billion budget spends roughly $31 million more than the state spends now. More importantly, it finances much of that increase via three new taxes: one on estates, one on capital gains and one on gambling winnings. In addition, it increases a host of other taxes and fees, including the rooms and meals tax, fuel tax and tobacco tax.

The estate and capital gains taxes should alarm the governor enough to draw a veto threat. We'd say "an immediate veto threat," but the governor has already let a day go by without comment.

House Finance passes budget that nobody wants

Lauren Dorgan reports in the Concord Monitor that no one of the House Finance Committee likes the budget that it approved yesterday, yet somehow it passed:

The budget passed the committee on a 14-9 party-line vote, with Democrats voting yes and Republicans no. The entire House will vote on the budget next week; after that, Senate budget writers will craft their own version before legislators from both bodies settle on a final version in June.

The budget drew little praise from anyone. Committee Chairwoman Marjorie Smith said she would not take a vote on whether "anyone in this room thought this was a good budget" and said she would be happy to see senators rework it.

"I think this is a horrible budget. Absolutely a horrible budget," said Rep. Dan Eaton, a Stoddard Democrat and the House's majority floor leader, who nonetheless voted for the plan. "It was improved vastly over what we received (from the governor)."

The Republicans who helped craft parts of the plan but ultimately voted against it panned the taxes in particular.

"In these economic times, the idea of increasing taxes, I think, goes against all the wisdom economists have given us," said Rep. Neal Kurk of Weare, the ranking House Republican. "It's the equivalent of kicking a man when he's down."

Gov. John Lynch didn't like the plan much, either. Spokesman Colin Manning listed "many concerns" about problems with the House budget, saying it "underfunds essential operations," including the attorney general's office, deprives the liquor commission of "flexibility" to become more like a business and relies on across-the-board cuts without "tough policy decisions" about where to trim. On the revenue side, Manning said Lynch had "concerns" but declined to state whether the governor would support either a capital gains or an estate tax.

The House Democratic budget includes a 5% tax on capital gains, reinstates the death tax at 8%, and increases spending from Governor Lynch's budget proposal.

State retirees, drivers to pay under tax plan

Lauren Dorgan reports in the Concord Monitor about the $11 billion budget plan approved yesterday by the House Finance Committee:

Drivers would pay nearly twice as much in state gas tax, which would rise from 18 to 33 cents. Retired state employees who are younger than 65 would, for the first time, have to help pay for their state-provided health insurance. New Hampshire's dogs and ponies would get a break, as the state's current three racetracks will be permitted to quit running races of live animals while continuing to simulcast out-of-state contests.

The House Finance Committee yesterday voted to recommend all three of those changes - along with scores of others - as its legislators nearly finalized their version of the $11 billion state budget for 2010 and 2011 in a daylong meeting yesterday. The committee is expected to finish its work today, taking up Health and Human Services programs and proposals to institute new estate and capital gains taxes before voting on the whole budget package. The whole House will vote on the budget next week, before sending it on to the Senate.

Crafting budget a grueling, 4-stage process

In the Nashua Telegraph, Kevin Landrigan reports on the long and winding road of putting together New Hampshire's two-year state budget:

Gov. John Lynch took the stage first on Feb. 12, offering his two-year spending plan that employs $400 million in federal stimulus money to cushion the state from a severe recession expected to shrink state revenues this year by at least $250 million.

But legally, Lynch's work ended in preparing his 1,200-page document. The governor must wait on what the two branches of the Legislature do with his tax and spending plans.

Lynch offered a plan that in non-school state dollars spent $40 million, or 1 percent, less over the next two years.

The three-term Democrat kept promises to raise state aid to public schools $123 million in 2010 and 2011. Taken together, that translates to a 2.3 percent increase.

Burning the state's economy with higher tobacco taxes

By CHARLES M. ARLINGHAUS

Our disgust with smoking itself and our hatred of the great demon tobacco companies clouds our judgment and leads us to adopt tax increases that affect the people hurt most by a recession.
New Hampshire is on the verge of passing its fourth cigarette tax increase in the past five years. If the tax were levied on something other than cigarettes, it would be rejected.

Cigarettes are still a legal product and the source of much economic activity. It's not a matter of smokers buying directly from a manufacturer. For decades, New Hampshire has had a significantly lower cigarette tax than its neighboring states. The result is that many citizens from Maine, Vermont and Massachusetts make trips across the border to purchase cigarettes here.

