1. Understanding and Explaining The New Hampshire State Budget
Charlie Arlinghaus,
Josiah Bartlett Center for Public Policy

2. New Hampshire Operating Budget

3. New Hampshire State Budget
24 month budget
2 one year components
Balanced Budget law
July 1 – June 30 Fiscal Year
Capital and Operating separate

4. Balanced Budget Law RSA 9:8-B Each fund must be balanced
Expenditures for biennium balanced by
Estimated revenue
Money remaining from prior biennium
Bonding (debt) prohibited for “operating expenditures”

5. Education Trust Fund Created in 1998 Response to Claremont case
Transparency re: tax increases
Not a real trust fund
Transfers to and from General fund
Statewide Property Tax
Separate or Combined?

6. General and Education Revenues
Combined to Balance as if one fund
Diverse basket – 10 sources 81%
FY $1,980M ( )
Business combined $611M – 31%
Meals and Rooms; Tobacco; Liquor; Int/Div; RETT; Insurance; Communications, Lottery
Medicaid “enhancement”

7. “Unrestricted revenue”: $1,853M (not including state property tax)
Business Taxes - $504 – 27%
Meals and Rooms - $232 – 12.5%
Tobacco - $244 – 13%
Liquor - $120 – 6.5%
I & D - $84.5– 4.5%
Real Estate Transfer – $84.5 – 4.5%
Insurance – $87 – 4.5%
Communications - $80 – 4.3%
Lottery - $66 – 3.5%
Medicaid Enhancement - $118 – 6%
Other: Court fees, securities revenue, utility taxes, beer tax, utility state property tax, racing, tobac. settlement

8. Spending (44%) Education: Trust fund ($958m) plus
Just the general fund – 6 Categories
General Government - $324M – 21%
Justice $227M – 15%
Resources $41M – 3%
Transportation $1M – 0.1% (highway, turnpike funds)
Health and Social $765M - 49%
Education $201 – 13% (plus education fund)

9. Spending (100%) The Six Categories (All Funds)
General Government - $555M – 10%
Justice $691M – 12%
Resources $344M – 8%
Transportation $566M – 10%
Health and Social $2087M - 36%
Education $1502 – 26%

10. This Fund and That Fund Total $11.5 billion – 2 years
General Fund - $3.2B* – 30% (was 31%)
Federal Funds - $ % (was 29%)
Education Fund - $1.9B – 17% (was 17)
Other “Other Funds” - $1.9B – 17% (15)
Highway Fund - $627M – 5.4% (5.4)
Turnpike Fund - $155M – 1.5% (1.5)
Fish and Game - $27M – 0.2% (0.2)

11. Employee costs 12,000 classified @ 45,800 Wages approx. $600M
Benefits approx $250M
Retirement approx $50M
$900M = 15% of annual costs

12. Local Aid? 2009 – Education 1.017B 2010 – Education 1.026B
2009 – Municipal $125M
2010 – Municipal $93M
Combined is 45% of GF/ETF Spending

13. Spending Trends How to Measure – 2 yr? Biennial? Over Twenty years:
General Fund – 4.5% annual
Biennial increase ave. 8.7%
GF + ETF 10 yr ave. – 2.55%
Inflation 20 yr – 2.6%
1989 adjusted – 1,025,000

14. Spending Growth

15. 23% equals $2.2 Billion Recent Growth – Two Biennia
01: 819M-1102M (+283) (+34%)
02: M (+529) (+62%)
03: M (+218) (+22%)
04: M (+63) (+6%)
05: M (+872) (+26%)
06: M (+248) (+9%)
Total: (+2211)(+23%)

16. How do we Balance? Surplus Statement Budget minus lapses (net approp.)
Unrestricted revenue
Fund balance plus ETF surplus
Two year total not each

17. Rainy Day Fund Revenue Stabilization Reserve Account
Surplus in, deficit out
When does it rain? RSA 9:13-E
Suspended last 2 budgets

18. The New Legislature, 2011 October 1, 2010/ November 1
Tentative Budget - DAS
Governor’s Address – February 15
6 weeks: House, Senate, Conference
Starting point: $ M?

19. “The Deficit” General and Education Funds 2010-2011: $887M “One-time”
FY2011 fast forward: $691M
$176.8 x 2=$353.7
Plus $337.4 temporary
$691 Million
Assume zero tax, zero spend (or+10.4)

20. Mind the Gap

21. Capital Budget and Debt
Operating v. Capital
$239 M
General Fund v. General Obligation
Self-supporting
Debt Issued offset by Debt retired
Growth $644M to $823M (28% - 4 yr)
Differing Opinions

22. The $6.5 Billion Debt Mountain
Pensions: 3.55B +?
OPEB: $2.47 Billion
Other Health: $496 million
Judicial: $15.8 million
20 years ago – zero*

23. Treasurer: Bond Statement
Information where?
Monthly Revenue and Historical:
Budget Document (LBA)
Treasurer: Bond Statement