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April 30. 2013 7:54PM

Charles Arlinghaus: Maybe NH should check its bank account


 

The word "budget" comes from an old Middle English word used to describe a wallet or purse that held one's available money. The state's budget negotiation ultimately will harken back to the original meaning of the word. Lawmakers of both houses of the Legislature will be unable to begin a negotiation over policy choices until they can agree on how much is contained in the state's purse.

The House has already passed its version of the state's two-year budget. The House has already acknowledged that there will be many disagreements that have to be negotiated after the Senate passed its certain-to-be-different version of the budget.

In anticipation of those differences, the House kept a few political hostages. When Rep. Dan Eaton, House Finance Committee vice chairman, took the governor's proposed funding for charter schools out of the budget, some of us claimed he was holding schools hostage as part of a budget negotiation. In response, he told public radio that it happens all the time and is based on the belief that Senate Republicans will want that funding enough to give House Democrats something in exchange.

That deal-making will happen during three weeks in June. In addition to the programs politicians may want to swap back and forth will be some structural questions that tell lawmakers just how much money they have available to spend.

For example, the House has a line item assuming that increased advertising will lead to an additional $4.5 million of net revenue. The Senate is likely to regard that as more hopeful than realistic. In addition, the House and governor both presume that more aggressive tax audits will yield $26 million in new revenue that current auditors can't find. Even to people who want more audits, that number seems a little high.

The House wanted to delay booking the revenue from a tobacco settlement so that as much as $24 million might help support new spending. We received much less than that, and it has to be counted in the year it was received, so that's another hole.

Those may all seem small and negotiable. The Department of Health and Human Services is counting on the transition to managed care for Medicaid to save $47.4 million. But the transition isn't going well, and those savings are decreasingly likely. That bad experience makes an expansion of Medicaid also a political football. It seems odd to expand a program that is in turmoil until that turmoil is resolved.

Part of the problem relates to the state's Medicaid Enhancement Tax on hospitals. Part of that tax goes into the general fund, and part is distributed to health care providers. The receipts in the last budget fell well short of estimates and created a problem so this year we should be going in with our eyes open.

According to an HHS presentation last month, receipts for the last two years will total $349 million, so the next budget estimate of $480 million must be curtailed. Good clear advice from the program's administrator. But the budget writers chose to ignore her.

The problem with her suggestion was that it was hard. It's easier to put the number we all know is wrong into the budget and hope for the best. Maybe the Senate will fix it so we don't look like the bad guy. Maybe no one will notice, and it won't be a problem until a year or two from now.

But a real budget will recognize that revenue is exaggerated by more than $100 million and be forced to reduce spending in those areas by the same amount.

So before the negotiated committee of conference phase of the budget even begins, lawmakers will have their hands full deciding the parameters of the budget. Dan Eaton's political bargaining chips are irrelevant until we have some idea how much money we're talking about.

Some disagreements will stand on their own. The gas tax and the spending it supports are part of the same package. The program won't exist without the money, and the money pays only for those projects. Similarly, at this point, gambling will rise and fall the same way.

Earlier, we were told that some general gambling money would support the budget in general. But the House didn't include it in its budget, and the Senate won't include it in its budget unless the gambling bill is adopted - and it won't even be voted on before a Senate budget is due.

The general budget itself will also correspond to spending. Lawmakers cannot and will not know what is possible to compromise on and negotiate over until they resolve a handful of difficult and technical issues that tell them how much money is available. After all, that's what the word "budget" means.
Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free-market think tank in Concord.


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