SEA fires back at Lynch

Diana Lacey launches another broadside against Governor John Lynch in this morning's Union Leader.

Lynch's layoff predictions were grossly overstated; the threat of "across-the-board" cuts was disingenuous at best. There were fewer than 300 full-time layoffs, and only in certain agencies.

Lynch gave his agency heads alternatives he would not entertain in contract negotiations. In Administrative Services Commissioner Linda Hodgdon's Oct. 27 column, she states: "Once the serious decision was made by the union to reject furloughs, the governor allowed department heads to be as resourceful as possible, and for that he should be applauded." Every taxpayer should be asking Lynch, "Why weren't you resourceful in the first place? Why did you try to take all that money from employees instead?"

State revenues off by $38 million

The Union Leader reports on state revenues through October, which have come in below expectations, and added $38 million to the state's fiscal problems.

A monthly report from the Department of Administrative Services shows the state took in $204 million in taxes and other revenues last month, $12 million short of the month's budget target.

Through the first four months of this fiscal year, the state has taken in $585 million, instead of the $623 million the budget was built to have at this point. The figures include $97 million in revenue to the Medicaid program from the federal government.

The DAS report shows that overall, tax revenues this fiscal year are below last year's levels by $4.6 million, less than 1 percent. October is a major revenue producer because of the concentration of business taxes that are paid. December is the next big month on the tax calendar.

Did we really need a summit to figure out how to fix budget?

Nashua Telegraph columnist John Bachman questions why House leadership would hold a Tax Summit, but not give equal attention to state spending.

Every dollar forcibly taken from the private sector is a dollar not available to finance growth and create jobs. Now the Democrats in charge must bob and weave themselves around these obvious facts, but the state budget is still broken due to the spending of Step 1.

A series of federal handouts have obscured the problem, but it is still here. We spend more than we have, and if we take more taxes, unemployment worsens.

It was not always so and it need not be. Most people live within their means and know how to restrain the wants to fund the musts. But politicians have proven they cannot be trusted to do the same. Spending begets power and buys votes, so they spend.

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.

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."

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.

http://www.gencourt.state.nh.us/legislation/2009/HB0662.html

HB 662 FISCAL NOTE

AN ACT relative to paid sick leave for employees.

FISCAL IMPACT:

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.

METHODOLOGY:

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
Total

Adjunct Faculty
1,727
$306.80
$21,193,744

Classified Employees
3,628
$13.42
$1,947,510

Judicial Branch
211
$57.71
$487,072

Non-classified Employees
1,473
$74.11
$4,366,561


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

By CHARLES M. ARLINGHAUS

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.

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.

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."

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.

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.

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.

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.

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.

Lynch tells his side of union dispute to voters

The Union Leader runs an AP article reporting that Governor John Lynch is emailing New Hampshire voters about the layoffs he announced last week.

Gov. John Lynch has sent an electronic letter to New Hampshire voters explaining why he ordered roughly 250 layoffs last week after state workers rejected a furlough plan.

Lynch said that New Hampshire's economy is in better shape than some states, but state spending still had to be cut. He said the state budget required him to cut $25 million in labor costs. He said state workers got a 10 percent pay raise over two years and he asked them to give back part with 19 unpaid furlough days.

It takes two to negotiate a deal

James Cole writes in the Concord Monitor that the paper has not done enough to investigate the State Employees Association case against the state contract rejected last week.

As the only newspaper originating from the state capital, the Monitor has the responsibility to do more for the public. Instead of putting the union's negotiating team, and to no small extent state workers, on the pillory, the Monitor could be researching whether cuts to state workers are the only or best way to close any budget gap. It could be looking at whether there is a budget gap and what caused it.

The SEA has claimed that the state:

• has 1,473 part-time non-classified employees with an average pay of $74 an hour.

• has increased spending on outside consultants by 40 percent.

• has rejected proposals from the SEA that would have saved the state over three times the $25 million figure floated in the budget.

• spends more than twice as much on outside contractors as on state employees.

State union has itself to blame

The Portsmouth Herald says that the State Employees Association is responsible for the round of layoffs now hitting state workers.

While the SEA membership can have many reactions to the layoffs the one reaction they have no right to is surprise.

The governor made it absolutely clear that if the union rejected a plan that included 19 furlough days he would have no choice but to go forward with layoffs. He was also clear that he didn't want to pink-slip state employees.

In our view, the union left him no choice. So 250 state workers will receive layoff notices and 60 others will be moved to lower-paying jobs. Another 60 vacant positions won't be filled.

In what 'ballpark' did the crunchers of numbers play?

Foster's editorial page wants to know why the Governor is laying off 250 state workers, when he insisted that he'd have to fire 750 if the state contract was rejected.

Linda Hodgdon, the commissioner of Administrative Services, has been reported as saying initial projections were made without knowing whether employees would be willing to retire, what the potential was for moving employees paid from general fund monies and the effect of laying off "higher cost" employees.

If there were so many unknowns, so many questionable elements, why so much talk of laying off 750 employees?

"It was absolutely not a negotiating tactic," Hodgdon was quoted as saying last week. "It was a ballpark estimate" of employees earning about around $50,000 in salaries and benefits.

Now the situation stands at laying off 250 employees, demoting another 50 or 60 and not filling some 60 vacancies. Assumedly, some of the higher-paid employees will feel the cuts.

Apparently, the ballpark's fences were pulled in so the administration could hit more home runs with the loss of fewer players.

Trust Fund for Municipal Health Care?

Tom Fahey writes in his "Under the State House Dome" column about a new approach to funding health care benefits for municipal workers.

A commission working on the problem of funding health benefits for retired public sector workers agreed on a solution last week. The plan calls for a new system of trust funds that would provide retired teachers, firefighters, police and municipal workers with a health care subsidy.

The current system is broken badly, especially for teachers. Funding for a subsidy for retired teachers was so low that the Legislature cut off eligibility this year.

The new retiree medical trusts would be fed by contributions from both workers and their employers at rates agreed to in local contract negotiations.

Estimates are it will take four years before enough money builds up in the trust to provide a benefit. Trustees of each work group's fund would set benefit levels, based on its finances.

Fahey also writes extensively on the layoffs across state government.

College immunity: Lynch ignores big pot of money

The Union Leader wonders why Governor John Lynch isn't looking for more savings out of the University System.

As a former chairman of the university system's board of trustees, Lynch knows that the state can ax higher education subsidies if it needs to. In fact, he did it last year. He asked the system to return $4.5 million to the budget, and trustees did so.

Why isn't the governor asking the universities and community colleges to share in the further sacrifices other portions of state government must make this year?

The university system gets nearly $100 million in state general funds this year. The community and technical colleges get almost $35 million. Yet none of the $25 million in personnel savings the governor was ordered to make came from those two arms of state government. UNH laid off only seven employees this year.