Budget Season Opens Long before Governor’s Budget Address

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Garry Rayno is InDepthNH.org's State House Bureau Chief. He is pictured in the press room at the State House in Concord.


Valentine’s Day in New Hampshire this year will be a double header.

The holiday for lovers will be its joyous celebration of hearts, chocolate, wine with a meaningful restaurant choice to dazzle that special someone.

The back end, or maybe the front end of the twofer, will be a traditional exercise of number crunching and wishful thinking sometimes known as the Governor’s Budget Address to the Legislature.

Governors traditionally gather the requests from department heads for what they say they will need for resources i.e. money over the next two years and blend it into a strange brew.

This budget season began last summer when agencies requested “efficiency budgets” about $51 million more than this biennial’s and a “wish list” which is what agencies would really like to have for a budget of about $670 million more than this biennial package, much of it from the Department of Health and Human Services, which had some significant reductions this biennium, particularly in personnel.

With those documents in hand, the governor and his budget staff will massage the numbers considerably before his budget address in about two weeks.

Budget addresses usually come in two packages, all the good things that have occurred over the last two years and what the governor wants to claim or put his or her stamp on in the coming two years for the history books.

Governor’s will say the budgets they present are not political documents, but they are as some folks receive what they want and others have their ox gored.

Some cities and towns will do better than others and some programs will have the money they need and some will not. It is all politics.

While many like to say the budget season comes into full bloom with the Governor’s Budget Address, lawmakers from both the House and Senate have been working already on the budget which is the most important legislative package of the two-year term.

This week, the House Finance Committee’s three divisions will begin meetings with state agencies to discuss what department heads believe are their needs and what can wait, not always in line with the governor, and lawmakers will have to decide what to do.

The House and Senate ways and means committees met earlier this month with state and federal financial officials as well as business organizations and owners to try to gauge what the next two years will look like for state revenues.

The consensus was things will slow down and will not resemble the last four years with more money rolling into state coffers than budget writers projected. 

The state’s good fortune is due to the billions of dollars in federal money sent to the state to offset the negative impacts of the COVID-10 pandemic and to rebuild the country’s infrastructure.

Those billions of dollars will slow to a trickle in the next two years and how that affects state revenues remains to be seen.

There are other issues with taxes as well.

The methodology used to assess business taxes will also change and is unknown and Republicans want to continue cutting business tax rates and eliminate the interest and dividends tax, another sign of who is important in this state in their eyes. 

So the future may not be quite so plentiful as the state has experienced in the last two budget cycles.

At the end of the budget work in the Senate two years ago, the exact amount of the large surplus was apparent and was used as one-time expenditures in this biennium, although it was charged to the last biennium’s budget.

Last fiscal year, the state had a surplus of more than $350 million. This fiscal year, the second year of the biennium, will have a revenue surplus, but likely not as much as last fiscal year.

Some of last fiscal year’s surplus has already been spent or at least spoken for and so will this year’s before whatever is left goes into the state’s rainy day fund.

But the revenue surplus from the current biennium certainly indicates how budget writers two years ago low-balled revenue estimates to keep spending lower than it really had to be.

It is certainly worth noting one of the areas with significant reductions in the current budget was money for homeless services and the impacts of those decisions are apparent, particularly in Manchester.

This session — once again — budget writers will have a nice cushion to work form as they craft the next biennial budget.

There are some obvious areas that need to be addressed with direct impacts on the state’s economic health.

Meeting with House and Senate ways and means committee members, Jason Hwang, senior vice president of the Federal Home Loan Bank of Boston, told the lawmakers one thing that could have a big impact on the economy and inflation is the tight job market here and across the country.

While the latest figures indicate a slight softening, wages are still going up to attract workers in many industries.

If, for example, restaurants cannot find enough help to remain open for both lunch and dinner seven days a week, that will reduce the state’s rooms and meals receipts, its second largest source of income. 

The state’s biggest source of income, business taxes, have been propped up by the business profits tax which largely is assessed against large multinational corporations, because the business enterprise tax, which is paid mostly by New Hampshire businesses, has been flat.

The labor market is somewhat dependent on another drag on the state’s economy, the housing market.

In both instances the problems did not surface overnight as a result of the pandemic, rather they have been building for some time.

And consequently they will take time to remedy and that remedy will have to include state help as it has done in the past with the nursing shortage by expanding nursing education programs.

The housing issue is both affordability and availability and relying on only the free market to fix the problem will only exacerbate the problem.

There needs to be a public-private effort to bring prices more in line with middle class affordability and to create enough units for people to find housing.

Without adequate housing, the state’s workforce will go elsewhere to find work.

It will be interesting to see what the governor has to say about both issues in his budget address.

He no doubt will tout his $100 million housing initiative which is woefully short on affordable units but fine for developers of high-end projects.

Governors like to talk about new buildings and new programs and even consolidating agencies in their budget addresses, but real issues that impact the state’s economic well-being like housing and worker shortages often receive short shrifts because they take time to remedy and are difficult for any one governor to take credit for the solution.

It is all politics.

Garry Rayno may be reached at garry.rayno@yahoo.com.

Distant Dome by veteran journalist Garry Rayno explores a broader perspective on the State House and state happenings for InDepthNH.org. Over his three-decade career, Rayno covered the NH State House for the New Hampshire Union Leader and Foster’s Daily Democrat. During his career, his coverage spanned the news spectrum, from local planning, school and select boards, to national issues such as electric industry deregulation and Presidential primaries. Rayno lives with his wife Carolyn in New London.

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