NH House Leaders Comment on Rebuilding Rainy Day Fund

CONCORD – House Speaker William O’Brien (R-Mont Vernon) and House Majority Leader D.J. Bettencourt (R-Salem) offered the following comments on the passage of House Bill 1652, which would transfer a state surplus to the Rainy Day Fund. Last August, one of the top bond rating agencies, Standard and Poor’s, downgraded the United States credit rating from AAA to AA+.  Just last week, the same agency downgraded nine ‘Eurozone’ nations, including France, Italy, Austria, Spain and Portugal. Bond ratings are not just a matter of parochial pride.  . These adverse credit rating actions have not been limited to nations.  Recently, Moody’s – another major bond rating agency – downgraded the State of Illinois and placed Maryland, South Carolina, New Mexico, Tennessee and Virginia on notice for future downgrades. And Fitch – the third top bond rating agency – downgraded Minnesota’s credit status.  HB 1652 passed the House 260 to 81 and will go to the House Finance Committee.

House Speaker William O’Brien

“As a practical matter, having a strong debt-to-equity ratio is critical to having a strong credit rating.  Among the best ways for any state such to do this is to have a viable Rainy Day Fund in case of a spending or revenue emergency.  This is particularly true for our state, which has a two-year budget, because, as we have often seen, there can be wide variance in revenues during the second year of the budget. Credit downgrades have the impact of driving up the cost to borrow money.

“We need to focus not on spending more money but on the plight of our nation’s finances, the financial woes of other nations around the world, and the developing insolvency of several of our sister states that have recently seen their bond ratings drop and consider that, on our current path, we could easily join them.  It’s always easier to spend our people’s money than to save it, but savings as a buffer against adversity is exactly what’s right for the taxpayers of New Hampshire. We came to Concord to be fiscally responsible. That was our promise. Replenishing New Hampshire’s Rainy Day Fund is the clear fiscally responsible use of surplus revenues.”

House Majority Leader D.J. Bettencourt

“Bad credit ratings mean higher capital bonding costs, as well as less favorable short-term borrowing rates on behalf of the state when the state Treasurer sells short-term bonds to ensure that New Hampshire state government’s cash flow remains positive.  Since bonds are paid off first, higher borrowing costs crowd out other state spending and fuel pressure to increase taxes and fees. The spending spree by the Democrats the last four years they were in charge caused a major collapse in the size of New Hampshire’s Rainy Day Fund. Now it’s time to rebuild it and place our Treasurer in a position in which she will be able to go to New York and petition rating agencies to upgrade our bond rating, which would save both the state and municipalities millions of dollars annually.”