Budget Problem About Teamwork and Turkey

Charlie Arlinghaus

June 11, 2014

As originally published in the New Hampshire Union Leader

DRED Commissioner Jeff Rose made a strong plea last week for his economic development bailiwick.  His rationale, however sensible, minimizes a very real problem and is an accidental example of the problem state government faces. The state faces a real problem, one they know about even when denying it, and can’t fix it without a team pulling on each and every oar, not with selective paddling.

The state may or may not face a budget crisis depending on who you believe. In the face of what she thinks is a crisis, the governor imposed the mildest of spending restrictions on every part of state government. Until we know the problem better, she decided to impose the time honored first step: a freeze on new hiring and out-of-state travel. It doesn’t save much money in the short term but it’s symbolic.

Very quickly, some criticized the governor because while out-of-state travel is banned, she herself will still go on a long planned trade mission to Turkey. While there is clearly a political element to the brouhaha, there are lessons to be learned whether the travel goes forward or not.

DRED Commissioner Jeff Rose, the state’s leading economic development official (and, I should add, all around decent guy and a friend of mine) took to the state’s newspapers to defend the Turkey Trip as appropriate, good for economic development, and mention that the state budget situation really isn’t very bad.

Commissioner Rose makes a good case for the value of trade to the state’s economy and the utility of missions such as this in developing business. He sounds like a good commissioner who has thought through the strategic value of a trip and can successfully engage in its defense. But, on some level, Rose’s skill is part of the problem.

Every commissioner and director has – usually – good cause for their individual program. Whether they communicate as effectively as Rose does or whether their trip holds the obvious appeal of a trade mission, most state managers have a good reason for their travel or new hire. The appeal of the trip or the persuasive power of the guy making the argument for what goes on in his bailiwick ought not influence our opinion.

The simple fact is that, despite the Commissioner’s attempt to minimize the fiscal turmoil of the state, we face a real problem.

Revenues, which we track on a monthly basis are in fact more or less right on budget. They are $0.8 million ahead of budget so therefore some would claim there is no issue. But two short months ago (nine months into the first fiscal year of the two-year budget) revenues were $25.5 million ahead of schedule. The rapid deterioration of revenues is not “mildly troublesome” but rather “quite alarming” to any serious budget watcher.

And yet revenues are the most optimistic half of the story. State spending is more than a little scary. Remember that to balance the budget, the executive branch must manage spending in such a way that they do not spend or “lapse” $50 million. The governor herself told the legislature’s fiscal committee that we are very unlikely to come close to meeting our budget target.

Add together deteriorating revenue numbers and spending well above budget and you get a budget problem. And I haven’t even added in the costs that will get carried forward to next year to pay for the MET lawsuit settlement.

Budget crises come and go in New Hampshire but there is only one way to solve them: together. I told legislative leaders in 2011 that real spending cuts were necessary but possible only if everyone on the team shared in the effort. Everyone must cut or everyone will battle to be the exception. That same dynamic should apply to the current situation.

Many spending ideas sound quite sensible on paper especially when advocated with Commissioner Rose’s eloquence. But if constraints like travel freezes and spending freezes are to be imposed they must apply to everyone. The more important and glamorous trips should not be an exception but a leadership example of everyone being in the boat together.

Perhaps we were too far down the road to Turkey to cancel – plans already made, etc. But that’s a different argument than “this project is really important compared to the other boring stuff the state does.” Going forward, all parts of the government, however exciting or well argued, should be part of fixing a very big problem by sharing in the travails.