Don’t Pay Attention To The Budget Debate, It Doesn’t Matter

Charlie Arlinghaus

June 10, 2015

As originally published in the New Hampshire Union Leader

The state budget is a pitched battle fought tooth and nail where the warriors largely agree. Posturing and the art of a press statement are more important than information. In reality, verbally armed camps will give way to easy agreement over all but one or two differences. Vetoes, stalemates, and months of budget-less government are much less likely than annoying-but-meaningless press releases you can safely ignore.

Very few people read budgets and most of our information is limited to a press clip here or there describing awful cuts that will bring about Armageddon or noble initiatives which will allow us all to travel the path to Arcady. They matter not.

If releases are to be believed, a draconian House budget slashed aimlessly at the Governor’s proposal and the Senate version came back a little but is still lacking. In reality none is far from the other. Politics exaggerates disagreements. The House would increase the operating budget (“general and education funds”) by 3%, the Senate by 5%, and the governor by 7% biennium over biennium.

The nature of the process always produces this divide. This year, the governor of one party proposed a budget in February. It included some taxes and other revenue that everyone knew the legislature wouldn’t go along with. That’s fine. It allows her to make a statement about priorities.

The House phase that follows is always difficult. It is less about a speech and more about a spreadsheet. It involves public hearings and the complaints of every group whose program has been changed or didn’t get what they hoped for. At this stage of the process only negatives come forward. No positive news permeates the gloom that envelops this phase.

To make matters worse, when the legislature is of a different political persuasion from the governor, as they are now, this is the phase where those philosophical differences are highlighted for the general public. In addition, budgeteers have an obligation at this phase to be conservative and even pessimistic about revenue projections to provide a foundation for future decision making.

By the time the budget is passed to the Senate, it is a rough hewn document that has sketched out a broad picture but is necessarily incomplete. The Senate is afforded the opportunity to consider changes rather than basic structure. Revenue estimates usually increase as the initial caution is augmented by more information. The Senate may then figure out where the figuratively “extra” money is best spent.

Consider the House’s job in its phase as whittling things back and absorbing to itself all the slings and arrows of the annoyed and disaffected. The Senate then makes changes, most of which make at least someone happy. Were there a legislative dispensary, antacid sales would spike during the House phase.

At this point some slight priority differences are hashed out between the House and Senate in a conference committee before sending everything on to the governor. And this is when the politics heats up.

The governor is able to decry the document she is about to receive as in shambles. She tells us it would “take our economy backward,” I suppose because it leaves out her proposal for keno, that economic development tool lauded through the ages.

In total funds, every dollar spent from whatever shoebox of government, the governor would increase spending by an average of 2.5% in each of the two budget years. The Senate version prefers an average increase of 1.6% each year. The “operating” part of the budget I described earlier compares a 5.2% Senate total increase to a 7.1% Governor’s total increase. There are eight different ways to measure the budget but by all of them the scorecards are close.

There are two big differences: The Senate wants to make our business taxes, currently among the highest in the country, lower to send a message to the kind of businesses that care about rates. The governor would rather spend the money on government services.

Second, the Governor wants to immediately reauthorize the Medicaid expansion plan that expires in a year-and-a-half. The legislature, undecided on the matter and wanting more information, prefers to consider it and its funding needs separately next year.

The changes in the committee of conference will be minor as the differences are. The governor won’t veto the budget but will make sure we all know she doesn’t like it. And most of us won’t even notice.