Financial advice for the Legislature

During the last two weeks of October, first the House Ways and Means and Finance committees and later the Republican legislative minority held sessions at which they sought input on the budget situation facing New Hampshire. While I did not have the opportunity to participate in the GOP event, it was my pleasure to be invited to the two-day House session to present my views, although it was somewhat humbling to realize that I was asked to recount the history surrounding such concerns as someone who has watched New Hampshire politics since the 1960s.

I would have told the Republican gathering the same thing I told the House committees and this is a brief synopsis of it:

State government works best in handling these issues when it acts in a bipartisan fashion to solve New Hampshire’s problems and is best served when there is real gubernatorial leadership. Those who criticized having the meetings as some kind of a pretext for one agenda or a particular tax or another missed the point, acting as if intellectual curiosity somehow is dangerous and questioning how we operate is subversive. What the committees are doing is exactly what elected representatives should do in planning, exploring and examining government in an open and deliberate way long enough before the next budget is to be fashioned so that there is reasoned input, an opportunity to explore details of proposals and come up with appropriate solutions.

Public expenditures should be for what is required, not what is desired. Each legislature has the obligation to examine state budgets with this standard in mind.

Often, those running for office for the first time talk about “zero-based budgeting” as if all existing programs can be eliminated and legislators have the luxury of going back to square one. This is silliness. What is not silly, however, is the old concept of “sunset laws,” which require the Legislature, on a periodic basis, to look at government programs and see if some have outlasted their usefulness and should be eliminated. Any serious study should do this, knowing every program or entity is some group’s “sacred cow.”

Next, government should examine whether there are functions that could be performed better by the private economy. If so, they should be privatized in a careful way with a test of financial performance applied.

After government has determined the minimum spending required, and only then, should attention be given to revenue regardless of how much spending is deemed necessary. Revenue sources should be designed with a number of principles involved:

• What revenue sources are fair and do not disproportionately disadvantage those unable to pay?

• What is the nature of the New Hampshire economy and what taxes fit that economy best, in order to raise revenue in a manner that makes the most sense, given that economic reality? In this respect, the Citizens Task Force on Government Organization that was formed by the Legislature at the urging of Gov. Walter Peterson in 1969 provides an interesting model. The findings of that commission included recommendations for the reform of state government, the elimination of the out-of-date stock-in-trade tax, and replacement of it with the business profits tax that fit the changed business economy. That Commission was not afraid to examine basic institutions of government in addition to the budget and made many lasting contributions. Over 300 of the state’s citizens participated in this thorough examination.

• In creating revenue sources, legislators should remember that business creates jobs and is the basis of the very economy that supports us all. Unless New Hampshire is relatively superior to surrounding states and is perceived as being business-friendly, our economy and tax base will suffer.

• As in the Hippocratic oath for medical doctors, legislators should insure that revenue-raising “does no harm.” In other words, they should avoid social experiments and dangers such as expanded gambling or other mechanisms that negatively affect our most vulnerable people and are unreliable means of raising revenue.

I urged the legislators to consider at this point a commission such as the one created in 1969. It is critical now that legislators not drop the effort or “file” the testimony they heard, but take action. It would be heartening if the leadership of both parties joined in a serious effort to study, discuss and reason and not shout and accuse, as they seek to solve New Hampshire’s problems together.

Brad Cook is a shareholder in the Manchester law firm of Sheehan Phinney Bass + Green and heads its government relations and estate planning groups. He also serves as secretary of the Business and Industry Association of New Hampshire.