NH DOT claims employees save money taking home state cars

By Grant Bosse

Of the 1.5 million miles that New Hampshire employees drove state cars for Non-Business Use last year, 1.1 million were in the Department of Transportation. The agency responsible for the Granite State’s roads and bridges has the largest number of vehicles in the state’s fleet, and by far the most of those cars and trucks outside of official business. But DOT officials insist that letting workers take state vehicles home at night can ultimately save taxpayers money.

DOT has 606 cars and trucks that fall under SB 402, a law passed last year to cut down on state vehicle expenses. Under the law, agencies must now track Non-Business Use of vehicles under 10,000 pounds, and turn in the keys to any vehicles with more than 15% Non-Business Use unless they can justify its continued use to a panel of state officials led by Department of Administrative Services Commissioner Linda Hodgdon. A recent DAS report found that 179 DOT vehicles tripped the 15% NBU threshold, along with 54 cars from across all other New Hampshire departments.

30% of DOT vehicles were used extensively outside of business travel, compared to just 4% for all other vehicles. Fish and Game and Health and Human Services each had only one car in the report despite each having over 100 vehicles in their departments. DAS calculates that the average state car costs $.33 per mile to operate, putting the total tab for employees driving their DOT vehicles to and from work at $384,000. But the same DAS estimates also take into account how much the state would have paid to reimburse employees for official travel if they had not had access to state cars. Those savings drop the total cost of Non-Business Use within DOT to just over $100,000 in Fiscal Year 2011.

Deputy Commissioner Mike Pillsbury says letting DOT employees take work vehicles home more than pays for itself. Pillsbury says that most DOT vehicles don’t just transport workers to and from work. They are needed on the job site because of the specialized equipment, signal lights, and communications gear they carry. If Civil Engineers, Bridge Construction Superintendents, and other key employees had to drive to Concord or nearby maintenance shed to pick up these vehicles, DOT would have to start paying them the minute they turned the key in the ignition.

“We’d rather have them on the job site at 7:30 in the morning than driving to Concord to pick up the truck, being on the clock for the whole ride, and starting construction that much later,” Pillsbury explains.

Pillsbury stresses that employees only take home DOT trucks when it is more cost-effective to home to their job, and often only during construction season. He says that no top officials drive state cars. But that wasn’t always the case. Former Commissioner George Campbell, who stepped down this fall, shows up on the DAS report.

Campbell drove a state-owned 2007 Chevrolet Malibu 23,549 miles last year, 14,618 miles for Non-Business Use. That means 62% of Campbell’s miles were off the clock. In an August 10, 2011 letter to Hodgdon’s committee, DOT Assistant Director of Operations William Janelle requested a waiver to keep Campbell’s car.

DOT headquarters are located in Concord, however often the commissioner is required to travel to any one of the six regional district offices or 102 maintenance patrol facilities, various cities or towns to address specific concerns, Governor & Council meetings, public hearings for design projects or ongoing construction projects. These meetings can often occur at the start or end of the day on weekends or during evening hours.

The Commissioner has 24/7 responsibility for all transportation operations. In the past major traffic incidents such as multiple car pileups, bridge collisions and winter storm events required the Commissioners presence. In addition when natural disasters occur the Commissioner is ultimately responsible for transportation activities ESF 1 & ESF 3 at the Emergency Operations Center. This typically involves both monitoring the condition of transportation infrastructure in the field and briefing the Governor and local communities regarding the status of the ongoing response.

The Executive Council confirmed Christopher Clement to take over DOT on September 14th. Pillsbury says neither Clement nor his top assistants drive state-owned vehicles. According to Pillsbury, the only top DOT officials with state cars are the chief Highway Engineer and Bridge Engineer, who are on call to respond to accidents 24 hours a day.

Pillsbury adds that taking home specialized cars and trucks isn’t much benefit for DOT employees, since they can’t use them anything other than getting to and from the job site. The state does end up picking up the costs of those employees commutes, since it pays for gasoline and maintenance for state vehicles, saving state workers from hefty gas prices.

