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Report Gives NH Low Scores for Long-Term Budget Planning

When in pursuit of a complex goal, it’s important to select the right navigational tools. To stay on track, pilots follow flight plans, builders follow blueprints, and entrepreneurs follow strategic business plans. In setting their fiscal priorities – and in sticking to them – states can and should use a variety of policies to understand the future trajectories of tax and spending levels and to adapt should reality fail to meet expectations.

Unfortunately, New Hampshire is not taking full advantage of many available fiscal planning options. In fact, a study released today by the Center on Budget and Policy Priorities (CBPP) finds that 36 states do a better job than New Hampshire in ensuring that policymakers have accurate and reliable information available to them as they craft their respective budgets.

In Budgeting for the Future: Fiscal Planning Tools Can Show the Way, CBPP assigns each state a score of 0 to 10 based on the extent to which they use available tools to “chart their fiscal courses accurately and make corrections when needed.” New Hampshire received a score of just 4.5.

New Hampshire scores well in the study for:

  • its use of maintenance budgets to estimate how much it would cost to continue to provide the same level of public services from one biennium to the next;
  • the presence of a non-partisan fiscal agency, namely the Office of the Legislative Budget Assistant, to review budget proposals; and
  • the design of its rainy day fund.

On the other hand, the study notes that New Hampshire could substantially improve its fiscal planning by:

  • preparing multi-year forecasts of anticipated revenues and expenditures;
  • establishing a more formal process to arrive at a consensus on annual revenue projections; and
  • assessing more rigorously the costs associated with various tax expenditures.

Efforts are underway to remedy some of these shortcomings. For instance, HB 1531, sponsored by New Hampshire House Ways and Means Chair Susan Almy and currently under consideration in that cMap of States by CBPP Scoreommittee, would create both an obligation to assess tax expenditures on a regular basis and a mechanism for fulfilling that obligation. It would also expand the Department of Revenue Administration’s responsibilities in reporting on tax expenditures. In addition, Governor Hassan last year created, by executive order, a Consensus Revenue Estimating Panel to review revenue estimates and confirm their accuracy and reliability. (NHFPI’s Executive Director, Jeff McLynch, is a member of the Panel.) Still, as the CBPP study suggests, that panel could have an even more beneficial impact on the state budget process if, for instance, it included legislators from both chambers.

Ultimately, while there will naturally be disagreements about the size and shape of New Hampshire’s budget, few could dispute that policymakers should employ the best tools available to build it. CBPP’s report provides valuable insights into just which ones are missing from New Hampshire’s tool box.

Quick link to NH fact sheet

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Unsettled Business Tax Revenues Push Surplus Upward, Offer Limited Insight for the Future

7 Dec 2018

tree with coins

The fortunes of State revenues continue to rise and fall with New Hampshire’s two primary business taxes, which provided positive signs for near-term revenue but have not shown these levels are sustainable. While the two business taxes remained healthy, other revenue sources were relatively flat overall, leaving the State with a revenue surplus entirely dependent on the two business taxes. The lack of growth in other revenue sources combined with the uncertainty around business taxes creates an environment in which it will be very difficult to accurately project revenues for the new State Budget biennium.