Charlie Arlinghaus

July 8, 2015

As originally published in the New Hampshire Union Leader

Fissures over fiscal policy are fed by fanciful fictions that threaten the focus needed to fix the state’s financial budget. Political statements mislead you and indefensible charges are designed to distract you from a simple but philosophical disagreement.

The governor of one party vetoed a budget passed by a legislature controlled by the other political party. Democratic Governor Maggie Hassan wanted to spend more money particularly on social programs and the university system. The Republican legislature would spend less money and phase in a reduction to our high state business taxes.

Instead of focusing on that philosophical fact, too much of the debate has focused on a fiction.  The governor and her allies repeatedly claim — despite proof to the contrary — that the budget is “unbalanced.” The state budget law requires quite specifically that the budget be balanced so any charge of imbalance is quite serious if true. Her charge, however, is silly hogwash.

The governor defined her unbalanced charge in her veto statement: “The legislature double-counted carryforward funds, attempting to take money that has been designated and appropriated to pay for 2015 bills, and instead proposed to use it to balance its 2016 budget.”

A very serious charge indeed. The difficulty with the charge is that it isn’t true. Accompanying each budget and budget proposal is a sheet from the state’s very strictly non-partisan office of Legislative Budget Assistant showing how the state’s budget is balanced. The LBA works for the legislature, is technically tasked by the committee chairmen, and has an unvarnished and unquestioned reputation for neutrality.

The balance document is called a surplus statement and is the chief point of reference for everyone in the executive branch, legislative branch, and general public for deciphering the budget.

To begin with, it shows a balanced budget without any question. The estimates of revenue are accepted by everyone involved in the process and they balance the budget spending authority granted.

The governor hasn’t produced her own surplus statement because she doesn’t allege inaccuracies in that document itself. Instead, she claims something quite specific: she believes money is being double counted — it was spent in the budget that ended June 30 and is being carried forward as if unspent so it can be spent again next year.

If true, this would show up in the surplus statement as the legislature artificially deflating FY2015 spending below what the governor knows will be spent. Actual spending would then come in high, the extra money would be unavailable, and we suddenly have a deficit.

State documents however show no such thing. The surplus statement shows the governor and legislature both planned on general fund appropriations of $1.34 billion.

Sometimes governors or legislatures can play games with what are called lapses — the planned management difference between what is technically authorized and what will actually be spent. Most line items are caps on spending authority and we know the agencies will spend just a bit less. That difference is included in the budget and each department manages its spending — under the watchful of the governor as CEO — to meet its requirement.

But here too the governor and legislature show no difference. They each budget 4% of authorized to spending to lapse, or remain unused — the exact same $51.2 million. You might argue that the legislature basically just accepted the governor’s claims about 2015 spending and adopted them.

So the ridiculous “unbalanced” rhetoric is just a political canard and should be ignored as just so much silliness.

The real disagreement is over cutting business taxes. If we have some of the highest business taxes in the country — and we do — should we start reducing them to gradually improve our competitiveness? Or are we better off having the government spend the money on priorities it determines will be the most helpful?

The proposed cut doesn’t reduce revenue below current levels. Rather it uses the natural growth to reduce rates — business tax revenues will be the same next year as this year. No one presumes one change will suddenly improve our anemic job growth but many things need to change and we need to start changing them gradually so we can afford to improve our position without disruption.

Budget imbalance is a fiction. The philosophical differences between the legislature and the governor are real and should be the focus of debate.

Charlie Arlinghaus

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.

Charlie Arlinghaus

February 18, 2014

As originally published in the New Hampshire Union Leader

Timid politics makes for bad budgeting. A case in point is Gov. Maggie Hassan’s proposed budget, which isn’t even a good first draft for the Legislature. It is a hodgepodge of mediocre ideas with a little money sprinkled here and there to get her through the speech. But there’s nothing bold or interesting. The speech isn’t even the starting point from which others can work.

The best example of passing the buck is the proposed creation of a new chief operating officer. It is a weird proposal mixed in with a good one. Consolidating small licensing functions into one office so there aren’t dozens of one- and two-person offices is quite sensible. But the creating of a new über executive is quite bizarre.

To begin with, the governor is already chief operating officer of the state. If we hire someone to do her job for her, we would need to stop paying her. The title is ridiculously grandiose for a staff member designated to root out inefficiency.

The governor already had an efficiency commission (sorry, innovation and efficiency; we can’t do anything without adding the word “innovation”). It would have been reasonable to include more of their recommendations in the budget.