Hodgdon and her colleagues approved 175 of the 179 waiver requests from DOT, but also directed the Department to cut its vehicle fleet by at least 10 cars. Hodgdon says it may often be cost-effective to let transportation workers take their state vehicles home, DOT needs to improve how it tracks and manages its fleet.

“They can do better,” Hodgdon added.

Over a third of all miles driven by the 179 DOT vehicles in the report were for Non-Business Use, drawing the attention of Senate President Peter Bragdon, who sponsored SB 402 last session.

“We now have the information on the vehicles we did not have before and that provides more transparency. And now we know where the issues are,” Bragdon told the Union Leader in response to this Fleet Week series. “I want to let the system run a little bit and then see as we go along.”

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Well Intentioned Veto Hurts the Wrong People

By Charlie Arlinghaus
December 21, 2011
As originally published in the New Hampshire Union Leader

Legislators too often ignore the negative but unintended consequences of an action motivated by good intent. The governor’s veto of a bill regulating auto title loans is just such an action. Although very well intentioned, sustaining his veto would hurt the people he’s trying to help.

Like many states, New Hampshire regulates the rate of loans, particularly the loans we find less desirable and more distasteful to middle class sensibilities. Not every American has the ability to take out a loan against the value of a home whether a mortgage or an emergency home equity line.

Small consumer loans include pawn broker loans, payday loans and auto title loans. Payday loans are the most commonly discussed product. They are an unsecured advance on a customer’s paycheck at the highest interest rates. Payday loans have essentially been banned in New Hampshire driving their customers to the internet and to loans from Indian reservations advertised on television. Whether that choice was sensible or not, legislation under consideration does not address payday loans at all. They are still off the market.

What is under consideration is adjusting the rates and terms of automobile title loans in New Hampshire. In 2008, legislation in New Hampshire capped interest rates on title loans as an attack on supposedly predatory lending. Instead those loans were driven from the market.

Opponents have watched them go and said good riddance. Yet most of those opponents have no need for a short term loan. These loans are intended for those who are unbanked or underbanked in financial terms. In other words, a title loan is a service for people who don’t have recourse to another method.

For any loan of any type, some of the overhead costs of the lending company are taken up by charging fees. For a consumer receiving a mortgage, those fees are many thousands of dollars. However, the fees are rolled into the mortgage and paid for over thirty years. The bigger the mortgage and the longer the term, the smaller the fees look when announcing them as a percentage. For a bigger mortgage, the fees look smaller while for a smaller loan the same fees appear larger.

For small consumer loans, there are also overhead costs and fees. Yet the loan is often for just one month and 80% of the loans don’t last most than five months. Covering overhead costs on a $500 loan in a month sounds much higher as a percentage than taking those same costs and spreading them over thirty years and $200,000.

Nonetheless, the interest rate expressed in annual terms sounds obscenely high. Under the proposed law, rates would still be capped but at a rate of 25% each month. The rate cap is not arbitrary. A Tennessee study of their title loan industry found the monthly rate to simply break even was 18%. That helps explain why banks and credit unions haven’t stepped in under the current law which is about a sixth of that break even rate.

The best reason to allow title lenders is that they are a better alternative for consumers. Federal bank regulators have found that the primary competition for small consumer loans are overdraft fees, bounced check charges. In fact, that’s the biggest reason to take out a loan – to avoid bounced check fees. No one suggests a bank not charge a fee for bouncing a check or would ever suggest it was usurious. Yet if you calculate those fees the same way, the annual percentage rate is in the thousands. By comparison, even over 10 months, a title loan’s charges would 138%.

A title loan is a better option than paying overdraft charges which may be ten times as expensive. It is a better option than paying for unsecured payday loans which have a much higher rate and are unregulated over the internet. To refuse to allow consumers this option does not change their situation because you wish it so. They don’t suddenly buy everything on layaway. Their need doesn’t vanish. It merely takes away the lowest cost option they might choose and drive them instead to the other alternatives of much higher fees they might have avoided or internet loans that cost much more.

