1 understanding and explaining the new hampshire state budget charlie arlinghaus, josiah bartlett...

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Understanding and Explaining The New Hampshire State Budget

Charlie Arlinghaus,

Josiah Bartlett Center for Public Policy

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New Hampshire Operating Budget

State Operating Budget

Federal Funds

Tax Revenues:•General Fund•Education Fund

Other funds:•Highway•Turnpike •Fish and Game •“Other Funds”

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New Hampshire State Budget

24 month budget 2 one year components Balanced Budget law July 1 – June 30 Fiscal Year Capital and Operating separate

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Balanced Budget Law

RSA 9:8-B Each fund must be balanced Expenditures for biennium balanced

by Estimated revenue Money remaining from prior biennium

Bonding (debt) prohibited for “operating expenditures”

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Education Trust Fund

Created in 1998 Response to Claremont case Transparency re: tax increases Not a real trust fund Transfers to and from General fund Statewide Property Tax Separate or Combined?

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General and Education Revenues

Combined to Balance as if one fund Diverse basket – 10 sources 81% FY 2010 - $1,980M (2343-363) Business combined $611M – 31% Meals and Rooms; Tobacco; Liquor;

Int/Div; RETT; Insurance; Communications, Lottery

Medicaid “enhancement”

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“Unrestricted revenue”: $1,853M(not including state property tax)

Business Taxes - $504 – 27% Meals and Rooms - $232 – 12.5% Tobacco - $244 – 13% Liquor - $120 – 6.5% I & D - $84.5– 4.5% Real Estate Transfer – $84.5 – 4.5% Insurance – $87 – 4.5% Communications - $80 – 4.3% Lottery - $66 – 3.5% Medicaid Enhancement - $118 – 6% Other: Court fees, securities revenue, utility taxes, beer

tax, utility state property tax, racing, tobac. settlement

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Spending (44%) Education: Trust fund ($958m) plus Just the general fund – 6 Categories

General Government - $324M – 21% Justice $227M – 15% Resources $41M – 3% Transportation $1M – 0.1% (highway,

turnpike funds) Health and Social $765M - 49% Education $201 – 13% (plus education fund)

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Spending (100%) The Six Categories (All Funds)

General Government - $555M – 10% Justice $691M – 12% Resources $344M – 8% Transportation $566M – 10% Health and Social $2087M - 36% Education $1502 – 26%

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This Fund and That Fund

Total $11.5 billion – 2 years General Fund - $3.2B* – 30% (was 31%) Federal Funds - $3.7 -32% (was 29%) Education Fund - $1.9B – 17% (was 17) Other “Other Funds” - $1.9B – 17% (15) Highway Fund - $627M – 5.4% (5.4) Turnpike Fund - $155M – 1.5% (1.5) Fish and Game - $27M – 0.2% (0.2)

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Employee costs

12,000 classified @ 45,800 Wages approx. $600M Benefits approx $250M Retirement approx $50M

$900M = 15% of annual costs

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Local Aid?

2009 – Education 1.017B 2010 – Education 1.026B

2009 – Municipal $125M 2010 – Municipal $93M

Combined is 45% of GF/ETF Spending

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Spending Trends

How to Measure – 2 yr? Biennial? Over Twenty years: General Fund – 4.5% annual Biennial increase ave. 8.7% GF + ETF 10 yr ave. – 2.55% Inflation 20 yr – 2.6% 1989 adjusted – 1,025,000

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Spending Growth 1989-2009

74%

154%

311%

0%

50%

100%

150%

200%

250%

300%

350%

Inflation General Fund GF + ETF

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23% equals $2.2 Billion Recent Growth – Two Biennia 01: 819M-1102M (+283) (+34%) 02: 845-1374M (+529) (+62%) 03: 440-658M (+218) (+22%) 04: 1085-1148M (+63) (+6%) 05: 3391-4263M (+872) (+26%) 06: 2758-3006M (+248) (+9%) Total: 9338-11549 (+2211)(+23%)

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How do we Balance?

Surplus Statement Budget minus lapses (net approp.) Unrestricted revenue Fund balance plus ETF surplus Two year total not each

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Rainy Day Fund

Revenue Stabilization Reserve Account

Surplus in, deficit out When does it rain? RSA 9:13-E Suspended last 2 budgets

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The New Legislature, 2011

October 1, 2010/ November 1 Tentative Budget - DAS Governor’s Address – February 15 6 weeks: House, Senate, Conference Starting point: $600-900M?

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“The Deficit”

General and Education Funds 2010-2011: $887M “One-time” FY2011 fast forward: $691M $176.8 x 2=$353.7 Plus $337.4 temporary $691 Million Assume zero tax, zero spend

(or+10.4)

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Mind the GapMind The Gap

4419

5058

4473

4369

4300

4400

4500

4600

4700

4800

4900

5000

5100

2006-07 2010-2011

Expenditures

Revenues

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Capital Budget and Debt

Operating v. Capital $239 M General Fund v. General Obligation Self-supporting Debt Issued offset by Debt retired Growth $644M to $823M (28% - 4 yr) Differing Opinions

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The $6.5 Billion Debt Mountain Pensions: 3.55B +? OPEB: $2.47 Billion Other Health: $496 million Judicial: $15.8 million

20 years ago – zero*

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Information where?

Monthly Revenue and Historical: http://admin.state.nh.us/accounting/reports.asp

Budget Document (LBA)http://www.gencourt.state.nh.us/lba/indexbudget.html

Treasurer: Bond Statement

http://www.nh.gov/treasury/Divisions/DM/DMdocs.htm