It is generally assumed that roughly 40 percent of New Hampshire cigarette sales are to out-of-state customers. These customers are sensitive to tax changes. For example, when we raised taxes in 2005, our sales declined by about 7 million packs, while Massachusetts saw an increase of 8.5 million.

Our total loss was a little less because we gained at the expense of the much smaller Maine market. Economist Scott Moody studied the sales of a convenience store chain operating in both states. After Maine increased its tax by $1 per pack, the chain's stores in two Maine border counties saw decreases of between 7 and 10 percent, while its New Hampshire stores saw an 8 percent increase.

Cigarettes are a higher-margin item and out-of-state customers typically buy other goods as well. For small stores struggling in a difficult economic environment, driving away any customers is a problem. A significant loss in a higher-margin item could make the difference between survival and closing up shop.

Some policymakers believe that as long as our price is lower than the price in neighboring states, a tax hike will have little or no impact on sales. Our recent experience suggests instead that any tax increase has a psychological effect that translates into lower sales.

In the past, when Massachusetts raised taxes and we didn't, our sales increased, and vice versa. In 2008, Massachusetts raised its tax by a $1 per pack. We should have seen a significant windfall. But we also announced our intention to raise our tax by 25 cents. Although our tax would be still be $1 lower than theirs, that had a negative impact on sales.

Through the first eight months of this fiscal year, sales are about the same as they were last year. To be fair, with cigarette consumption declining a few percentage points each year, this is probably a slight increase in share but not nearly as much as we would have expected.

The psychological impact of any increase drives business away or creates a sense of equivalence in a consumer's mind.

Massachusetts will not be raising its tax this year, so any increase in our tax will likely lead to a significant sales loss for New Hampshire stores. This economic loss would ordinarily be problematic in a recession, but because the product is tobacco, normal rules are suspended.

The other major failure of cigarette taxes is that they are significantly regressive. Because people in lower-income levels are disproportionately more likely to smoke, they pay a significantly higher proportion of cigarette taxes. The Tax Foundation studied options for raising $35 billion at the federal level and "concluded that a cigarette tax increase hurts the poor more than virtually any other way of raising money to fund State Children's Health Insurance Program expansion."

The purpose of the proposed increase, like the three other increases in the last four years, is to raise money to fund the general purposes of government. To increase revenue exclusively through the most regressive option available is poor public policy.

The politicians most likely to support the cigarette tax hike are generally sensitive to the concerns about its harm to the poor and harm to small business, so why do they keep doing it?

The short answer is because it's smoking. Small increases in cigarette taxes do have a small effect in reducing the number of smokers. At least some subset of tax supporters would increase the tax $2 or $3 instead of 35 cents to try and make smoking unaffordable or more likely drive it underground.

More than a general anti-smoking attitude, it is paradoxically New Hampshire's anti-tax attitude that creates support for cigarette tax hikes. Many tax supporters will admit privately that they think raising the cigarette tax is bad policy, but they do it because they believe government needs more money and smokers are the path of least resistance.

Small businesses and poor people get caught in the crossfire, but they're just collateral damage.

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

Amendment X: Detergent Smuggling in Washington State

Laws have consequences. Laws making it harder for people to wash their dishes will drive people to evade those laws. Washington is dealing with banned chemicals coming across its borders, dishwasher detergent:

The quest for squeaky-clean dishes has turned some law-abiding people in Spokane into dishwater-detergent smugglers. They are bringing Cascade or Electrasol in from out of state because the eco-friendly varieties required under Washington state law don't work as well. Spokane County became the launch pad last July for the nation's strictest ban on dishwasher detergent made with phosphates, a measure aimed at reducing water pollution. The ban will be expanded statewide in July 2010, the same time similar laws take effect in several other states.

We tried to protect those who need help most

In today's Concord Monitor, House Finance Chairwoman Marjorie Smith justifies the budget that her Committee will likely approve today. Smith pens an op-ed outlining where Finance is increasing spending over Gov. John Lynch's budget proposal:

The governor's budget left many valuable and innovative programs on the cutting room floor. We have, nonetheless, been able to address some needs that had not been in the budget or had been funded at a lower level.

We decided to:

• Return rooms and meals revenue to cities and towns;

• Fully fund education adequacy according to the formula approved by the General Court in the last session;

• Provide additional money to cities and towns, the Department of Resources and Economic Development and Fish and Game Department, and as a result of inclusion of the gas tax in the budget;

• Support Family Resource Centers which assist at-risk families.

