February 25, 2014
As originally published in the New Hampshire Union Leader
The decisions a politician makes this year will have an impact next year, particularly as it relates to the budget. Nonetheless, most politicians ignore short term consequences and pretend the future doesn’t exist. The logical outcomes of choices they make are often ignored and many decisions are delayed for a year or two as a way to avoid them.
In the state’s budget process, putting off decisions seems to haunt us every two years. In general, politicians are expected to balance current levels of spending with the revenues they raise in the same budget. But enough games and gimmicks are available that clever budget writers can cover up holes until they become much bigger two years later. They then feign surprise and look for a new gimmick.
The classic example was the budgeting of 2009 and 2010. Happy budgeters of that era will misleadingly tell you that the budget of those years was “balanced.” What they don’t mention is that lawmakers, desperate to avoid making decisions, propped up then current spending levels with odd doses of borrowed money (among other things we borrowed money to pay for our borrowing) and two special federal stimulus programs which allowed them to prop up spending with one-time federal grants.
The problem with such one-time props is that they vanish and leave a bigger hole next year. The program you didn’t really have the money for doesn’t go away. It exists again next year at an even larger level and you still don’t have the money for it. The decision you tried not to make was merely delayed and made more problematic.
The bad decisions of 2009 and 2010 illustrate this in spades. Lawmakers coming afterwards faced what they (and I) called an $800 million deficit. It wasn’t a retrospective deficit (money already spent) but rather a prospective deficit. The amount represented how much spending levels would exceed revenues in the next year if nothing were done.
That astronomical problem is a good example of what lawmakers can face many years when they put off some decisions. This year, there are a handful of problems that combine to force lawmakers to roll up their sleeves. First, the budget passed two years ago spent more than it took in. It used $57 million in surplus funds left from the prior budget.
After that surplus turned out to be larger than expected, the executive branch overspent its budget and created additional problems. Each of those two overspending problems carries forward into this budget and creates a hole that has to be adjusted for.
Third, changes to the hospital tax often called mediscam created a lawsuit that had to be settled. Requiring that money to be spent for its stated purpose was a predictable and delayed outcome but creates close to $100 million of spending issues.
Lawmakers are being forced to make decisions to deal with each of these issues and make sure current levels of spending are supported by regular revenues not gimmicks.
A second kind of issue is the one that relates to charter schools. The state has a public charter school program (and I support more options for more children) but funding continues to be an issue. Charter school funding has been a fixed dollar amount that doesn’t adjust at all for inflation. So lately we’ve ignored the issue and hoped charter schools could figure out how to operate on less and less. Without a change they will be asked to operate on less than one-third of the spending in traditional public schools (which have per pupil costs of a little more than $16,000).
Of course that’s silly and has to be changed. Each year we choose to ignore the problem the discrepancy becomes larger and larger and the solution become bigger and bigger. This again is symbolic of the problems budget writers face when their predecessors ignore a problem. The problem doesn’t go away but fixing it becomes harder.
The House currently has to come up with a budget almost from scratch (they don’t really have a workable draft to start from). They will have to make all the decisions that have been delayed. With less margin for error, the problem is, in some ways, as hard as it was four years ago. We will all be annoyed by some decisions they make. But we have little to complain about. Delaying and doing nothing made these decisions difficult. All we can ask now is that someone step up and do the job.