State needs to rebuild its rainy day fund
Just a little over four years ago, New Hampshire found itself in an enviable financial situation. With $89 million in the rainy day fund to protect against future economic downturns, we had a chance to make a strong case for pushing for the state to have a AAA bond rating, the highest around.Sadly, what followed was a Democratic governor and prior legislatures choosing to grow government instead of exercising the fiscal restraint that would protect our taxpayers and the state’s creditworthiness.The drive by Governor Lynch and his party to expand state government left him in the unenviable position of coming before the Legislature this June to ask to drain most of the last $9 million in rainy day fund reserves to balance the last budget.The prior leadership not only spent through the rainy day fund, raised all sorts of taxes and fees, such as the car registration surcharge, borrowed operating expenses, but they also left a major deficit to close. This challenge was met, however, in the current budget that not only paid last year’s deficit but also reduced general fund spending by almost 18 percent to balance honestly.That’s why it was great news to learn that the initial, unaudited returns for the last year show that the state treasury now has a surplus of $26 million. After years of red ink, this is a clear sign that the culture of taxing and spending is over in Concord.Within days of news of a surplus, groups are already lining up to convince the Legislature to increase spending on the very programs whose rapid growth undercut the state’s fiscal viability. Instead of making the same mistake of growing government, we need to show the discipline and restraint we promised the voters last year during the campaign.That restraint means taking all surpluses and replenishing our drained rainy day fund. At just the current $9 million, reserves represent less than one-half of 1 percent of our annual state spending. Responsible governance would look to bring that level up to 5 percent of yearly spending, or about $110 million. Although $26 additional million won’t get us to our goal immediately, it’s a great first step and will significantly help stabilize our bond rating.It’s high time that we started to rebuild the rainy day fund to protect against the next economic downturn. With many economists predicting a double-dip recession, the responsible answer is to have to funds set aside now to ensure that if we do see another slowdown, it won’t result in more tax hikes on New Hampshire residents.For all these reasons, we strongly support legislation by Rep. Keith Murphy to move an amount of state funds into the state reserves equal to this surplus. This is just one more example of Republicans keeping our word to the citizens that we will deliver a government that treats taxpayer funds with as much respect as we treat our own money.William O’Brien is the speaker of the New Hampshire House. Pam Tucker is deputy speaker.