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DRED Commissioner defends giving Cannon GM “Company Car”

By Grant Bosse

Commissioner George Bald is satisfied that no one in his department is abusing the privilege of driving state-owned vehicles, even if he was a little sloppy in keeping track of his own mileage. The head of the Department of Resources and Economic Development defends his decision to let the General Manager of Cannon Mountain take home a “company car” every night, putting more than 18,000 personal miles on the vehicle in Fiscal Year 2011.

“There are a lot of requirements that people have to meet with different companies and travel the district. I don’t feel there is any waste going on with people in DRED using state vehicles,” Bald tells New Hampshire Watchdog. “And if they take them home, it is because it was going to be less expensive than for them to be driving to Concord to pick up the vehicle.”

DRED had eleven of its 168 state vehicles show up on a recent report detailing cars and trucks with more than 15% of their miles for Non-Business Use last year. A new state law, SB 402, requires that agencies track that mileage more carefully and redistribute vehicles above that threshold unless a they receive a waiver to let employees keep their state cars. Ten of those eleven vehicles received waivers, including Bald’s own car.

Bald drives a 2006 Chevrolet Impala LS, and last year drove it 25,980 miles, according to a report submitted by Administrative Services Commissioner Linda Hodgden to the Legislative Fiscal Committee earlier this month. Bald says he drives the car to and from work.

“I live in Somersworth, but I generally work out of the Concord office. I do take it home every night. Sometimes I’m going up to Colebrook or Berlin from here,” Bald explains. “I could have a meeting in Portsmouth in the morning, and Keene in the afternoon.”

State rules, and federal tax guidelines, treat a public employee’s commute as Non-Business Use. The distance between home and the office does not count as official travel. And while Bald submitted details mileage reports for ten of his department’s vehicles, he could not precisely account for his own mileage.

“I didn’t keep the records as well as other people have,” Bald readily admits. “Whenever I gas up, I note the mileage, but I wasn’t as good at keeping the mileage between various trips.”

Hodgden says that committee charged with considering vehicle waivers had to estimate how much of Bald’s mileage was taken up by Bald’s 40-mile commute.

“We did a low, medium and high version based on prior years and in all cases, it was better to have him drive a state vehicle than pay him $.55 to drive his own vehicle,” Hodgden concluded.

Bald argues that taking home state vehicles isn’t much of a perk, since most state employees don’t like leaving their personal vehicles in Concord, and they can’t use their state vehicles for anything once they pull into their driveway. State policies prohibit transporting family members or running errands in government cars.

CANNON CASE STUDY

2010 Chevy Impala: Photo from Chevrolet.com

The state car that has drawn the most attention following the publication of the DAS report is the 2010 Chevrolet Impala LS driven by Cannon Mountain General Manager John DeVivo. That car registered 18,842 miles of Non-Business Use in FY11, second most of any car in the state fleet. But it is also the only state car garaged outside of New Hampshire. DeVivo lives in Bethel, Maine, and Bald says he gave DeVivo permission to take the Chevy home every night.

“He’s on call 24 hours a day, seven days a week. In the winter he runs Cannon Mountain, but in the summer he runs all of Franconia Notch State Park,” Bald explains. “I felt it was important for him to have a vehicle because he wasn’t being compensated for being on call. He’s driving a billboard. There’s no doubt as to what it is. There’s no personal use of it.”

DeVivo’s out of state commute drew the ire of Josiah Bartlett Center President Charlie Arlinghaus, who highlighted the case in a Union Leader column previewing this Fleet Week series.

“I’m sorry he lives in Maine but why am I taxed so he can drive a state-owned Chevy Impala home every night instead of buying a car like the rest of us?” Arlinghaus asked.

Bald took issue with the idea that taxpayers are footing the bill, since Cannon Mountain’s operations are paid for entirely with user fees.

“There are no tax dollars that go into that vehicle. There are no General Fund dollars going into Cannon Mountain. Cannon Mountain is 100% supported by user fees,” Bald reiterated.

DAS estimates that the cost of maintaining DeVivo’s vehicle for 30.973 total miles is $3,488 more than it would be to simply reimburse DeVivo for the 12,131 miles in official travel he logged last year. Despite that additional expense, Bald made a case for letting DeVivo keep the car in his August 17, 2011 letter to Hodgden.

