The governor’s budget & New Hampshire’s reactionary policy-making

One aged man—one man—can’t fill a house,
A farm, a countryside, or if he can,
It’s thus he does it of a winter night.

–Robert Frost, “An Old Man’s Winter Night”

From my perspective, Gov. Hassan’s proposed budget does a good job of beginning to restore funding to necessary programs. While I’d ideally like to see nearly all the funding cut over the past two years restored, with additional funding for education, as well as investments in infrastructure and the economy, I agree with the governor when she says that we can’t do everything all at once. Bill O’Brien, in his inimitable hubris, didn’t seem to recognize that when he was moving legislation in the opposite direction. The governor’s budget sets the groundwork for restoring responsible and adequate funding to programs vital to residents of New Hampshire, as well as to improving the economy.

But there’s something that deeply bothers me about the budget, and it’s not the fault of the governor or any other individual, but something much more systemic and intrinsic in the way New Hampshire crafts its budgets, raises its revenue, and attempts to build its economy. For far too long, New Hampshire has relied on gimmicks like cheap booze and cigarettes, fireworks sales, and a lack of a certain taxes to entice people across the border and fill the coffers of state government and border-lining businesses. Rather than promote and invest in its scenic beauty, educated workforce, relatively low cost-of-living, and its collection of bustling downtowns and villages, many in New Hampshire have essentially portrayed the state as a one-trick pony, relinquishing all policy decisions and revenue structure to the now-faltering “New Hampshire Advantage.”

That not only sells the state short–it has also led to the transformation of vast swaths of the state. New Hampshire has marred its natural beauty with border-hugging cigarette discounters and fireworks outlets, lined its highways with liquor stores, and populated border towns with mega-malls at the expense of once-vibrant downtowns. It has built part of its revenue structure and economy–and a huge part of its political culture–on cheapening the state to a place where you can “sin” for cheap.

It’s a pattern that cheapens and transforms the state, and it really leaves the state at a disadvantage. If Massachusetts, say, lowers its sales tax, then retailers and tax receipts along the border will suffer. So a good chunk of the economy, and thus the tax revenue, and thus the ability of New Hampshire to invest in the state, its people and its economy, is really dependent upon factors outside its border, and outside its control. Over the past two years, the O’Brien-led legislature brought the idea of reactionary policy to a new level in the state, but the fact is that relying so heavily on outside forces makes New Hampshire’s policy-making inherently reactionary.

So now, New Hampshire needs to raise revenue to restore vital services and pave the way for a more robust economy, and Massachusetts is planning to build a series of casinos within easy driving distance of New Hampshire. New Hampshire has debated the merits of casinos for years, and it has always rejected them. Personally, I am fairly ambivalent about them, but I think any discussion of such a major policy should be based on what we want our state to be like–do we want to be a destination for gambling? will a casino compliment New Hampshire’s other attractions? will casinos help the larger economy? and so on–rather than a pressing need for greater revenue and the fear that New Hampshire might be missing out on its slice of the gambling pie.

It’s not the fault of Gov. Hassan, and she made no secrets about her support for casino gambling in her campaign. I really don’t know how I feel about casinos, and I don’t fault her for including one in her budget. But rather than debating the merits of a casino and what it would mean for our state, the argument for a casino rests on a need for revenue, and the concern that a casino across the border would leave New Hampshire with all the ills and none of the benefits of a casino. So once again, New Hampshire is building a revenue structure and a sizable portion of its construction by reacting to decisions made in other states.

For how long can this be sustainable? For how long can New Hampshire continue to play catch-up? For how long can New Hampshire ignore the fact that people choose where to live, visit or work based not primarily on low taxes or cheap cigarettes, but on the quality-of-life and amenities offered?

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  • Dean Barker

    Thank you for this.

    It’s painful to hear on VPR radio waves coming across the river how a state with similar demographics, vibrant small business, and tourism and with a similar government style manages to think about budgets as investments for long-term future success, rather than lurching from one underfunded crisis to the next and fixing them with stopgaps, fees, and gimmicks.

    I’m not at all opposed to gambling. My work with the Cilley campaign showed me loud and clear it is a regional issue, not a partisan one, and it is as much desired in one area of NH as it would be found appalling in others. But I suspect (happy to be wrong) it’s a short-term fix at best, and of questionable social value. I do appreciate that Gov. Hassan mentioned in her SOTS the priority of putting some of the revenue toward gambling addiction education. The fact that we spend $0.00 of our millions of tobacco tax revenue on tobacco cessation is a moral failure.

    On the other hand, I find disingenuous the implication in the latest Statehouse Dome column that we can’t fund needed services without gambling.

    http://www.unionleader.com/article/20130217/NEWS0604/130219309

    That kind of blackmail rhetoric will turn off lawmakers rather than get them on board, I think, and Democrats should not adopt it in the efforts to pass a gambling bill. I remember hearing many many times from then candidate Hassan how we can “fund our priorities” in NH without an income or sales tax. If that’s the case, then we can also do it without gambling, as Gov. Lynch did, if the bills don’t pass. NH should not be in the business of holding children’s welfare hostage to whether the slot machine industry gets their way.

