February 27, 2013
As originally published in the New Hampshire Union Leader
The state’s budget laws are often ignored. The general public knows this and so routinely believes that, no matter what they hear, some wool is being pulled over their eyes. This skepticism is strongest in the area of transportation where we presume diversions and shell games are routine. The details often prove the public right. This year’s budget includes a diversion of $28 million of supposedly dedicated highway fund revenue in violation of a law that is only a few years old and already being ignored.
It is commonly accepted wisdom among the public that dedicated highway funds are routinely diverted to non-highway purposes. The constitution was amended in 1938 to provide that taxes and fees related to motor vehicles be used for no purpose other than building and maintaining highways and supervising traffic thereon.
This ironclad dedication exists with no other tax. But for as long as it has existed, people have believed that gas taxes were being diverted like a slush fund to other purposes. It became commonplace to rail against raiding the highway fund (where the dedicated funds are meant to reside). Nonetheless as much as 40% of funds were diverted under vague rationale – if you try hard enough, almost anything can be described as sort of, tangentially related to taking care of roads.
In 2008, however, legislators acted. Republican Rep. Ken Weyler and Democratic Rep. Marjorie Smith, between them chair of the House Finance Committee for six years, sponsored a highway spending cap. A minimum percentage of total gas tax and other highway fees had to be spent within the department of transportation — phased in until the percentage reached 73%. A maximum of 26% could be spent at Safety (on state troopers to supervise traffic in theory) and just 1% could be spent anywhere else.
It was a sensible law which I described as the best piece of legislation of 2008. I was critical of the 2011 budget for suspending the law temporarily even though legislators came close to the target. I worried that suspending the law would send a message that ignoring it is common practice. Ignoring it once makes it easy for legislators to smile at you as if you’re naïve and say “oh that! No one ever does that.”
Sure enough, a tiny diversion becomes a big one. Rep. Lynne Ober, a member of the finance committee had the legislative budget office check on compliance with the law in the governor’s proposed budget. She found that far from reaching the 73% minimum threshold, the budget misses that target by $28 million over the biennium.
In other words, the budget diverts $28 million of dedicated highway taxes and fees to non-highway purposes. Ober is an opponent of the gas tax and contrasted the diversion with the state’s urgent infrastructure needs: “She [Gov. Hassan] should have obeyed state law and put those needed funds into DOT for roads instead of trying to raise the gas tax.”
Ober’s cynicism about the diversion of funds highlights the struggle lawmakers have to earn people’s trust. Gas tax supporters want to raise an additional $120 million each year in dedicated money. But if the $120 million is desperately needed and absolutely, positively won’t be diverted, why is $28 million being diverted with only Rep. Ober raising the alarm?
Gas tax opponents may want the law observed to limit the need for more revenue. But gas tax supporters should also want the law followed to ensure existing revenues are spent as they are supposed to be and thereby create trust.
This diversion may be the tip of the iceberg. The governor’s budget summary includes a line in a spreadsheet indicating the state will raise $29.5 million for its general fund from “dedicated funds/other initiatives.” Which dedicated funds will be undedicated? What other initiatives? We’re not sure yet.
That explanation will wait for the arrival of what’s called HB2, the appropriation language part of the budget. That language required by law by February 15 hasn’t come and is often many weeks late. The law is routinely ignored because other people ignored it first and so we wait for explanation. Similarly, dedicated funds are not supposed to be undedicated but they routinely are so we’re expected to turn a blind eye.
The highway spending protection law is in its infancy. Whether it will have the force of law or become routinely suspended is probably in the hands of the current legislature.