My dear friend Skip Murphy has posted a rebuttal to my post “The Meeting was a Partial Success” can be seen on Granitegrok under the heading “Blogging Councilor - the rebuttal” and this is my response to this entry.

Skip states:

My summary: Greg misses the point - it's not the legislation, it's the COST! 

His claim: A Partial Success

My opinion: Not so much.  No, the taxpayers lost.

He has clearly missed my point. There was a partial success in the meeting. I consider a partial success to be the reduction in revenue to be raised by property taxes from 13.047% to 10.417%. This was created by a direct effect of the $351,000 increase in the revenue projections. I wouldn’t call a decrease in the amount to be raised by property taxes a loss to the taxpayers. I wouldn’t call it a victory either. I would call it a partial success.

I would call a 2.349% reduction in property tax revenue a “PARTIAL SUCCESS”. To me the word “partial” means that we gained something but not what we wanted.

You may notice that my percentage and Skip’s percentage don’t match. Skip you show a 14.14% increase in the amount to be raised by property tax to be raised. You have an extra $15 in your figure for the 2008 amount to be raised by taxes in the original budget.

Skip goes on to say:

SO, here's the upshot - the County was demanding 14.14% more in taxes in one year. Effectively, this is a inflation rate multiple of 4!  Why does government always rise much faster than inflation rate (and generally, far faster than most peoples' income)? Where is the fairness to the general taxpayer in that?

It is true that government, whether federal, state or local increases at a greater rate than what is normally seen. In Laconia we have enacted a Spending-Tax-Cap that ties the growth in government spending to, in simple terms the rate of inflation.

Skip, you are part of the Gilford Budget Committee that has the ability to influence the level of town spending. The residents of Gilford have the final say on approving spending, which may not be as effective as our tax cap but does help keep growth under control.

Unfortunately in the world we live in there is very little control over the tax increases we, the taxpayers feel. With a representative form of government the local officials feel the heat and hear the complaints more frequently and often than our state and federal representatives do.

As many of you may know I am originally from Arizona. There are some things I miss in Arizona and many I don’t. One of the things Arizonans have the power to do is offer a petition articles on the local, county or state ballot. These petitions have the same effect as a law passed by the legislative body. If we had the same option in New Hampshire we could find a way to force a Spending-Tax-Cap on our county and state officials.

Skip continues:

Great - the State is giving money that they don't have to a County that shouldn't be spending it in the first place.  Remember, the State is already in the throes of a deficit to the tune of $50 million with expectations of it going to $150 - 200 by the end of next year because they've raised their revenue projections way too high to support their additional $475 million spending over the State's last budget.

I agree that the state is having financial troubles of great magnitude, and we know what caused this problem. But does a state budget crisis allow the state to stop paying their responsibilities? If we, the taxpayers followed this reasoning we would all end up homeless and broke. We have to live within our means and it has been said over and over again that the state and county should live within their means.

If the revenue projections for the county are accurate then there should have been more of a reduction in expenses, but I will go into that later.

The post continues on as follows:

Besides, where did that Medicare money come from.  No, you are wrong if you say the Feds.  The startk truth is that it is ALWAYS the taxpayer that has to foot the bill.  We have to pay it - this is not new money - it is simply an "account transfer" from one level to another. This is a thinly covered "fix" in the works. 

It is true that the Medicare/Medicaid money is an “account transfer” from one level to another. The sad truth about this is the federal government set the system up this way many many years ago. Unfortunately this is a federal benefit provided to retired and lower income people and until we have the power to force the feds to pay their promises on their own it is not going to change.

The state has made a change in the local responsibilities for the “non-federal” share of expenses. Because the state wanted to increase other programs, open to debate about their necessity, and the need to have a “neutral budget” at the state level the state simply cut their share of these payments. This not only is a passing of state costs directly to the property taxes but because of the way the feds have set up the sharing program it leaves a large sum of money on the table in Washington D.C..

You wrote:

The taxpayers also paid for the Surplus Fund, so to claim that as "new found revenue" is still a crock. 

First of all I never claimed this to be “new found revenue”. I know the original intent of the Surplus Fund was to cover operating expenses from the start of the county budget to the time the county receives its revenue from the towns and Laconia. Throughout the years the county has had to use this surplus to reduce the effect of the budget on the tax payers. This same technique has been used by towns for the same reasons.

