Bad Budget Information Creates Squabbles

Charlie Arlinghaus

July 22, 2015

As originally published in the New Hampshire Union Leader

One of the greatest obstacles to our current crop of politicians getting along with each other is a lack of information or at least a lack of good information. Sharing information and sharing it correctly is important not just for the sake of government transparency but so political squabbles are more constructive. New Hampshire’s state budget process needs more and better information. A just-passed transparency bill comes too late to help this budget but is an important step for the future.

New Hampshire’s government is very transparent in some areas and pathetically opaque in others. We do a terrific job on taxes. Each month’s tax receipts are posted within a day or two of the month ending. That they are posted quickly and completely helps make them a useful analytical tool for policymakers and also for interested parties outside the legislature. But the speed with which they are posted is only a small part of the story.

It would be useless for us to know how much a given tax raised in a month if we had no other information. The way taxes are collected, the reporting requirements, and other economic factors allow tax collectors to establish a budgeted amount for each month against which we can compare the actual receipts.

For example, business tax receipts are much higher some months than others because of the way they are collected. knowing a given month raised $96 million is useless unless we know whether it was a lesser month budgeted for $72 million or a larger month budgeted at $107 million. The one situation is a cause for optimism and the other will require action to avoid a deficit but we have no way of knowing which situation we face unless someone compares the data to the budget.

For taxes we have precisely that information each and every month very quickly. Our spending information by comparison is quite difficult and not useful for analyzing the budget. The lack of information on spending is one of the sources of budget fighting this year.

The state does maintain a transparency site called TransparentNH on the state website. It started some time after the Josiah Bartlett Center launched our NHOpenGov portal. Both transparency sites though are meant to be an encyclopedic disclosure of each transaction of state government rather than a real time analytical tool.

Go to the state website and look at it and you’ll see that it is of very limited utility for resolving the kind of discussions currently at the center of the state budget mess. Are we spending more in general fund dollars than the House, Senate, and Governor all agreed we would end the year having spent? Are department on track to meet their the budgeted amount of lapsed spending required for the budget to balance? That’s not the point of the website and it can’t answer those questions.

Sen. Jeb Bradley with a host of other senators and representatives sponsored and passed this year the first step to create a transparent budget tool. Their law (which was SB32 if you want to go look) would require quarterly spending reports modeled after the tax reports everyone likes so much.

The law requires spending totals and projections so lawmakers and the public will know as soon as possible if spending is unlikely to come in as advertised. Today some department heads have good information but the legislature and the governor — and certainly the public — aren’t always equipped with the same pieces of information.

Following the governor’s budget veto, the level of spending for the year that just ended has turned into a matter of dispute. In Concord there are allegations of underestimating spending, of overspending contrary to legal authority, of incorrect or misleading estimates of lapsed or unspent funds required by law. Most of these disputes are not easily checked because the information is not publicly available.

This is a concern partly because lawmakers can’t resolve a budget impasse until better information is available in September, leaving us fiddling with a temporary budget and much uncertainly for months.

Better information leads to better decisions. Some philosophical or programmatic disputes will remain but they can be debated properly. Competing in the marketplace of ideas requires competitors be equipped with the same information base. Just as important, those of us deciding between competing alternatives need similar access to the information. The Bradley transparency law is a good step I wish we had taken two years ago to help us avoid the current messiness.

1 reply
  1. Doug Hall says:

    It could be made clearer in the budget itself (and in spending reports subsequently) whether a particular line item is (1) just an estimate, or (2) an enforceable limit. Almost all major budget shortfalls are caused by type 1 line items. But very, very few of the line items in the budget are of this type. And they are big line items. Examples: indigent defense, medicaid payments, “catastrophic” special ed. Type 1 line items should be in a different color in the printed budget. Tracking those alone would be a first and easier step. At least that is where the attention should go.

    The public (and even some legislators) do not fully understand that some line items are Type 1. To control a Type 1 line item that will exceed its budgeted amount most often will require a change in state or federal law.

    Attempts to hide problems in these lines by administrative action can prove to be bad news. Years ago, the Medicaid payment line would be throttled to stay within budget by holding bills from providers in June (and even May) and not paying them (or even recording them as payable) until the next fiscal year began in July. That kind of administrative duplicity only made things worse for the next Commissioner of H&HS or the next Governor.

    Limiting access to information is a way of maintaining power. The Executive Branch often hides information from the Legislative Branch. But even within the legislature, my experience was this: if I had information that other legislators did not, I had more power. Power relationships are maintained by information imbalance. Making more information public is a worthy goal. But it will be met by resistance (dressed up in many different costumes) from those who foresee their current power and influence being lessened.

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