But creating an executive senior to everyone except the governor, doing the job the governor’s supposed to do, and with a title that makes him or her seem like a viceroy, is all politics and no substance. In fact, it’s quite similar to the time-honored dodge of creating a commission. The commission helps you avoid responsibility and gives you someone to blame for the recommendations.

A so-called chief operating officer is worse. It sends a clear message: “I want someone else to do the work and be held responsible so I don’t have to be.” This proposal should and will vanish quite quickly.

Every governor always touts having presented a balanced budget even though balance is required by law. The governor went further with some gobbledygook about it being smaller than the 2004 budget. Hogwash. Since that time, hundreds of millions of dollars that used to count as general fund spending have been relabeled as non-general fund. The spending didn’t go away, it was merely relabeled. Politicians need to stop pretending ignorance of that fact.

If you compare apples to apples, spending increased over the last decade by hundreds of millions of dollars. In fact, when you include all funds — federal and all categories of state money — the budget increases by $947 million, nothing to sneeze at.

On tax policy, the governor’s actions were predictable and disappointing. Her revenue estimates are significantly higher than the House’s. When you balance your budget using estimated revenue, every increased estimate is an additional dollar you get to spend.

The two biggest tax increases are old standbys of hers and her predecessor’s. For the better part of the last decade, the two of them turned time and again to raising cigarette taxes. Everyone knows the cigarette tax is among our most regressive taxes, falling much more heavily on the poor. But poor people who smoke are somehow fair game.

And don’t let anyone offer a canard about kids smoking. This is about revenue, pure and simple. In a period of rampant cigarette tax hikes, youth smoking in New Hampshire declined six points, the same amount as the country as a whole.

Speaking of regressive taxes, the other major increase is to car registrations. A flat fee, no matter who you are or how much you have, isn’t exactly progressive. But increasing a fee sounds more palatable than, say, raising the gas tax would. It’s not good policy, but timid politics never are.

Finally comes innovation. Extending the MBTA train over the border is very innovative in a 19th century sort of way. Even that has no money. We’ll spend $4 million up front and then hope for a miracle. Massachusetts, in the middle of a budget crisis that has seen significant cuts to the MBTA, is being counted on for $96 million. That seems optimistic, no? For the rest, the governor is hoping for “public-private partnerships,” a wonderfully meaningless phrase.

So much of the budget amounts to talking points designed to get through the speech, but not designed as building blocks for change. In football, they call this punting.


Charlie Arlinghaus

February 11, 2014

As originally published in the New Hampshire Union Leader

The vast majority of businesses in New Hampshire are non-employers. Interestingly, just 10 percent of firms account for 95 percent of the jobs. As states across the country and the region look to increase competitiveness by lowering business profits taxes, these numbers become very important. But the most important reason to lower taxes is to be competitive in attracting new jobs to New Hampshire.

Naysayers have tried to argue that the business profits tax affects few people or few businesses, but those claims are based on a poor understanding of businesses in New Hampshire.

The Bureau of Labor Statistics and the Census collect data regularly on businesses in the 50 states. In 2012, there were 132,800 businesses in New Hampshire. The lion’s share of them (more than 100,000) are “non-employers.” A non-employer might be a sole proprietorship or a nominal business created to account for a small sideline of self-employment income. That sector does account for a small fraction of overall employment, but only about 2 percent of the total employed population.

Of the 30,500 firms with employees, most jobs come from a small number of companies. The 4,900 firms (3.7 percent of the total) that have at least 20 employees account for 80 percent of the jobs. If we expand that universe to every employer with at least five employees, it includes 13,500 employers (about 10 percent of the total number of firms) and 95 percent of the jobs.

Not coincidentally, those employers representing 95 percent of the jobs approximate the number of firms that pay the business profits tax. Last year 15,865 firms paid the business profits tax. That’s a 10-year high. The lowest number of the last decade was 11,375 in fiscal year 2011.

It is reasonable to presume a significant overlap between the 13,500 firms that have 95 percent of the jobs and the 15,000 taxpaying firms. In that respect, we can conclude that the business profits tax affects nearly all the jobs in the state.

From an economic development standpoint, we are interested in businesses that employ people. We know that the business profits tax will have an impact on virtually every business that employs people.
Lowering the business profits tax becomes essential because all of our competitors are looking to attract those same jobs to their state. Businesses across the country and the region know that a lower corporate tax is a visible and tangible signal to companies to come and do business. While the rate is important, the act of becoming competitive sends a strong message about the state’s mindset.

