Todd I. Selig - NH Towns, Cities, School Districts, and Counties Must be Responsive to the Economic Realities of their Citizens

The prevailing focus of the upcoming budget season for local governments across New Hampshire will continue to be the economy. Three and a half years have passed since the onset of the financial and economic crisis of 2008, yet despite what politicians campaigning across NH have been saying about the U.S. economy, the New Hampshire economy appears to be headed in a positive direction, albeit very, very slowly. The critical question will be the length of time it will take to regain a solid footing, and whether it will continue to improve or take a turn, and perhaps a significant turn, for the worse.

In this tumultuous economic climate, it is imperative for New Hampshire’s 234 towns and cities, 177 school districts administrated by 87 School Administrative Units, and 10 counties to be economically and prudently operated.  Local, School, and County governments function as purveyors of public services, and more and more of them across the country are implementing sound business practices during uncertain economic times. 

The following list represents strategies New Hampshire local governments may choose to consider if they have not already done so:

Continuing to hold operational expenses flat, to include public employee wages, as an ongoing strategy to limit the impact of the U.S. macroeconomic situation on local taxpayers.  At this time local governments will likely find a broader pool of qualified applicants from which to draw who are willing to accept positions at lower rates of pay.

Rethinking the organizational structure of agencies and departments and the manner in which services are delivered in an effort to improve organizational efficiencies and mitigate cost centers over the long-term.

Engaging with local legislators to prevent the continued downshifting of bona-fide State of N.H. costs to towns, cities, school districts and counties at the expense of local taxpayers.  Areas of specific concern include highway block grant funds, bridge aid, shared revenues, school building aid, public assistance programs, pole exemptions, and costs associated with financial challenges within the New Hampshire Retirement System.

Controlling escalating health care benefit costs by reconsidering benefit and prescription plans offered to public employees, increasing employee co-pays, shopping around for the most competitive pricing, and implementing active employee wellness programs to encourage healthy living thereby reducing long-term cost exposure.

Regionalizing services such as multi-town or county assessing districts, cooperative school districts, regional dispatch, and multi-jurisdiction police/fire precincts.  Regionalization is commonly utilized in other areas of the country and should be given serious consideration where feasible in New Hampshire.

Mitigating future utility/fuel costs by replacing older vehicles with smaller, more fuel efficient alternatives, retrofitting facilities with energy efficient lighting and mechanical systems, the establishment of local energy committees, and utilizing Energy Star and LEED (Leadership in Energy and Environmental Design) certified new construction within future building projects.  

Maintaining a strong balance sheet and favorable bond rating by sustaining an appropriate undesignated fund balance, utilizing realistic revenue/expenditure projections, and ensuring adequate contingency funds to account for unanticipated events such as floods, wind/ice storms, and extended power outages.

Encouraging Land preservation activities to preserve open space and protect a community’s natural resources during a time when land prices have fallen considerably from pre-2008 highs – a wonderful buying opportunity for taxpayers.

Promoting economic development activities intended to broaden the tax base and create new jobs combined with smart growth initiatives to thoughtfully plan futuredevelopment.   

Implementing risk management strategies to control property/liability/unemployment compensation insurance costs by establishing active Joint Loss Management/Safety Committees to reduce the incidence of employee injury, accidents, property damage, and lost time.

Budgets developed for the 20012/2013 timeframe must continue to be reflective of meaningful efforts on the part of local governments to develop new efficiencies and synergies within departments, agencies, and schools tocontrol spending growth during a time of continued economic uncertainty.  No two communities, no two school districts are alike; local governments will have to tailor solutions to their individual needs and the needs of their citizens. 

Information about Todd I. Selig:

Todd I. Selig has served as Durham Town Administrator since 2001.  After graduating Phi Beta Kappa from Syracuse University, Mr. Selig went on to complete a Master of Public Administration degree from the University of New Hampshire.  He has served in a variety of New Hampshire administrative positions within both the municipal and schoolsectors including positions in Raymond, Laconia, New Boston, Hopkinton, and now Durham.  In 2003, Todd Selig was awarded the Caroline Gross Fellowship allowing him to attend the Program for SeniorExecutives in State and Local Government at Harvard University’s John F. Kennedy School of Government.  He was named as one of New Hampshire’s “40 Under Forty” by The Union Leader in 2005.  Mr. Selig has previously served as chairman of the board of directors for the New Hampshire Center for Public Policy Studies and as a trustee and vice-chairman of the board of PRIMEX (N.H. Public Risk Management Exchange).  He is a member of the International City/County Management Association, a member of the Municipal Management Association of NH, and a member of the Laconia andDurham Historical Societies.  Originally from Laconia, Mr. Selig resides with his wife and two daughters in Durham, New Hampshire.

NH Sen. Jeb Bradley - Continued Frugality Necessary to Protect Taxpayers and Grow Jobs

By Jeb Bradley 11/28/2011

In passing the 2011 budget, the Legislature made tough decisions and difficult cuts to stabilize NH finances while also laying the groundwork for economic recovery.

