Here's my fix for Lynch's problem

It slipped under the radar but the Concord Monitor recently ran an opinion piece on how to solve the state's $100 million dollar JUA budget problem. It's such a simple solution that it just might work.

No JUA? Cut health spending increase
By Thomas R. Eaton for the Monitor
August 13, 2009

Recently Judge Kathleen McGuire did something completely expected. She told Gov. John Lynch and the Democrats in the Legislature that their plan to balance the state budget by taking $110 million from the Joint Underwriting Association was unconstitutional.

This has been expected almost from the moment Lynch first proposed taking the money back in February. The JUA is a nonprofit group, not a government agency. The JUA exists solely to supply medical malpractice insurance to private health care providers, not for any governmental purpose. The $110 million is in a fund the JUA maintains to pay its malpractice claims. The money came from insurance premiums paid by JUA members and belongs to them. Not a penny came from the state or from taxpayers.

Ever since the judge released her decision reporters, editors, bloggers and taxpayers across the state have been transfixed by one simple question: Now that the JUA money is off limits, what is plan B to balance the budget? (more)

Gov. John Lynch: Even with cuts, state must find new revenue

Governor John Lynch takes the pages of the Union Leader this morning to defend his search for more revenue through new taxes, arguing that the $11.6 billion budget under consideration is fiscally responsible:

In all, the state budget will be essentially flat, about a 1 percent increase in general and education spending from 2009 to 2010. While spending is nearly level, revenues are continuing to decline because of the recession. For 2010, we project that state revenues will be lower than they were in 2004 and 10 percent lower than they were in 2008. For state government to continue meeting its core responsibilities without passing additional costs on to local taxpayers, it is clear the state will need to raise additional revenue over the next two years.

The Governor's is based on more than a handful of budget gimmicks designed to allow much higher spending this year than last while maintaining the illusion of a stable General Fund.

Charlie Arlinghaus wrote about the scheme to increase highway spending without it counting against the General Fund.

Tom Eaton showed how the Liquor Commission is being moved off the books, and a number of other gimmicks. And of course, Governor Lynch all that free federal stimulus money that he's spending. In fact, with all the one-time money being used for permanent state programs, the state's budget hole will be larger two years from now than it is today.

All in all, the budget as it currently stands increases state spending by about 8%. It's hard to know exactly as both the Governor and the Legislature are keeping the shells moving faster than the eye can see.

Tom Eaton: Gov Lynch's Budget is a Shell Game

By TOM EATON (Union Leader, March 6, 2009)

Now that the shock and awe of Gov. John Lynch's budget address has faded and we have had a chance to look at the details of his proposed budget, one fact has become clear -- the emperor has no clothes.

Gov. Lynch's proposed budget is a shell game that amounts to intergenerational theft.

We're not in this huge budget deficit because of the national economic downturn. This past budget cycle, the Democratic- controlled Legislature passed a 17 1/2 percent budget increase. For reference, the 2003 and 2005 budgets increased by about 3.5 percent, which included all essential and nondiscretionary spending. That coincided with the rate of inflation and demonstrated fiscally sound policy.

In this year's budget, Gov. Lynch claims he cut general fund spending by $40 million. But that's not exactly true. What he really did was some creative accounting. For example, he "relabeled" the State Liquor Commission budget so that it is no longer called general fund spending. This is not a cut; it is a name change. He is going to increase the agency's spending from $71 million to $91 million. But with a little creative accounting, a $20 million spending increase instead looks like a $71 million spending decrease.

Gov. Lynch also proposes bonding $83 million in school building aid -- money that used to be part of yearly general fund operating costs. The program isn't going away. The state will still send $83 million to communities for building aid. But with another sweep of Lynch's magical budget wand -- poof -- "level funding" an existing program looks like an $83 million spending cut. The reality is that the aid dollars were put on a "credit card" that our grandchildren will end up paying.

Here's another creative way to make it appear that you're cutting state spending -- announcing a state agency reorganization. However, is there an actual plan to do this? And if so, where is it? And can a plan of this magnitude really be implemented over the next two years? How much could we actually save if there was a plan that could be implemented over the next two years? Who knows? Yet Gov. Lynch's budget includes a $28 million cut in general fund spending due to reorganization. This is not a way to reduce our obligation going forward and demonstrates a worrisome pattern.

Gov. Lynch's budget proposal is full of these accounting gimmicks. State spending doesn't decrease. Many current costs are shifted or hidden. We all know that we are in the midst of a recession. This is not the time for quick fixes, yet one-time federal stimulus money is earmarked for programs we used to pay for within our budget.

Switching the funding source for the next two years doesn't solve the massive budget deficit. When the next budget comes around, projects with their costs will still be there; however, the one-time funding will be gone and the Democrats' huge budget deficit will be back and even greater.

Gov. Lynch also claims that he kept "overall aid to property taxpayers at least level." Unfortunately, that is not correct. Lynch's budget increases education funding to cities and towns by $123 million. However, it cuts other state aid programs to cities and towns by $166 million. The net result is a downshift of state spending onto local property taxpayers. That is wrong and harmful to our communities.

Perhaps the greatest feat of Gov. Lynch's budget is his attempt to take $110 million from a private, nonprofit organization. I know that sounds too bizarre to believe. But it's true. Lynch wants to take money that belongs to the New Hampshire Medical Malpractice Joint Underwriting Association and use it to balance the state budget. Remember, this is not government money and never has been. It is money that was paid by doctors and health care facilities to private insurance companies to help keep their malpractice premiums low, and it also helps retain and attract physicians and nurses. The money belongs to them.
If the state can take money from one private, nonprofit organization, why stop there?

The bottom line is that Gov. Lynch's budget increases state spending by $1.2 billion over the next two years. So despite cutting aid to communities, closing courts and Department of Motor Vehicles offices and forcing hundreds of layoffs, state spending is actually going up by 11 percent.
It is time to get back on track: fiscal discipline, good policies, job stimulation. The taxpayers and citizens of New Hampshire should receive nothing less.

Tom Eaton of Keene is the former Republican leader in the state Senate.