Last year, New York state embarked on major reductions that reduce complexity and loopholes as well lower the rate to its lowest level since 1968 (6.5 percent). Those changes could ultimately affect the state’s standing in the corporate index rankings of the Tax Foundation, moving New York from 25th to 4th. New Hampshire is 48th in that category.

Massachusetts lowered its top corporate tax rate three times (in 2010, 2011 and 2012), reducing it from 9.5 percent to 8 percent. “Taxachusetts” now has lower business taxes than we do and is eating our lunch in the contest for jobs.

Not to be left out, Maine is looking to make a change. Long the economic doormat of the region, Maine’s governor wants to eliminate the highest corporate rate of nearly 9 percent and lower the top rate to 6.75 percent.

Surrounded by tax cutters in Massachusetts, Maine, New York and Rhode Island, New Hampshire could emerge as an island of high rates surrounded by a sea of states putting out welcome signs for business. How’s that for a historic reversal?

Some policymakers will avoid lowering taxes for everyone and instead focus on a deduction here or waiving taxes for new businesses for a short term. That would be a terrible mistake. Tax reform involves creating an incentive for everyone, not some legislators picking and choosing winners and losers to pretend they did something at minimal cost.

New Hampshire has a history of keeping its laws as simple as possible, not creating a tax code with exceptions and exemptions. 

Lowering the business profits tax helps in several ways. It covers virtually all the businesses in the state that employ Granite Staters, and it offers equal treatment for new companies we hope to attract and old companies we hope to keep.

It also is the most visible and effective signal that this state (or any other) can send to the economic development world. That’s why every state is getting ahead of us. Let’s not fall behind.

June 2013

Joshua Elliott-Traficante

Click here to view as a pdf

{Author’s note: June 2015. This piece was originally written during the 2013 budget process when there was a possibility that June 30th would arrive without new budget having been passed. With the possibility of a gubernatorial veto this budget cycle and all of the below still holding true (though the opponents have changed), we brought this piece from the archives}

What happens if there is no state budget by June 30? With the House and Senate at such odds on the matter, it is a distinct possibility. It would not be that unusual either. New Hampshire has resorted to temporary budget six times since the end of World War II: 1949, 1955, 1959, 1971, 1977, and 2003.

The state’s budget is not designed to be perpetual; rather it requires reauthorization every two years. As a result, the state’s legal authority to spend money expires at the end of the last day of the second fiscal year of the biennium: June 30.

If a traditional two year budget has not passed, to keep the state functioning and allow more time for negotiations, the legislature instead passes a temporary budget, called a Continuing Resolution. The funding level of the last four continuing resolution have been a fraction of the budget about to expire. For example a 3 month resolution would be 3/12ths of the funds spent in the just ended fiscal year.

Given the historical precedent, if the House and Senate are unable to pass a budget later this month and opt for a continuing resolution, the most likely scenario would be a 3 month continuing resolution for 3/12ths of the expenditures made in Fiscal Year 2013. However, the legislature has the discretion to set the duration of a continuing resolution for whatever they see fit.

Q: When is the Deadline for a Budget to Pass?

A: June 30. Spending authorization ends on June 30 of the second year of the biennial budget. To avoid a break in authorization, some type of measure must pass by the end of that day. There is a little room for maneuvering however. In 1993 a budget deal was reached on the 30th but a vote was not possible until the next day (i.e. July 1).  Sitting Attorney General Jeffery Howard saw no legal issue, as long as work was finished “at any time on July 1.”[1]Of course the underlying assumption in this scenario was that the measure would, without question, pass both chambers and be signed into law.

Q: How does a Continuing Resolution Work?

A: Continuing resolutions provide spending authorization for a set period of time. Historically, they last anywhere from a week to three months. There is no required length for continuing resolutions, so the legislature can set them for whatever time they view as reasonable. The most recent continuing resolution, passed in 2003, was for three months.

Q: How is the funding level of a Continuing Resolution determined?

A: Earlier resolutions (1949[2] and 1955[3]) were specific dollar amounts, while the three month long resolutions passed in 1959[4] were each 1/12 of the Governor’s recommended budget.

All of the resolutions passed in the last forty years (1971[5], 1977 [i][6], 1977 [ii][7]and 2003[8]) have been fractions of the just expired budget, based on their durations. For example, the 3 month resolutions of 1977[ii] and 2003 were 3/12ths of the previous fiscal year’s appropriations.

Q: Is there a companion bill (an HB 2 equivalent) that has all of the legal language?