Judging the 2011 budget must be made in the context of the previous two budgets which increased spending 23% from $9.36 billion to $11.5 billion. In those prior budgets, when tax revenue underperformed, Legislators resorted to unprecedented borrowing for operating expenses and Stimulus funds to close growing deficits. That gap from prior budgets was at least $800 million when current legislators began formulating the 2011 budget. Difficult choices could not be avoided!

Those of us tasked with producing a balanced budget also recognized that New Hampshire taxpayers, working families, and small business owners were still reeling from nearly 100 new or increased taxes and fees passed in the previous four years. Those new levies included the job killing LLC business owner income tax and the camping tax that proved to be so odious they were repealed. Given the negative impact that higher taxes would have on job growth and hardworking Granite Staters, higher taxes were an obvious non-starter.

Two of the more difficult decisions involved funding for hospitals and the University System. Due to the fact they are both large expenditure items, cuts in these line items could not be avoided if the budget was to be balanced. Very few legislators wanted to make these cuts, but unfortunately they were necessary.

Due to their not-for-profit status hospitals pay no business taxes and very little property taxes. Over the years these hospitals have absorbed numerous private physician practices that had previously paid taxes, but now don’t, because they are under the hospital umbrella.  Meanwhile, some of these not-for-profit hospitals act like large businesses by engaging in expensive advertising wars fighting for market share. Nevertheless, a provision in the budget allows some future funding for hospitals should revenue become available.

While virtually all state departments received less funding, the Senate retained funding for the mental-health system and for families that have disabled children.

Other budget cuts that generated much discussion were in the Department of Transportation and were made necessary by the expiration of the $30 (and in many instances higher) surcharge on motor vehicle registrations. The surcharge was enacted in the 2009 budget and promised to be a temporary measure.  New Hampshire residents complained about this surcharge as much as any of the nearly 100 taxes or fee increased in the previous four years -- rightly viewing it as a “fee” to get to work. 

Allowing it to expire as promised does have consequences in the Transportation budget however. Initially the Department proposed snow plowing cuts on secondary roads.  Several legislators led by Sen. Chuck Morse and Rep. Gene Chandler objected and the newly appointed Transportation Commissioner announced an alternative plan that will ensure the same level of plowing as in past winters.  Instead, reductions will be made in maintenance, mowing, road sweeping, tree trimming, and pavement markings in 2012 and the Department will work with the Legislature to meet budget constraints.

In my view, we must prioritize necessary maintenance over most new construction with the exception of projects such as Route 93 expansion, the Little Bay Bridge or Conway bypass that have  state-wide traffic significance.  There also must be recognition that maintaining our roads and highways costs money.

Because of realistic and conservative projections, revenue is somewhat ahead of expectations -- welcome news indeed.  Business taxes, the most important revenue source, are 12% above predicted. The rooms and meals tax, the communications tax, and the real estate transfer tax are all slightly ahead. It is a hopeful sign of possible light at the end of the recession tunnel, when business, real estate, and tourism revenue are improving.

A key priority, especially for the Senate, has been enacting legislation that improves the business climate for job creation. We passed bipartisan legislation (SB 125) that dramatically curtails the ability of the Department of Revenue to foist a de-facto income tax on the salary a business owner pays him or herself.  We passed legislation (SB-86) that restricts the Department of Labor from imposing large fines on business owners for rather minor paperwork violations without first warning the business.  We expanded net operating loss provisions to encourage start-up businesses and job creation by wrapping SB-126 into the next budget.   Also included in the budget, SB-154 made changes to development rules near rivers and lakes that will encourage a depressed home building industry by easing requirements while still protecting the environment.

Furthermore, the Senate sought to relieve future pressure for tax increases through a number of government reform efforts.  A new education funding formula sponsored by Senators Jim Rausch and Nancy Stiles ended donor downs and prevented unsustainable future cost increases while ensuring the cities and towns received the same level of funding in these difficult times.  SB-147 reforms Medicaid, the largest cost center in our budget, saving significant present and future costs while maintaining quality services for those in need.  And finally pension reform will save property taxpayers from skyrocketing costs.

This Senate legislation – much of which I was the primary sponsor of -- will pave the way for more cost effective, efficient government and a demonstrably improved business climate. New Hampshire’s unemployment rate -- while still too high -- has dropped from 5.7% in November 2010 to 5.3% today. However, the fact that nearly 40,000 of our friends and neighbors remain out of work gives added urgency to these measures.

There are also budget storm clouds on the horizon. The federal government seeks to recoup $35 million of excess Medicaid payments made to New Hampshire several years ago. This calls for continued careful budgeting and living within our means.  Governor Lynch was able to save $26 million from the previous budget through carefully managing each department’s expenditures. 

A budget provision supported by Governor Lynch as well as Senate and House budget writers would curtail welfare eligibility saving $8million per year. Though almost most legislators agree with this change, a drafting mistake was made and the language was not reflected in the final budget. 

Realizing this, the Senate met in early September to pass fix-it legislation before more money was spent. Unfortunately, the House waited for a month to address the issue which cost nearly a million dollars.  The House then added a non-germane amendment that will foolishly cost another two million dollars.

The State needs to continue to practice frugality to protect hard pressed New Hampshire taxpayers and to help our economy weather the national recession.