According to Bud Daigneault the surplus is running out. I am not certain how much is left in the Surplus Fund but I would argue that this type of use should not be a regular occurrence. After all the County Convention that decides the County Budget is a part of the same group that decides the State Budget. Why aren’t they looking out for the tax payer more vigorously?

Skip asks:

My take: Greg, how can you call this a Partial Success?  For WHO? 

I explained earlier what I consider the definition of “Partial Success” and this is for the tax payers in Belknap County. It isn’t everything we wanted but it is a step in the right direction.

I believe the revenue projections were short to emphasize a point. The point deserved to be emphasized, but not at the expense of the people that vote. I also believe that, even with the increase in revenue projections, the County Commissioners and County Convention are still purposely short on the projections to try and keep emphasis on the point they are trying to make.

I also believe that this strategy is going to backfire on them at the polls come November.

Skip quoted my posting, adding emphasis and added his comments as follows:

“There were a lot of questions about the expenditure side of the budget. It is valid to ask these types of questions but looking at an expenditure increase of 3.9% seems fairly reasonable. When you take into account the relatively small level of increase in the expenditures I believe that you are never going to see a significant impact on what is to be raised by taxes.”

You don't believe that a 10.425% increase in taxes is NOT a significant impact on the property tax rate of the County?  This is the first big mistake in the reasoning. 

True, overall expenditures increases were up 3.9%. The problem is the COST of that increase!  With the "new found revenue", it still is an increase of 10.425% to tax payers - still an inflation rate multiple of between 3 or 4 times!  This is the problem of just examining the budget of expenditure year over year.  Or the revenue year over year.  In governmental spending, one ALWAYS has to look at the COST to the taxpayer, year over year.

Skip, you are mixing up the revenue impact with the expenditure impact in the way you asked questions about my statement. My point is that, just looking at the revenue side of the equation 3.9% is fairly reasonable. Notice that I didn’t say it was completely reasonable because the rate of inflation is at 2.9% and the expenses of this budget is 1% above that. With that being said a 3.9% increase in spending for an entity that is not controlled with either a Spending-Tax-Cap or direct voting by the people being affected is fairly good. I would prefer the spending be at or below the inflation rate but considering the amount of power we have over this budget I have no choice but to live with it, at least until November.

I still stand by my statement you cite. Without drastic cuts in the budget you will never see a significant impact on what is to be raised by taxes when the problem has been stacked on the revenue side of the equation. I agree that the expenditure side of the budget should be looked at closely, not only by the public but by the Convention itself. When I looked at this budget I saw the problem was stacked on the revenue side and figured out my assumptions as to why it is that way. Unfortunately, it appears, many of the citizens in attendance were so consumed with the expenses that they either couldn’t or refused to analyze the revenue side.

I do strongly believe that if these revised revenue projections are accurate then the budget expenses should be cut drastically. My belief is that the county is doing the reverse of what the state did when adopting its budget. The state made the projections look much rosier than they should have been because they wanted to spend more and when they couldn’t inflate the revenues enough they made cuts in expenses so they wouldn’t have to live up to their responsibilities. The county made the projections look gloomier so the emphasis would be on the additional spending at the state level. The problem is that the elected officials who represent us at the county don’t care about the expenses they hit us with in making their point. I believe that the change in revenues is because they finally realized that their move would actually cost jobs in Laconia. I think a partial success can also be applied to the fact that we saved people from losing their job. I think they might describe it as a partial success too.

You are still crediting me with saying “new found revenue” in your statements and I think I have already covered my thoughts about the revenues. You finish this statement by discussing an analysis of the budget over a period of time, or “year over year”. I must remind you that my statements were not an analysis over time but a snapshot of the current budget with a minor comparison to last year’s budget.

I would enjoy a debate over an analysis over time but I would have to get the figures and examine them. I have the feeling that we would not find much, if any, disagreement in this debate. We will probably save this for another time. We will also have to save the remainder of my response for another time (maybe tomorrow) because this post goes on for some length and it is getting late.

Skip, you don’t have to wait for my next post if you wish to respond to this one. Please read this carefully so you can follow my reasoning.