• Support Senior Volunteers, Foster Grandparents and RSVP - programs that provide assistance to seniors and school children;

• Support the Catastrophic Illness Program, which provides minimal assistance to those with serious illnesses;

• Fund family planning at the maintenance level;

• Provide funding for AIDS services organizations;

• Increase funding for programs to divert at-risk youths from the juvenile system;

• Fund the Governor's Commission on Drug and Alcohol programs at the 2009 level, and

• Fund the Comprehensive Cancer Plan at 25 percent of maintenance level.

State employee unions declare an 'income tax'

State employees facing budget cuts have come up with a new way to descibe smaller government. They say it's an income tax. Lauren Dorgan reports in the Concord Monitor and state workers and retirees are trying to redefine receiving less money from the taxpayers as "an income tax" on state workers and pensioners:

Two of the proposals that have generated protests from union leaders, employees and retirees will likely have their first major vote today, when the full House Finance Committee takes a vote on the state budget. They are:

Temporarily boosting public employees' contributions to the New Hampshire Retirement System by 2 percent, to 7 or 11 percent of every paycheck, depending on what the employee does, a measure backed by lawmakers on a finance subcommittee.

Having retired state employees under 65 years old pay a portion of the premiums for their state-provided health insurance for the first time, a move proposed by Gov. John Lynch and backed by the subcommittee. Lynch, a Democrat, proposed a charge of $100 a month for a single person. House lawmakers have suggested instead charging 11.5 percent of the pension for each of the roughly 2,400 state retirees who take advantage of the health care plan. That way, lawmakers said, those who draw the smallest pensions won't shoulder an excessive burden.

Borrowed money: No debt for school aid

The Union Leader comes out against Gov. John Lynch's plan to borrow money to pay for state school construction aid on this morning's editorial page:

Last year, Gov. John Lynch got legislators to agree to bond about $40 million in building aid for local school districts. This year, he has proposed borrowing another $83 million over the next two years for the same purpose. Legislators should say no.

The governor justifies this move by saying that, well, this money pays for capital projects so it's OK to borrow it. But his plan amounts to borrowing the money twice.

Local school districts borrow money for construction projects. The state has long paid a share of these costs by giving localities grants from the general fund. If the state borrows money to pay off locally borrowed money, as Lynch proposes, then it increases the debt -- and the interest -- for those projects.

That's not smart. It's like making your monthly credit card payment with money borrowed from another credit card.

Budget Concerns

While high-profile bills dealing with social issues got most of the attention last week, Kevin Landrigan continutes to supply excellent coverage of New Hampshire budget mess in the pages of the Nashua Telegraph. In his weekly column, Landrigan reports on how Governor John Lynch's plan to borrow against operating funds is endangering the state's capital budget:

Lynch had enough to worry about trying to get his complex state budget through the House of Representatives.

Now it's looking more and more like his two-year capital budget could be in tatters before too long.

As noted, Lynch used a variety of maneuvers to balance his two-year spending plan, and one that has received little attention is the proposal to float state-backed bonds and make $84 million in school building aid payments to school districts.

One byproduct of this is that for the next two years, it would gobble up 60 percent of state bonds to do public works construction projects.

"Once you do that, you cease having a capital budget," said Nashua Democratic Rep. David Campbell, vice chairman of the House Public Works and Highways Committee. "If we do that, then we might as well not bother putting one together, because we can't possibly meet the needs."

Campbell and others worry that setting this precedent for a popular local aid program couldn't easily be undone once the economy recovers.

Landrigan also lists some of the budget changes under consideration by the House Ways and Means Committee:

Budget "hole": At one point early last week, the House subcommittee recommended spending that dwarfed the amount of expected revenue even with proposed new taxes on capital gains and estates.

The gap closed by week's end. House budget writers cranked the budget up by $14 million over what Lynch had budgeted to come in from prescription drug discounts and they dropped estimates for welfare caseloads as much as $20 million below Lynch estimates.

State layoffs: The proposal adds back two dozen employees, or nearly 30 percent of layoffs Lynch called for in Corrections with the closing of the state prison in Laconia.

Medicaid ouch: House budget writers learned at least $25 million in federal stimulus money given to the state has to go straight to county budget coffers because counties pick up all the non-federal share of nursing home and other costs.

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Amendment X: Michigan Film Incentive

The Mackinac Center for Public Policy investigates whether the tax incentives that Michigan provides to film movies and televisions shows in state deliver on the amount of jobs created:

When movies are filmed in Michigan, the studios have to pay Michigan business taxes. Under this program though, state government will give filmmakers a refund check for up to 42 percent of the money they spend in Michigan. That means a movie company that spends $10 million in Michigan could get a check for more than $4 million. That’s even after the film companies pay their own taxes.