When John was hired in 2007 into the Unclassified Position as Mountain Manager and with the realization that the position serves at the pleasure of the Commissioner, it was agreed that John would be assigned the use of a state vehicle. This decision was based on the 24/7 nature of the job, the 15-18 hours of commuting time each week, the need to travel extensively in New Hampshire (and occasionally in western and southern Maine) beyond the commute, and the desire to put a Cannon logo in front of folks in lesser-marketed areas in Cannon country along the Route 2 corridor (Franconia, Twin Mountain, Jefferson, Gorham, and Shelburne) twice a day, on roughly 270 days a year. As with the electronic tethers (cell phone, mobile/global email, and laptop), the vehicle is a necessary tool for the job at hand, and John agreed to more than offset its use (financially) with an annual 4-1/2 month winter seasonal cottage rental at his own expense, to allow for even closer and more consistent contact with the organization.

As in the private sector, most state employees are responsible for getting themselves to and from work. And most employees who take home state cars do so in order to avoid having to drive to Concord or a nearly depot to pick up a state car for official travel in the morning. Such an arrangement saves the state money on each trip, even though it increases the amount of Non-Business Use on state vehicles. But Bald argues the Cannon Mountain GM should be allowed to take home a company car even if he isn’t traveling on state business the next day.

“It’s operated as a business would be operated, so that would certainly fit under the category of company car,” Bald says.

Bald says the decision to let DeVivo commute in a state vehicle has been well worth it.

“Four years in a row, we’ve had Cannon Mountain in the black. For his compensation, having a vehicle is a very small cost given the amount of work that he does and the responsibility he has,” Bald concludes.

Hodgden and the waiver committee agreed, voting 5-0 to let DeVivo keep driving the car. Overal, the panel allowed the continued use of 218 of the 233 cars and light trucks that crossed the 15% Non-Business Use threshold.

Dred- Bald Mileage Estimate

NH DRED State Vehicle Requests

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NH state workers drive 1.5 million personal miles a year

By Grant Bosse

December, 19 2011

State employees drove 1.5 million miles in state vehicles for non-business use last year, according to a report presented to the Legislature by the Department of Administrative Services. Starting in Fiscal Year 2011, DAS is charged with determining how many miles each state vehicles was driven for official and non-business use, and reporting any car or truck that had more than 15% of its miles driven off the clock.

The 233 vehicles reported to the Legislature were driven 1,504,034 miles for non-business use in FY11, and a total of 4,150,092 miles including official business. That’s enough miles to circle the Earth six times, or make three round trips to the moon. DAS calculates the state’s cost for allowing a state employee to use its vehicles at $.33 per mile, meaning that state employees cost the state $496,331 last year by using their government cars.

However, DAS also calculates how much it would have cost taxpayers to reimburse state employees if they had used their own cars for official business. The state reimburses official travel at $.55 per mile. So in some cases, it is cheaper to let a workers take home a state car than to reimburse them for their official travel. The 233 vehicles that tripped the 15% threshold represent 12% of the state’s fleet of passenger cars and light trucks under 10,000 pounds. The report does not include heavy construction equipment, which can be assigned to state employees but not used to commute to and from the job site. 61 of the vehicles were actually driven more for personal use that on official state business.

Last year, the Legislature passed Senate Bill 402, which in addition to directing departments to reduce their overall in-state travel, requires that reassignment of cars that exceed 15% personal use.

For every vehicle that logs more than 15% Non-Business Use (NBU), a panel of state officials led by DAS Commissioner Linda Hodgden decides whether the car should be repurposed within the fleet or retained by its current employee or department. Of the 233 vehicles that tripped the 15% threshold last year, 14 were repurposed while 218 were retained. The NBU report Hodgden presented earlier this month to the Legislative Fiscal Committee states that one vehicle assigned to the Board of Pharmacy was “erroneously logged NBU”. According to the report, there are 1,884 passenger automobiles and light trucks in the state fleet.

Senate President Peter Bragdon (R-Milford) was lead sponsor of SB 402, and said the report delivered the information the Legislature was hoping to find.