A: No. The most recent continuing resolutions contained a clause that keeps the laws that were part of the last budget in effect for the duration.

Q: Will a Continuing Resolution force the state to underpay our debt service obligations?

A: No. There is statutory language that allows the Treasurer to make bond payments from “…funds not otherwise appropriated.”[9]This would allow the Treasurer to make debt payments beyond what a continuing resolution provides. Payments would continue to be made in full with no risk for default.

In addition, the State’s bond payments are not paid in uniform allotments over the year. For example, the debt service paid in the first quarter of the fiscal year does not equal 25% of the total paid for the year. This repayment schedule provides an additional buffer against the threat of default under a continuing resolution.

Q: Once a Continuing Resolution has passed, can state agencies get emergency funding above and beyond what has been authorized?

A: Under a normal budget, if a state agency needs additional funds, they ask the Joint Fiscal Committee of the legislature, which has the authority to approve additional expenditures. Under past continuing resolutions, any additional spending must not only be approved by the Fiscal Committee, but by the Governor and Council as well.[10]

Q: Could the State’s Bond Rating be affected by a Continuing Resolution?

A: Credit rating agencies would undoubtedly view the state’s inability to pass a regular two year budget and the use of a continuing resolution negatively.[11]

However, as long as there is no break in budget authorization on July 1, the likelihood of a rating downgrade on these grounds alone is very small.

Q: Will the state lose Federal funds under a Continuing Resolution?

A: Past resolutions have included a clause that accepts all of the federals funds that the state is qualified to receive. Essentially it allows the state to continue receiving all of the Federal funds it did in the previous year for established programs.

Q: Will the state still be able to collect taxes?

A: Yes. The state’s authority to tax is derived from statutes independent of the budget. Regardless of what is in place on July 1, the state will not lose the ability to collect existing taxes at their current statutory rates.[12]

Q: What happens when a biennial budget eventually passes?

A: As soon as a two year budget passes, the continuing resolution is no longer in effect. In addition, the newly passed budget is retroactive to July 1.

Over the Edge

Q: What happens if a Continuing Resolution does not pass on or before June 30th?

A: Ideally continuing resolutions are passed before the previous budget authorization runs out. While there is some room for maneuver on July 1, that only applies in cases where a deal has already been made and there is no question that it will pass.

However, the state has been without any type budget authorization in place twice: in 1959 for two days, in 1977 for 12 days.

1959: A continuing resolution was delayed over a dispute whether or not to include funding for the controversial Department of Commerce. As a result, the state began fiscal year 1960 with no legal spending authority in place. The State Treasurer was forced to stop all certifying all payments, road contracts were held up and paychecks were delayed among other things. The Legislature put their differences aside and passed a month long resolution on July 2, retroactive to July 1. It took two additional month long resolutions before a budget was finalized.

1977: Budget troubles were caused by the inability of the House and Senate to agree on which taxes to increase. July 1 came and went with no action. The Attorney General issued a memo stating that the state be forced to shut down sometime between July 15 and July 22, unless some type of spending authorization was passed. A continuing resolution was finally passed on the 12th, retroactive to the 1st and continuing through to the 19th. The State Treasurer told the Legislature that if neither a budget nor continuing resolution were passed by the 19th, then the state’s credit rating would be in jeopardy. A deal on a two year budget was reached by July 19, but a 3 month continuing resolution passed instead. A final budget was not passed until late October.

Q: Would state employees still get paid when there is no budget authorization?

A: Historically, when a continuing resolution is eventually passed, it is retroactive to whenever the last authorization ran out, so the employees still receive their pay and any other expenses incurred are paid. In 1977, the Attorney General ruled that state employees did not have to report to work when there was no spending authorization in place, but when some form of budget was eventually passed, they would not be compensated for the time they were not at work.[13]

Q: Would the State’s Bond Rating be affected by a lack of Budget Authorization?

A: If neither a budget nor a continuing resolution passes by July 1, there is the very real risk for a credit rating downgrade. During the 12 days in 1977 while the state was without authorization, there were threats of downgrades from the rating agencies.[14]


Q: If the House and Senate cannot agree on a budget by June 30, 2013, what happens next?

A: If the two bodies cannot come to an agreement by the deadline, there are two options. If nothing is done, the state’s authority to spend would lapse, causing a government shutdown and alarming credit rating agencies.

The other option is to pass a continuing resolution, which would allow the government to continue to function as the House and Senate work on a final deal. Given the historical precedent, the most likely scenario would be a 3 month continuing resolution for 3/12ths of the expenditures made in Fiscal Year 2013.

