NH State Representative Steven Smith

Many of you saw the County Manager statement on the proposed budget. Let me offer a rebuttal. No, there is not going to be an 8.75% county tax increase. If you’re new to this process, you should know that this is normal and happens almost every time. Sullivan County runs a pretty tight operation, accomplishing much with less than other counties have to work with. The County Manager and Commissioners administer it. They are right to express concern about how tight the finances are, and advocate for more. The Delegation (made up of your State Representatives) are your advocates in this process. It is after all, your money. Every budget cycle, the proposed budget is higher than what eventually passes. Let me explain the reference that was made to the undesignated fund balance. The county has a policy of keeping around $2.5 million dollars in reserve, and that makes good sense. Over the years, county officials have argued that this number is insufficient. My response has always been “fair enough, present a business case for increasing the amount and then change the policy”. Since this has not happened, my position has always been that if there is one dollar more in that account than there should be, you get it back. We’ve been able to increase some programs and make some improvements without raising the tax rate because we had that money to use. That is what “structural deficit” means. The budget exceeded the incoming revenue. There are two ways to fix a structural deficit. You can increase revenue (raise taxes) or reduce spending. Which would you like us to do? We do after all, work for you. If you want to provide input to your Representative, you can find contact information at http://www.sullivancountynh.gov/index.php?n=delegation

There will be a public hearing on June 12 regarding the budget and I urge you to attend. You will have an opportunity to tell us what you think. Place: Newport, NH – 243 North Main Street, Louis Thompson Community Room, Sugar River Valley Regional Technical Center

Representative Steven Smith
Chairman, Sullivan County Delegation
Sullivan County District 11
PO Box 624, Charlestown, NH 03603
603-826-5940

Every Memorial Day, I struggle to find some worthy to say. I fail. What is worthy of the thousands who have given their lives to keep us free? What is worthy of the families with an empty chair at the dinner table, or someone missing from family pictures after their ultimate sacrifice? This year, let me simply say thank you. We are eternally grateful that through your sacrifice, we live free.

You are going to hear a lot of wild accusations and hyperbole regarding the budget over the next weeks. Let me offer some calmer truth. There is only one difference between the state budget and the household budget that you all manage every day. When you run out of money, you have to borrow, sell things, or give up something as you change your lifestyle. The government never runs out of your money. We can always take more to cover our spending. We pass tax laws, and you pay them or face penalties.

The normal budget process as you all know, is to figure out how much you have and then how much you can afford to spend. The state budget is supposed to work the same way. Here’s the problem, in a real world scenario. Let’s say you are just scraping by, but your car needs to be replaced. That’s major. Let’s add two other factors. Your employer just announced that there is going to be overtime for the foreseeable future and your tax refund is coming. You have a choice.

Option 1 – You figure that your overtime will cover a car payment. You go the dealer and use your tax refund as a down payment. You sign a 6 year finance contract. Your overtime will cover the car payment.
Option 2 – you save your overtime payments, plan to sell your car in 5 months, and start shopping for something you can purchase outright with the OT savings and your refund.

Problem with Option 1 – One year goes by. Your employer announces that the overtime is over. Now, you can no longer afford the payments because you didn’t forecast your revenue correctly. You are going to have to sell the car, or it will be repossessed. You end up taking a loss on the car and buying one not nearly as good with what is left of your next tax refund. If you were the government, you could keep the car by passing a law that your employer has to pay more. But you aren’t the government, and it shouldn’t work that way anyway.

This is why I voted against the budget.

I prefer option 2 better when I am spending your money. The over $400 million in new spending isn’t covered by revenue we can count on. If we pass the budget, we are absolutely committed to the spending, which means we’ll be coming back to you for money to cover the shortfall. The process was not very smooth compared to prior budgets. Normally, we rely on the Ways and Means Committee to estimate revenues, so we know what we can spend. As an example, Ways and Means estimated around $94 million from a brand new capital gains tax. That amount was not sufficient to cover one spending measure, so Finance got the estimate upped to $150 million. We should have numbers based on data, not wishes. Doing it this way can lead to devastating deficits like we experienced in 2010. I remember talking to one Representative who was heavily involved in the budget process in 2011 after a bruising press conference about the cuts that had to be made. He looked at me and said “but we spent all the money that there was”. The budget we just voted on spent all that, and a few hundred million that doesn’t exist yet. I am hopeful that when the Senate receives the budget, they will revert to revenue estimates that we can count on, but I could not vote for a budget based on wishes.

Steve