budget 101- nh budget

8/7/2019 Budget 101- NH Budget

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1

Understanding the State

Operating Budget andShortfall

Charlie Arlinghaus,

Josiah Bartlett Center for Public Policy



2

New Hampshire Operating Budget

State OperatingBudget

Federal FundsTax Revenues:•General Fund•Education Fund

Other funds:

•Highway•Turnpike•Fish and Game•“Other Funds”



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 balancedby

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

Smokes and Liquor At The Track

A Different Basket of Revenue

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

1967 2010

Other

Tobacco

Liquor

Beer

Racing



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, beertax, utility state property tax, racing, tobac. settlement



8

Ten-year Average = 3.0%

Regular Taxes 2001-2010 (no SPT, MET)

2.7

5.75.1

3.1

3.9

8.3

5.3

2.1

-9.1

2.9

-10

-8

-6

-4

-2

0

2

4

6

8

10

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010



9

This Fund and That Fund:Total $11.5 billion – Biennial Budget

9



10

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%



11

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)



12

Employee costs – all funds

Wages approx. $700M

Benefits approx $250M

Retirement approx $50M

$1,000M = 17% of annual costs



13

Local Aid is 45% of spending

Transfers to Towns and Schools

(millions 2010-2011)

$178.30

$2,049.70

$0.00

$500.00

$1,000.00

$1,500.00

$2,000.00

Municipal Aid School Aid



14

Spending in Three Parts

Budget Components

Local Aid,

2,459,018

Debt and

Retirement,

555,664

StateGovernment,

2,255,527

-730,000

270,000

1,270,000

2,270,000

3,270,000

4,270,000

5,270,000

Components



15

Spending Growth 1989-2009

74%

154%

311%

0%

50%

100%

150%

200%

250%

300%

350%

Inflation General Fund GF + ETF



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 ReserveAccount

Surplus in, deficit out When does it rain? RSA 9:13-E

Suspended last 2 budgets



18

How Deep is the Hole

The 2012-2013 Budget Shortfall



19

Mind the Gap

Mind The Gap

4419

5058

4473

4369

4300

4400

4500

4600

4700

4800

4900

5000

5100

2006-07 2010-2011

Expenditures

Revenues



20

Temporary Revenue: $597m

Federal

Stimulus,

$351

Other One-

time, $90

Borrowing,

$156

$0

$100

$200

$300

$400

$500

$600



21

An $820 Million Hole

2011

OperatingShortfall,

$348.5

Debt, $91.8

Retirement, $83.6

Education Increase,

$141.2

Building Aid,

$92.5

Local Aid $62.4

$0.0

$100.0

$200.0

$300.0

$400.0

$500.0

$600.0

$700.0

$800.0



22

Solving the Problem

Revenue growth?

3% annual growth = $154 million

Only $666 million to go

12.6% cut?



23

The 4.5% and 5% Solution

Economic Growth of 4.5%

Cut Departments by 5%

4.5% revenue growth = $232 million

5% except local aid = $113 million


475/2255 = 21%



24

Caps and Cuts

Revenue at 3% average

Adds $154 million

Education Aid at 2011 Saves $141.2 million

Local Aid at 2011

Saves $82 million


443/2255 = 19.6%



25

Information where?

Monthly Revenue and Historical:http://admin.state.nh.us/accounting/reports.asp

Budget Documents (LBA)http://www.gencourt.state.nh.us/lba/indexbudget.html

Treasurer: Bond Statement

http://www.nh.gov/treasury/Divisions/DM/DMdocs.htm