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Understanding and Explaining The New Hampshire State Budget Charlie Arlinghaus,

Understanding and Explaining The New Hampshire State Budget Charlie Arlinghaus, Josiah Bartlett Center for Public Policy. New Hampshire Operating Budget. New Hampshire State Budget. 24 month budget 2 one year components Balanced Budget law July 1 – June 30 Fiscal Year

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Understanding and Explaining The New Hampshire State Budget Charlie Arlinghaus,

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  1. Understanding and Explaining The New Hampshire State Budget Charlie Arlinghaus, Josiah Bartlett Center for Public Policy

  2. New Hampshire Operating Budget

  3. New Hampshire State Budget • 24 month budget • 2 one year components • Balanced Budget law • July 1 – June 30 Fiscal Year • Capital and Operating separate

  4. Balanced Budget Law • RSA 9:8-B • Each fund must be balanced • Expenditures for biennium balanced by • Estimated revenue • Money remaining from prior biennium • Bonding (debt) prohibited for “operating expenditures”

  5. Education Trust Fund • Created in 1998 • Response to Claremont case • Transparency re: tax increases • Not a real trust fund • Transfers to and from General fund • Statewide Property Tax • Separate or Combined?

  6. General and Education Revenues • Combined to Balance as if one fund • Diverse basket – 10 sources 81% • FY 2010 - $1,980M (2343-363) • Business combined $611M – 31% • Meals and Rooms; Tobacco; Liquor; Int/Div; RETT; Insurance; Communications, Lottery • Medicaid “enhancement”

  7. “Unrestricted revenue”: $1,853M(not including state property tax) • Business Taxes - $504 – 27% • Meals and Rooms - $232 – 12.5% • Tobacco - $244 – 13% • Liquor - $120 – 6.5% • I & D - $84.5– 4.5% • Real Estate Transfer – $84.5 – 4.5% • Insurance – $87 – 4.5% • Communications - $80 – 4.3% • Lottery - $66 – 3.5% • Medicaid Enhancement - $118 – 6% • Other: Court fees, securities revenue, utility taxes, beer tax, utility state property tax, racing, tobac. settlement

  8. Spending (44%) • Education: Trust fund ($958m) plus • Just the general fund – 6 Categories • General Government - $324M – 21% • Justice $227M – 15% • Resources $41M – 3% • Transportation $1M – 0.1% (highway, turnpike funds) • Health and Social $765M - 49% • Education $201 – 13% (plus education fund)

  9. Spending (100%) • The Six Categories (All Funds) • General Government - $555M – 10% • Justice $691M – 12% • Resources $344M – 8% • Transportation $566M – 10% • Health and Social $2087M - 36% • Education $1502 – 26%

  10. This Fund and That Fund • Total $11.5 billion – 2 years • General Fund - $3.2B* – 30% (was 31%) • Federal Funds - $3.7 -32% (was 29%) • Education Fund - $1.9B – 17% (was 17) • Other “Other Funds” - $1.9B – 17% (15) • Highway Fund - $627M – 5.4% (5.4) • Turnpike Fund - $155M – 1.5% (1.5) • Fish and Game - $27M – 0.2% (0.2)

  11. Employee costs • 12,000 classified @ 45,800 • Wages approx. $600M • Benefits approx $250M • Retirement approx $50M • $900M = 15% of annual costs

  12. Local Aid? • 2009 – Education 1.017B • 2010 – Education 1.026B • 2009 – Municipal $125M • 2010 – Municipal $93M • Combined is 45% of GF/ETF Spending

  13. Spending Trends • How to Measure – 2 yr? Biennial? • Over Twenty years: • General Fund – 4.5% annual • Biennial increase ave. 8.7% • GF + ETF 10 yr ave. – 2.55% • Inflation 20 yr – 2.6% • 1989 adjusted – 1,025,000

  14. Spending Growth 1989-2009

  15. 23% equals $2.2 Billion • Recent Growth – Two Biennia • 01: 819M-1102M (+283) (+34%) • 02: 845-1374M (+529) (+62%) • 03: 440-658M (+218) (+22%) • 04: 1085-1148M (+63) (+6%) • 05: 3391-4263M (+872) (+26%) • 06: 2758-3006M (+248) (+9%) • Total: 9338-11549 (+2211)(+23%)

  16. How do we Balance? • Surplus Statement • Budget minus lapses (net approp.) • Unrestricted revenue • Fund balance plus ETF surplus • Two year total not each

  17. Rainy Day Fund • Revenue Stabilization Reserve Account • Surplus in, deficit out • When does it rain? RSA 9:13-E • Suspended last 2 budgets

  18. The New Legislature, 2011 • October 1, 2010/ November 1 • Tentative Budget - DAS • Governor’s Address – February 15 • 6 weeks: House, Senate, Conference • Starting point: $600-900M?

  19. “The Deficit” • General and Education Funds • 2010-2011: $887M “One-time” • FY2011 fast forward: $691M • $176.8 x 2=$353.7 • Plus $337.4 temporary • $691 Million • Assume zero tax, zero spend (or+10.4)

  20. Mind the Gap

  21. Capital Budget and Debt • Operating v. Capital • $239 M • General Fund v. General Obligation • Self-supporting • Debt Issued offset by Debt retired • Growth $644M to $823M (28% - 4 yr) • Differing Opinions

  22. The $6.5 Billion Debt Mountain • Pensions: 3.55B +? • OPEB: $2.47 Billion • Other Health: $496 million • Judicial: $15.8 million • 20 years ago – zero*

  23. Information where? • Monthly Revenue and Historical: http://admin.state.nh.us/accounting/reports.asp • Budget Document (LBA) http://www.gencourt.state.nh.us/lba/indexbudget.html Treasurer: Bond Statement http://www.nh.gov/treasury/Divisions/DM/DMdocs.htm

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