[1]Landrigan, Kevin, “All Sides Take Credit for Budget”, Nashua Telegraph, July, 1 1993.

[2]Laws of 1949, Chapter 275

[3]Laws of 1955, Chapters 229 and 274

[4] Laws of 1959, Chapters 174 & 203, 211 and 249

[5] Laws of 1971, Chapter 480

[6] Laws of 1978 {Special Session}, Chapter 1

[7] Laws of 1978 {Special Session}, Chapter 2

[8] Laws of  2003, Chapter 212

[9] New Hampshire RSA 10:6

[10] Laws of  2003, Chapter 212


[12]For example, under current statute, the tobacco tax will increase automatically by 10 cents on July 1, whether or not there is a budget agreement.

[13] Wysocki, David, “State Employees Can Go Payless,” Nashua Telegraph, July 2, 1977

[14] Herman, Bill, “Budget Lack Imperils Top NH Bond Rating,” Manchester Union Leader, July 14, 1977.


Charlie Arlinghaus

March 7, 2012

As originally publish in the New Hampshire Union Leader

Stupid laws beget stupid problems. The current debate over the rainy day fund and what to do with a surplus has been going on for eight years and is a direct result of bad legislation. What to do, as with most budget issues, requires common sense and a little discipline. The last budget had an odd technical surplus and we should prevent people from being too excited about the existence of money that may mislead them about the state’s very poor fiscal health.

The State of New Hampshire operates under a two-year budget. The audit for the second year of the budget ending June 30, 2011 shows that the state ended the two year budget cycle with a decent surplus – with a $17.7 million balance plus $9.3 million in the rainy day fund for reserves of $27 million. (we started the cycle on July 1, 2009 with a zero balance and $9.3 million in the rainy day fund). In the first year of the budget, we took in $65 more than we spent but in the second year we spent $48 million more than we took in despite significant lapses in spending that the governor quite justifiably brags about.

It would be unfair to describe FY2011 as having a $48 million deficit because we budget on a two-year cycle. It is no more important than an individual twelve months be balanced than that a week or month be balanced.

Don’t let talk of a $17 million surplus fool you into think everything is hunky-dory in Concord. Things aren’t horrible but the budget was only balanced in 2010-2011 by the unprecedented use of borrowed money and grants. The first of the two budget years had used nearly $300 million in one-time federal bailout funds and borrowing. The second year – the year being talked about publicly as having a “surplus” – used $200 million in borrowing and one-time grants and still was $48 million short for the year.

The Swiss cheese nature of the last budget is why the current budget was forced to make significant cuts. The current two-year budget is projected to spend 9.9% less over its two years than the last budget did in an apples to apples comparison. Those cuts were required to replace borrowed money and the federal bailout.

The governor frets that the current budget is $14.1 million short in the first year with $14.7 million extra in the second. In a two-year budget cycle that seems reasonable compared to the $65 million up, $48 million down roller coaster in the last budget.

The real fight right now is over the rainy day fund. Yet, the sad part is that if state law were followed, there would be no debate. Under the state’s rainy day fund law, any surplus at the end of the two-year budget shall be deposited into the rainy day fund once the audit is complete. There is no vote, no choice. It happens automatically.

But the current budget suspended that law as did the three budgets before it. Section 207 of the current budget requires “nothwithstanding RSA 9:13-e…any budget surplus shall NOT be deposited….” Faithful readers will recall my carping on this subject during Gov. Lynch’s first budget when he also enjoyed a Republican legislature. Republicans inserted the language, then Democrats followed suit, and now Republicans did it again. You’ll forgive me if I have no sympathy now that suspending the budget law has come back and bit them in the neck.

The point of a rainy day fund law is to automatically take surpluses generated in good years and save them so we don’t have to play odd borrowing games in off years. The rainy day fund requires approval of both the governor and the legislature for a withdrawal and stipulates conditions that must be met (deficit or revenue shortfall). It’s not meant to be a windfall to be used to fund whatever you wish to fund instead of raising the taxes to pay for your plans.

Because there are restrictions, some politicians prefer the flexibility of just leaving it as an undesignated balance to use however they wish. But in New Hampshire we have storm clouds on the horizon (hospital lawsuits, uncertain revenues, and an uncertain economy) and our track record of responsibility is poor.

The legislature did the wrong thing in suspending the rainy day fund law. The Governor is suggesting they double down on their mistake. They need to ignore his siren calls, admit their error, and put the money away in the rainy day fund before someone spends it.