A Lose-Lose Proposition

Raiding user fees to balance the budget creates a new class of taxpayer, does little to remedy our financial woes, and we all lose

Concord, NH — March 21, 2013 — We’re in the thick of budget season again in New Hampshire, and as in years past, the Governor and Legislature face tough choices. Whether it’s health care, social services, or the environment, only one issue really matters right now, to pretty much everyone at the State House, and that’s finding money to balance the General Fund.

The struggle to balance the budget is nothing new, but unfortunately, neither is the solution: once again, the Governor and our legislators plan to dip into dedicated funds to balance the books. It’s hardly a winning strategy.

Dedicated funds are those fees paid by users, or participants in certain activities, and are ‘dedicated,’ because they’re designed to fund or cover costs associated with those activities.  In state government, there are hundreds of such fees, established over time to fund specific purposes.

Case in point: the Land and Community Heritage Investment Program (LCHIP).   Since 2007, New Hampshire citizens have paid a $25 fee on mortgage transactions to fund land and historic conservation. You assume the money actually goes to conservation…but it doesn’t. Over the last five years, almost two-thirds of LCHIP fees have been “swept” into the state’s General Fund to help balance the budget (in FY2012 and FY2013, all of the monies went to this budget balancing act). So while fee-payers are told they’re supporting a conservation account, they are in fact supporting general government operations, making the LCHIP fee, in reality, a mortgage tax.

Governor Hassan has proposed fully funding LCHIP in the second year of her budget, yet legislative budget writers are preparing to once again dip into LCHIP’s dedicated fund, taking half the money in the second year of the budget for the General Fund.

And the Governor’s budget proposal goes one step further.  Buried in House Bill 2 is a provision authorizing the Governor, without legislative oversight, to use “an amount of dedicated funds for transfer to the general fund, sufficient to cover the budget shortfall.” This broadly-worded provision would allow the Governor to use millions of dollars in dedicated user fees — collected for purposes ranging from transportation improvements and environmental protection to energy development and public safety — to fill the hole everyone knows exists in the current year’s budget. And all without public hearings, legislative oversight, or any input from Granite Staters paying these dedicated fees.

We understand the state is having a difficult time balancing its operating budget, but when citizens pay a fee for one specific purpose, let’s use it for that purpose or at least be given the courtesy of being told why it can’t be used for that purpose. If the budget situation demands redirecting those fees, say so, out in the open, through a public process instead of through a provision buried in the depths of a budget bill.  And while LCHIP is just one example among hundreds of dedicated funds, it is one whose impact is felt across the Granite State.   If there are no funds to protect our land and community heritage, we need to know that; if NH residents are getting slapped with a new mortgage tax, we need to know that too, and hold our elected officials accountable.

Susie Hackler, Executive Director, Conservation NH

Rick Russman, Former Republican State Senator, Kingston

Contact: 603-228-1970

One Comment

  1. Victoria Smith says:

    What you have revealed here is disconcerting to say the least. I would like to urge you to send this to all of the local papers around the state because more than conservationists need to know the true costs of balancing our state budget.

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