  • mevansnh

    I arrived in NH in 1964 and began a short-lived teaching career. I remember the NH Lottery being touted as the answer for solving the woeful education budgets. I also remember that some towns took the state money and then lowered their own tax rates which left the status quo in place.

    NH, in my experience, has never been adult about its responsibilities as a state, and has always looked for a way to get others to pay for the programs the citizens demand, rather than biting the bullet and taking responsibility through progressive revenue raising, aka, an income tax….a tax based on one’s ability to pay, rather than what one buys or owns.

    I have no hope that this will change during the remainder of my life.

  • hannah

    The reality is that Washington produces and distributes dollars to the several states, much as the european central bank now distributes currency to the countries that have joined. The Euro experiment is, as I understand it, the first of its kind. Independent (sovereign) nations have not previously willinging surrendered control over their money to another entity (Zimbabwe uses the U.S. dollar and the South African rand because its own currency, like the governing authority, is a joke — not credible).
    I mention the Euro experiment because it serves to illuminate the disability under which our states have been operating in having to rely on Washington, specifically the Congress, to administer the basic measuring tool of our trade and exchange. Tradition has led us to think of currency as comparable to a scarce natural mineral, the gold of which currency used to be made. But, in fact, money has always been a token or sign or image of something else, much as the inch is a token of a distance in space. And, as would be the case, if a tailor were deprived of his measuring tape, the absence of currency inhibits exchange and trade. It doesn’t rule it out entirely, just as a shortage of marital certificated wouldn’t rule out marital relations, but it is inhibiting.

    What should be totally irksome, if it were fully recognized, is that the shortage of money is entirely arbitrary and man-made. Not only can the federal government produce bills in various denominations (last year the Bureau of Engraving and Priniting sent out three billion hundred dollar bills) in virtually unlimited amounts, but the Federal Reserve doles out dollars electronically via key strokes on a computer. The only limit being, one imagines, how high we can count.

    Given the above facts, we can only conclude that the Congressional claim that there is not enough money to do what needs to be done is a scam. Though it is true that the states, which rely on Washington to dole it our, are in dire straits, the problem originates on Capitol Hill, whose denizens insist on rationing something that should be in infinite supply. Why?

    The answer, one suspects, is that some Congress critters don’t know any better. They’ve bought into the fiction that the flow of funds is from the private sector (as taxes) to the public, instead of the reverse. Others, especially those who have been there a long time, are accustomed to doling out natural resources to their supporters to curry favor at election time and, as far as they are concerned, dollars are just another public asset (like mineral rights and fishing rights and logging rights) that they get to allocate as they see fit. Also, although rationing real commodities has proven disasterous because it inevitably leads to people hoarding, rationing dollars has, until recently, not been obviously susceptible to this response. Now it is. We know, for example, that private corporations are hoarding more than two trillion dollars (the equivalent of everything we spend on health care in a year), largely because they are uncertain about what the Congress will do next. If Congress proposes to make dollars even scarcer, then corporations (logically) figure they need larger reserves.

    Meanwhile, trade and exchange stagnates and more of the economy slips into the shadows.

    Whose fault is it? Congress’.

    Btw, I’m sure Willard Romney was sincere when he said he wanted to go to Washington because “that’s where the money is.” What he was naive about was thinking that the President is in charge of how and how much money gets distributed. George W. Bush and friends managed to trick the Congress into approving of a war on which they were willing to spend whatever was needed, but now that country’s blood lust has been sated, the people’s pacific impulses are to be punished by putting the screws to the economy.

    • The Money Magician

      Hannah, you can’t make this argument stick without addressing inflation – the natural outcome of expanding the money supply faster than the underlying value of goods and services.

  • susanthe

    Casinos in other states are losing money hand over fist – but we’re running out of scams. Lottery, booze, cheap butts – just aren’t doing it any more. Mediscam turned out to be a disaster. So we’ll try gambling. And when that fails, maybe we’ll try brothels. We can start teaching Hooker 101 to all of the incoming freshman high school classes.

    • hannah

      The shortage of currency cannot be addressed by inventing new ways to move it around. The problem is that the supply is being artificially restricted by Congress and this rationing is prompting other segments of society to hoard. The Federal Reserve, which keeps track of our money, finds evidence of hoarding in over two trillion dollars in cash that private corporations are sitting on, and that’s supported by evidence that the rate at which dollars move through the economy has gotten slower and slower.
      From that perspective, casinos, which do keep money moving, are a positive. If people have extra money, they should get rid of it. If they use it to buy a brief period of enthusiasm, rather than some useless gadget that doesn’t work, so much the better.
      Although economists rate goods higher than services because goods are easier to count, services are actually less prone to market saturation and more likely to increase profit as the service provider’s expertise goes up. A service economy has more staying power than goods production.

    • mevansnh

      So much smarter than biting the bullet and asking the state’s residents to pay for the services and infrastructure that they use day in and day out through fair progressive taxation. Acting like adults is such a difficult thing to do.

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