In effect, Michigan taxpayers will foot the bill every time the refund is more than the movie company’s taxes, and there’s no limit as to how large the refund could be. In return the state is supposed to get more jobs and revenue.

Click the link to see the Mackinac Center's video.

State is wrongly seizing private funds

By CHARLES M. ARLINGHAUS

New Hampshire's budget is being balanced this year in part by turning private insurance funds into government money and appropriating the funds for government use. The raid illustrates how fiscal problems can tempt a government to limit property rights and rationalize behavior it would never consider otherwise.

The state's current financial crisis is well known. During the governor's budget address, he announced his intention to use $110 million from a little-known medical malpractice fund to balance the budget. His announcement immediately sent policy makers scrambling to find out exactly what the fund was.

No one knew there was $110 million available to the government sitting in an untapped fund. When legislators had passed a bill a few weeks earlier to clear out surpluses in other dedicated funds, they had found only about $16 million. The governor had waved a magic wand and -- presto! -- a huge chunk of money materialized.

It turned out there was good reason no one knew it was available. That's because it's neither state money nor a government program. The medical malpractice fund is a privately funded high-risk insurance pool administered by a private company through a provision in state law for joint underwriting agreements. The state doesn't pay for it or administer it. It is merely set up through state rules that allow for such joint agreements.

The co-operative fund assesses premiums and holds the money in trust against future charges. When it has a balance, it invests those funds according to a formula set up by its rules. The premiums and investment have been more than enough to pay charges, so the pool has a surplus.

This is exactly how mutual or cooperative insurance works. In the case of a typical mutual insurance cooperative, excess funds not needed to pay premiums are returned as a dividend to those who paid premiums. This may be how your car insurance works. In my case, we pay premiums throughout the year and then receive a check refunding excess premiums.

In fact, the cooperative medical malpractice fund has exactly the same provision. The money is held in trust but must be remitted to members or premium payers should there be a surplus. The wording is available in the rules on the insurance department's Web site. (It's rule 1703.07.)

The rule specifically requires that if premiums exceed the amount required to pay losses and expenses, they shall be distributed first to members and then the fund must "distribute the excess to such health care providers covered by the association as is just and equitable."

There's nothing weird about this. It is how any mutual insurance organization operates. Premiums are held in trust to pay claims. If you don't have claims, the premiums are not justified and cannot be justified.

The explicit rules of the underwriting agreement don't provide a third paragraph that says "yeah, but if the state's having trouble balancing its budget then nobody gets his money back and the state can just take it."

The state has a long memo from the Attorney General's Office that explains why in the attorney general's opinion no entity has enough standing "such that it could successfully challenge a legislative act to transfer the funds to the General Fund." Essentially the state argues that because joint agreements are allowed by statute, statute can be used to seize their funds. I'm not sure anyone who set up the fund realized that.

The attorney general also cites cases in other states where the state court allowed the legislature to take the money. In those cases, the agreement did not have rules providing for the distribution of any excess funds.

The governor and the attorney general's memo have also argued that a disbursement would be an unacceptable distortion of the market despite the rule requiring it. It is difficult to see how the very same disbursement my insurance company makes to me, and yours makes to you, is unacceptable just because the government desires the money. If it is, in fact, an unacceptable practice, then wouldn't all mutual insurance companies have to be abolished by state law? And wouldn't the state have made a huge mistake in approving the rules that govern this cooperative?

Ultimately, this is a seizure of private funds justified only by the cash crunch the state finds itself in. Argentina recently did something similar. Faced with a larger crisis than we face, the government nationalized private retirement funds, the equivalent of our 401(k) funds. The government seized billions in private funds to help its own cash flow. It was uniformly attacked as an unacceptable assault on private property. Let's not follow that bad example.

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

Mass., NH lawmakers unite to fight border tolls on I-93

Kevin Landrigran reports in the Nashua Telegraph on the joint effort by Massachusetts and New Hampshire lawmakers to avoid a pair of dueling toll booths along the border:

Lawmakers said they created the Border Coalition to prevent a bidding war as state officials compete for federal support to erect a New Hampshire toll in the southbound lane of Interstate 93 in Salem and Massachusetts tolls just over the state line."The amount of support I get from the public is overwhelming," said state Rep. Frank Sapareto, R-Derry, who worked with Massachusetts lawmakers to form the coalition.

