The Budget Squabble Can’t End Before October

Charlie Arlinghaus

July 29, 2015

As originally published in the New Hampshire Union Leader

The ongoing state budget fight is about yesterday not tomorrow. Big government squabbles are never about what the press release claims. This one won’t and can’t be resolved quickly. The press conference phase of the budget that we are currently undergoing amounts to positioning before negotiations which can’t begin until official documents are released at the beginning of the Fall.

Democratic Gov. Hassan vetoed the Republican legislature’s budget last month. The public fights between those two parties have been over tax cuts, tax hikes, state employee raises, and expanding the Medicaid program. The real fight, however, is all about last year.

The governor has charged the legislative budget with being unbalanced because she contends it would move $31 million of money budgeted for last year forward to this year. In her words, the legislature is double counting that money. The legislature counter charge is that nothing is double counted unless the governor and her departments overspent the budgeted authority and are trying to obscure that alarming fact in the budget process.

The charges are confusing and sound both technical and obscure leading the casual observer to dismiss them as largely irrelevant minutiae. In fact, this dispute is the most important part of the squabble and critical to future budgets.

In the budget process, the most important public document released is called the surplus statement. The surplus statement is an explanation of every major change a proposal — the legislature’s or the governor’s makes — and is a summary of the bottom line of the budget showing spending levels, tax estimates, and how the budget is balanced, as required by state law.

Under our state law, the budget proposal does not stand as an island but must take into account the prior year that is ending as the new budget begins. This forces government to clean up messes left behind and encourages good behavior by examining and then living with the outcomes of earlier decisions and statements.

The prior year’s spending must fall within the budget limits established by the prior budget and any adjustments to that spending authority made by other laws and by executive order. In addition, the executive branch as a whole must meet its estimated managerial savings, referred to as “lapses.”

This year, up until the moment of veto, there was remarkable agreement over the outcome of fiscal year 2015. A look at the surplus statement in the budget documents on the legislative budget assistant’s website show’s that the legislature and the governor estimated 2015 spending at precisely the same $1.34 billion and both count on precisely the same $51.9 million lapse adjustment.

Nonetheless, in the current budget squabble, the governor claims the legislature has underestimated spending by $31 million. Her public statements have accused the legislature of double counting revenue and not paying for all the 2015 spending. Yet, they pay for the same spending and count the same lapsed spending.

The only possible way the legislatively passed budget doesn’t pay for the 2015 bills is if the bills are coming in high — if the executive branch is spending more than it said. The legislature has not pressured them to spend less in 2015. Instead it appropriated the same amount and made the same assumptions the governor said she was making.

This is why the budget can’t be fixed anytime soon. In late September or early October, the state will issue official documents detailing how much was actually spent, whether some departments exceeded their authority — overspent their budget — and whether the $51.9 million everyone agreed was going to lapse actually lapsed.

There is no legal penalty if the executive branch spent more than it was supposed to. In fact there will likely be an argument about what the numbers actually mean. If a department spends too much but characterizes it as “not meeting its lapses,” it amounts to the same thing as overspending its authority but amounts to a sort of wiggle room under the law.

Nonetheless, yesterday matters. If spending will exceed $1.34 billion or if lapses won’t be $51.9 million the managers of state government should not allow the fake number to be the basis of a budget.

In about two months, the truth will come out. If spending is not as advertised any compromise budget must include transparent methods to keep a jaundiced eye on unreliable stewards of spending.