“While it is disturbing to learn so many taxpayer-funded vehicles are being used for commuting and other non-business purposes, I am pleased to learn that our efforts to increase the transparency of state government are paying off,” Bragdon said. “This type of information on state vehicle use was unavailable to the public before and I believe its release will give even more public support to our efforts to reform state government.”

Senator Chuck Morse (R-Salem) added that personal use of vehicles sometimes saves the state money, but it should be a fringe benefit for top state officials.

“As chairman of the Senate Finance Committee, I am constantly aware that we are accountable to the taxpayers concerning how we spend their money. That includes the use of state vehicles,” Morse said. “The vast majority of miles put on taxpayer funded cars should be accumulated by employees conducting official state business, not by employees taking private trips. In New Hampshire use of a state vehicle should be considered a privilege, not a perk that some people get and others don’t.”

Reimbursing state employees for the 2.6 million official miles logged by the vehicles in the NBU report would have cost taxpayers $1.47 million in FY11. DAS estimates that the total cost of maintaining those 233 vehicles was $1.37 million for both official and non-business miles.

The Josiah Bartlett Center will continue our Fleet Week investigation tomorrow.

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On Highways, The One Good Idea in Washington

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By Charlie Arlinghaus

Originally Published in the New Hampshire Union Leader

Odd as it may sound, in the next big budget battle the state government could learn a lesson from Washington in how to balance our books. In transportation spending, the state government regularly plans on spending much more than it has available. The state should reverse this practice and turn the highway plan from a wish list back into a plan.

The federal government may make significant cutbacks to the gas taxes it sends back to New Hampshire but who can blame them? Last year, like most years, the Highway Trust Fund took in $35 billion of revenue but authorized spending of $50 billion. That tells you just about all you need to know about how Washington works.

Transportation Committee Chairman John Mica has broken with tradition by planning on spending only what the fund collects in user fees (largely gas taxes) to balance this one corner of the federal budget. It’s a novel idea in Washington but one that we ought to import into New Hampshire.

New Hampshire currently plans its transportation spending under the old Washington model. Every two years, we authorize a new “Ten-Year Transportation Plan.” In this process, we have a long term plan for the infrastructure projects we can fund.

The difficulty with the so-called plan is that it is and has generally been a fiction. Over the years, the Ten Year Plan has morphed from an actual plan into a public relations document that bears little or no relation to reality. We know going into the plan that under current scenarios we have only so-much capacity. Yet project after project is added to the list to make people feel better even without any hope of paying for it.

It’s a game politicians play. They run around the state holding meetings and making people feel good. They pat selectmen and chambers of commerce on the back and say “we’ve added this important project to the Ten Year Plan.” Everybody feels good. We’re in the plan. He’s looking out for us. But back in Concord they snicker because it’s all a game.

There’s no money. The plan isn’t a real plan. Just a few years ago, the projects had swelled so much that it would have taken 30 years to fund the ten year plan. A former commissioner, Charles O’Leary, was brought in as interim commissioner to dish out the pain. He ruthlessly pared down the list so there were “only” 17 years of projects in the Ten Year Plan.

The Orwellian doublespeak part of the whole process is when people who want to raise user fees talk of a deficit in the plan as if simply planning on spending money you don’t have is a deficit. Because of the way the plan is developed, all we really know is that the wish list costs more than we have.

The problem is the process itself. The starting point should be available revenue under current budget scenarios (which includes the federal government sending $50 million less if they actually stop spending money they don’t have in this one tiny area of federal spending).

Highway spending in New Hampshire is not funded by general taxation. Our highway spending is supported entirely by user fees like the gas tax and turnpike tolls. So, if we’re developing a real plan, let’s start by figuring out how much money those fees will raise over the next ten years.

The second step is to figure out what those specific revenues will support and what they won’t support. The advantage is that we can figure out what gets left out and whether or not we can live with that. It helps put any proposal for new projects or new revenues in context.