"I haven't met anyone who is strongly in favor of putting tolls up there."

Sapareto got 65 New Hampshire lawmakers to join after a few hours of buttonholing individuals during a recent House session.

The New Hampshire House has 399 members.

Only five Massachusetts senators have signed up from that body, which has 40 members.

"We've not had an easy time of it in either state getting Democrats to get on board," Sapareto said.

Utility players: Dangerous regulations

The Union Leader editorializes against a pair of bills that is sees as legislative micromanagement of Public Service Company of New Hampshire:

In 2006, the state required Public Service of New Hampshire to install a mercury scrubber at its Merrimack Station coal-burning power plant in Bow. The law did not cap the price of the project. In the meantime, the estimated cost has risen from $250 million to $457 million. House Bill 496 would cap the amount of PSNH ratepayer dollars that could go to the scrubber project at $250 million.
This makes zero sense. It would scrap the project, which would put the plant out of compliance with emissions regulations, which would force the plant's closure. PSNH would then have to buy power on the market, costing ratepayers much more than the scrubber would cost.

Tobey School could remain open one year

For years, budget writers have looked towards closing the state-owned Tobey School, which would save money by sending troubled teens to less-costly private institutions. Governor John Lynch proposed the move in his budget address. Yesterday, the House Finance Committee voted to put off the closure for at least a year:

But lawmakers yesterday said they felt that closing the school at the end of June, as Lynch's plan proposed, was too soon. Daniel Barrick reports on the vote in this morning's Concord Monitor:

"I'm ready to close Tobey School today, but it might make more sense to delay," said Rep. Fran Wendelboe, a Republican from New Hampton. "I think we owe them a year. This was awful abrupt."

The proposal approved yesterday would fund Tobey for another year while directing the state health department to study whether the school could merge in some way with the Anna Philbrook Center, a state-run facility that treats preteens with mental illnesses.

Weekend Roundup

In the Nashua Telegrap, Kevin Landrigan reports on the proposed capital gains tax passed by the House Ways and Means Committee, and reflects on the last time this idea came up:

A decade ago, the dilemma was how to solve an education funding mess as the result of the state Supreme Court decision that judged over-reliance on local property taxes to be unconstitutional.

By now, it's well known that lawmakers and then-Gov. Jeanne Shaheen ultimately went for a statewide property tax and other hikes in existing state taxes to more than triple state aid to public schools.

In the midst of that debate, however, Shaheen got squarely behind raising the capital gains tax and raising the state's tax on corporate profits 1 percent (HB 117) as her preferred solution.

The state Senate agreed in passing her version by a 14-8 margin.

Tom Fahey writes in his Under the State House Dome column in the Sunday News about the proposed budget savings from cuts to state employee health plans:

Retired state workers will have three months to get used to a new health-insurance program. The Legislative Fiscal Committee voted unanimously Friday to move all retirees into the same point-of-service program active workers get. The change is part of Gov. John Lynch's budget plan, and saves an estimated $2.4 million.

Retirees at the meeting worried that their costs, especially for pharmaceuticals and hospital visits, will soar while they stay on fixed state pensions.

House and Senate members said the most onerous part of the switch was dropped. Administrative Services Commissioner Linda Hodgdon pulled a proposed $100 monthly premium for retirees under age 65 from the plan. However, that charge remains in the mix for consideration with the rest of the 2010-11 state budget. Taken together, the
premium and plan change save $10 million.

In the Concord Monitor, Lauren Dorgan tells us about a group of New Hampshire and Massachusetts lawmakers trying to disfuse the border war:

United against tolls

Lawmakers from New Hampshire and Massachusetts will join up in Concord tomorrow at noontime to announce united opposition to tolls on Interstate 93 in either state. They're calling themselves the Border Coalition.

Foster's editorial page notes that the federal stimulus is seen by local officials as a way to fix their budgets, at least for the short term:

Does the pot runneth over? If it does, there are a lot of people getting in line to dip their ladles in the caldron before there is a spillover and the excess goes elsewhere.

The so-called stimulus fund is looked at hungrily by officials at every level of government. The only emergencies county and local officials acknowledge are the ones within several miles of their offices. They have started to think of the stimulus fund as a deep well from which they might draw relief. The fund is taking the shape of "found money."

Every state, city, town and hamlet in the country is trying to get its hands on some of the three-year funding.

Stimulus funds are seen as a way to balance budgets in a manner that denies there is hole in the economy through which the nation's wealth is flowing.