A WISH, A PRAYER & A CREDIT CARD (Part 2)
By Jeb Bradley 10/27/10
In June, the Concord Monitor editorialized that “House and Senate Democrats balanced the state budget with a wish, a prayer and a credit card." As campaigns approach the finish line, claims about the budget by its Democratic authors dominate debates. What’s spin? What’s reality? What’s it mean?
Democratic Claim 1: The current budget is balanced. That may prove technically accurate when the budget closes next July – after an audit. It’s pre-mature now, however and the rest of the story behind this election eve claim is critical.
In June, the Legislature faced a $300 million deficit which was closed on paper with more one-time Stimulus money, a $60 million sale of state assets that has not happened, and unprecedented borrowing for operating expenses that exceeded $150 million. Most hardworking citizens wouldn’t borrow to balance their family budget but that's exactly what the Democrats did. And now they're hoping we believe this Halloween trick is actually a balanced budget.
Democratic Claim 2: The current budget has a small surplus. That claim is also premature. Democratic budget writers made the first year of the budget look flush by moving $80 from the second year to the first year. This Enron-style accounting makes the first year budget numbers look good --- conveniently in time for the onslaught of election eve advertising.
Will there be a surplus when the budget closes in nine months? It’s unlikely! The $60 million sale of state assets is bogged down and may not happen at all, which likely means more borrowing. Credit rating agencies may not have rapped NH’s knuckles for this unprecedented borrowing yet, but voters are fearful this Washington style behavior means looming trouble. Even Legislators who’ve voted for this unprecedented borrowing know it can’t be sustained.
If there truly is a surplus why is the State still trying to steal private property – doctors’ JUA Liability Fund -- when that raid was previously ruled unconstitutional. If there is a genuine surplus why isn’t it going into the Rainy Day Fund?
Democratic Claim 3: State spending has been cut by 7%. Reality: total state spending increased from $10.4 billion in the previous budget to $11.5 billion in the current budget -- an increase of 10.5%.
Democrats want to focus on the General Fund which represents one third of total state spending. They contend that General Fund spending is down $111 million. What really happened is that $208 million of spending was removed from the General Fund, only to reappear in other accounts.
This gave the appearance of a 3.5% cut -- terrific political spin before an election. Add back the $208 million – because the money is being spent –the General Fund actually increased 3%. Spin that any way possible---it’s still not a cut.
Elected officials will always try to pick and choose some version of the facts which will make them look conservative with taxpayer money, but it’s the bottom line that counts. NH families realize bottom line spending increased 10.5% in NH while they were tightening their belts. There is no way to spin, misdirect or conjure away that pesky fact no matter how big your political advertising budget is.
Democratic Claim 4: Business Taxes Did Not Increase. Try explaining that statement to a small business owner who actually paid the LLC Income Tax before Republicans forced its repeal. Explain that to businesses paying higher unemployment insurance taxes. Furthermore, Democrats in the House passed both an estate and capital gains tax before Democrats in the Senate passed higher business taxes. They compromised by passing the job killing LLC Tax – without a public hearing.
Democratic Claim 5: 10% Spending Cuts Are Reckless. Irony of ironies -- some Democrats who claim 10% cuts are reckless are actually proposing 5% cuts! In their world is a 5% cut -- merely devastating?
In the current budget, Democrats cut $100 million of funding to cities and towns increasing everyone’s property taxes by roughly 3%. The State is being sued for that. The Court budget was cut. Civil trials have ground to a halt. The State is again being sued. So what is reckless?
Democratic Claim 6: There will be no Donor Towns. Another great political one-liner, but it’s flat out wrong. The education funding law will reinstitute 36 donor towns on July 1. I have actually filed the necessary legislation to prevent donor towns from returning. That legislation won’t even be considered until January and it must pass – not a certain prospect. So until then – donor towns return with a vengeance.
Here is the bottom line on these Democratic election eve claims: spending has exploded and some 97 taxes and fees were raised by Democrats in their two budgets to pay for this splurge. Even these 97 tax and fee hikes are not sufficient as virtually all independent budget observers expect the state to face a gargantuan budget deficit of $600 to $900 million. Voters will soon get to decide who truly is reckless.
As working families and small business owners struggle to make ends meet, voters are frustrated even furious. They are fed up with pretend spending cuts that actually are spending hikes. They are fed up with claims of a balanced budget and fictional surplus when the state will face its largest deficit – ever! They are fed up with scary borrowing that looks too much like Washington. And they are fed up with the impact that 97 tax and fee hikes has on their wallets and somehow despite all those taxes and fees, NH still finds itself on the verge of an income and sales tax if many Democrats have their way.
Facing disenchanted voters, candidates often find the narcotic of their own spin almost irresistible. Those disenchanted voters however are more likely to remember Mark Twain’s adage “figures don’t lie but liars figure.”