As part of that process, we’ll have to make distinctions between new features and maintaining the current features we have. Our current roads require regular repaving so they don’t disintegrate. We have a red list of bridges in need of repair. Setting aside the money for prevention and maintenance should probably take priority over some of the more glamorous projects.

I love open road tolling where I can fly through with an EZ Pass and not be bothered to stop. However, the very large expense of such a new feature comes at the expense of fixing a lot of decrepit bridges. Is my convenience more important than maintaining our current infrastructure?

When the plan matches the revenue, we can evaluate proposals to raise or cut revenues more clearly. This is what we can fund with current revenue. He wants a toll increase to do these four things. That is a much more strategic evaluation than saying we just need some extra so I can tell everyone yes and put them on the wish list.

Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free market think tank based in Concord, New Hampshire.

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NH Budget 101 Presentations

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January 2011

Charlie Arlinghaus on Understanding the State Budget and Current Shortfall.

Grant Bosse presented on Growing State Debt Shortfall.

Rep. David Campbell outlined State Transportation Spending .

and Rep. Ken Hawkins explained The State Retirement System.

 

Please note that each file is a large pdf file and may take a few moments to download

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Why do gas prices spike in the Spring?

As noted in last post, gas prices always spike seem to spike in the spring. Why is that?

Well, there are several reasons. The first are the basic laws of supply and demand. With nicer weather, people tend to drive more, increasing the demand and thus the price.

The second is what is called the Seasonal Gas Transition. Taking effect in 1995, amendments to the Clean Air Act of 1990 mandated a different formulation of gasoline for the summer months, colloquially known as the ‘summer blend’ to cut down on pollution. Changing output from summer to winter blends of fuel is not as easy as flipping a switch. Rather, the refinery must often shut down completely in order make the change over.

In addition, the summer blend mandates a lower percentage of Butane in gasoline for environmental reasons. The Butane is replace with more expensive ingredients, further boosting the price.

The summer blend also reduces the mileage per gallon, further increasing demand on gas to travel the same distance.

Perhaps most troubling is that different areas have different blend requirements, meaning that surplus fuel in one area can not be easily shipped to a deficit area, resulting in potential large regional price differences and giving oil companies distorted market power than they otherwise would have. This could be easily solved by doing away with these variations entirely or at the very least parring them down to a more reasonable number.

The actual cost of the summer blend is difficult to calculate and as a result, there are a wide range of opinions as to the exact cost. Estimates range from $.01 to $.15 per gallon.

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Gas Prices in NH: Top off now

As reported by WMUR this morning, gas prices have slightly increased over the past week, after a slight dip.

Looking at data from GasBuddy.com we see some interesting historical trends when it comes to March gas prices.

March historically sees a plateauing in gas prices, followed by a spike that peaks roughly around Memorial Day. The extent of the peaks vary from year to year, over the past 6 years as historical data, with anomalous years removed, NH typically sees a 17% jump in prices.

That being said, there is only so much room for prices to go up. Last year we saw only a 13% run up from a price level of about $3.50/gal, where prices rose right up against the $4/gal mark. This year we are starting at a base of roughly $3.65/gal, and a 13% increase would mean about $4.11/gal.

Conventional wisdom holds that $4.00/gal is the psychological point in which people begin to change their driving habits and most industry experts contend that the oil companies, faced with the loss of sales, will try to keep it under $4.00 a gallon. However there is only so much wiggle room before they would have to sell gas at a loss to keep it at or below $4.00/gal.

On a side note, if you haven’t discovered Gasbuddy.com yet, it is certainly worth a look. Beyond historical data, their primary purpose is to provide real time gas prices. Using something akin to a Wikipedia model, gas prices are updated by users punching in data from their local gas stations. Though these days gas prices can change several times a day, the time of the last update is noted which gives the reader an idea of how the accurate that figure is at that particular moment in time. For example, if the last update is 2 hours old, chances are it is right on the mark, if it is 18 hours old, maybe not. Data older than 36 hours is removed from the list.

It is a great tool if you are looking for the best price on gas whether it be around town, somewhere along your commute or on a trip.

Long story short, gas prices are only going to go up (baring some unforeseen event), so fill up now.

-Josh

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