Does New Hampshire have a spending problem?

According to the John Stephen for Governor Web site, “state spending has spiraled out of control – up 24 percent in the last two budgets.”Governor Lynch’s Web site counters, “the average two-year general fund spending increase under Gov. Lynch has been less than 1 percent.”Surprisingly, these contradictory statements are both technically true. To understand how this can be so, we need to know the difference between “state spending” and “general fund spending,” and the difference between budgets and actual spending.The “general fund budget” is the portion of the overall state operating budget that is paid for by state taxes and fees; it is the part of state operations that is paid for by New Hampshire taxpayers.The General Fund Budget does not include federal funds, the Highway Fund, the Education Trust Fund or the Fish and Game Department, which is funded by hunting and fishing license fees.The overall state budget adopted by the Legislature in June 2009 was indeed about 24 percent bigger than the budget adopted in 2005, but the use of this figure without explanation by the Stephen campaign is both deceptive and outdated.It is deceptive because it fails to mention:• Hundreds of millions of dollars of extra federal money (the stimulus) that is included in the current two-year budget• State spending that was kept “off-budget” by past Republican legislatures, but included in the past two budgets in the interest of “truth in budgeting”• Large increases in money put into the state’s pension fund after years of underfunding by past legislatures• Increased revenue from user fees for state servicesWithout the increased federal funds, increased user fees, increased pension contributions and the elimination of off-budget spending, the growth in the overall state budget – when compared to the two previous budgets – was 7 percent, not 24 percent.But the Legislature cut the budget in June of this year, when it became clear that state revenues were below projections. After closing a $300 million budget gap, the general fund budget is down 2 percent when compared to the previous budget.The Stephen campaign thinks the voters will forget the many significant budget cuts made by the Legislature during the past two years:• Closed the Laconia prison• Closed the Tobey School for emotionally troubled children• Closed some district courts• Reduced funding for the developmentally disabled wait list by $2 million• Cut the state workforce by more than 5 percent by laying off 200 state workers and eliminating funding for 400 vacant state positions• Continued a hiring freeze for two more years• Cut $1 million from the payment to the Children’s Hospital at Dartmouth-Hitchcock• Required retirees under the age of 65 to contribute to their health insurance• Continued the freeze on travel and on equipment purchases• Reduced funding of the court system, which has resulted in the closing of all courts for one day a month, and a reduction in jury trials.During the first four years of the Lynch administration (the figures for the year that ended June 30, 2010 are not yet available), the state’s general fund spending has grown a little more than 1 percent a year.Critics of the governor say that growth in the general fund budget has been masked by moving some items out of the general fund budget. For example, school building aid was paid out of the general fund in past budgets. In the current budget, school building aid is paid through state bonding. Expenses of the Liquor Commission also have been moved out of the general fund.However, even if the general fund were “beefed up” to reflect these changes, the growth in general fund spending under Governor Lynch has been slower than under any of the four previous governors.Mark Fernald was the 2002 Democratic nominee for governor.