Now it’s “Where’s the Answers?”

At the Laconia City Council meeting on Monday, March 10^th during the City Manager’s Report item on the agenda there was more discussion about the Belknap County budget and the Public Hearing. This was reported in both the Citizen of Laconia and the Laconia Daily Sun. (click this link to view the March 11^th edition)

If you read these articles you can easily see that nobody on the council feels we received adequate answers to our questions about why the revenues are so short. It is getting quite frustrating for us and, I imagine for others in the county.

If you have read any of the blog debate (Post 1 and Post 2) I am having with Skip Murphy at Granitegrok.com or any of my previous posts or responses (Post 1, Post 2, Response 1, Response 2) on this subject you will know that this is a subject very dear to my heart. The TAXPAYERS can’t afford double digit increases in their taxes and we in Laconia have let it be known by passing the Spending-Tax-Cap. The problem is that this increase at the county level still affects us because even though this increase will not be passed onto the property taxes raised, the city still has to pay the county. This reduces the funds available for operating the city and schools. The county increase (10.417%) is greater than the reported CPI-Urban rate of inflation increase (2.9%) by over 3 ½ times.

My friend Skip has concentrated a lot of his effort on the expenditure side of the equation and I don’t disagree with his assertion that the county expenses should be trimmed and kept in check. My issue is that this problem was stacked on the revenue side of the equation and a lot of the blame has been indirectly placed on HB2.

The reason I see the revenue side of the equation as the most important part of the county budget is that the spending on Medicaid/Medicare programs, especially the Nursing Home, will far outpace any other spending going on in the county budget. These programs are set up as a Federal Cost-Sharing plan requiring either the state or local government to pay 50% of the costs. Skip argues that this is only “account transfer” that is paid by the taxpayers, which is true. The problem is this is the program we were dealt by the feds and the feds don’t care who pays the non-federal share. Thus HB2 comes into play.

Councilor Lipman predicted that in coming years, care for the elderly is not going to carry an annual inflationary factor of less than high single digits. The entire council agreed the city cannot handle those kinds of numbers and stay within the local property tax cap without significantly impacting city services, including schools. Mayor Matt Lahey said “At some point it’s going to go beyond our ability to absorb it,” which I think hits the nail on the head.

As Ed Engler reported in the Laconia Daily Sun:

“The tax cap covers everything passed on through property taxes, including the city’s share of running Belknap County government in general and the Belknap County Nursing Home in particular. And the city’s 20-percent share of that bill for 2008 is going up $164,000 more than is being allowed, proportionally, under the cap. The difference will have to me made up, for fiscal year 2008-2009, out of city and school spending plans and City Manager Eileen Cabanel indicated she will recommend that additional burden be split 50-50 with the School District.”

City Manager Eileen Cabanel stated “We seem to be getting different answers from different people on HB-2” and Mayor Lahey added “We really couldn’t get an answer” to any of the questions we were asking.

The Mayor has spoken with Senator Kathleen Sgambati about this and she volunteered to come to a council meeting to explain the way the bill is supposed to work. Mayor Lahey is going to ask Sen. Sgambati to attend the next council meeting on Monday, March 24^th at 7:30 PM. She will also bring Senator Lou D’Allesandro (D-Manchester) and at least one official for the state Department of Health and Human Services with her.

I would everyone to attend this meeting to show support for our position that costs are being unfairly passed on to the property taxpayers. My feeling is that Mayor Matt Lahey will allow some questions from the public during this debate. If you are unable to attend then I would encourage you to forward any questions you may have to myself, the Mayor or one of the other council members.

LET’S GET THE ANSWERS WE DESERVE!!

My last post covered the about half of my response to Skip Murphy’s rebuttal of a previous post. Click this link to read his rebuttal. The Debate will NOW Resume.

About halfway through his post Skip quotes me and provides his rebuttal:

“It was mentioned that the Commissioners and Convention should have taken the shortfall in revenues into account when preparing the budget.”

That would be me....and Doug!  Over and Over, Commissioner Daigneault repeated "revenues are not keeping up with expenditures", "revenues are not keeping up with expenditures"

As I tried to point out during the meeting - if you know that revenues are not up to expectations, then why the heck are you still spending more than you take in and forcing taxpayers to pay for your mistake?  It is automatic that when one gets elected that the basic laws of supply and demand are suspended?

I did report in my post what you and Doug were saying, but I heard other people mentioning this same thing. I didn’t give credit to anyone in particular because there were so many people emphasizing this point.

I did hear Commissioner Daigneault say a few times that “the problem is that revenues aren’t keeping up with expenses” but I am not sure how many people picked up on the real intent of this statement. My translation is “we got the shaft from the state budget and HB2. We want to make sure people know it. This will outrage people enough to vote those fools out in November.”

As I stated in the first part of my response, the Commissioners and Convention didn’t see any problem with emphasizing their point, regardless of cost. They didn’t realize just how far they had gone until they were notified that this budget could cost jobs in Laconia. This is just more proof that the Spending-Tax-Cap in Laconia provides some benefit to people beyond our city limits. It doesn’t have the same effect to the County residents as it does on Laconia’s residents, but all of the town budgets in this county will benefit from the $351,000 increase in revenues.

I really feel that the revenue projections are still seriously understated, even when the revised numbers are taken into account. I believe that, because of the understated revenues we will see a great reduction in the amount to be raised by property taxes at the county level by December. I wonder if the Convention is thinking that the large sum of money they are asking from the municipalities isn’t so bad if they will get a reduction by the time the bill actually comes in.

Skip continues in his post with the following quote from me and his questions:

“With increases in prices for goods and services (fuel, repairs, etc…) and contractual agreement increases for wages it would be extremely dangerous for the county to run a flat line budget equal to 2007.”

Absolutely not.  We ALL face the same thing - why does government get first pick?  Why do they  receive top priority? What too many people forget is the reason for government - it is to do things that are not possible for us as individuals but also to exist for our benefit.

Again my statement is true in that the increase in the budget problem was purposefully done on the revenue side and it would be dangerous to make serious cuts on the expenditure side to compensate. This does not mean that the expenditure side shouldn’t be reviewed and trimmed. It only means that the impact on the county would be greater by eliminating needed services.

I don’t feel that I am giving the county “top priority” and I am not forgetting the reason for government, I am only stating what should be obvious to everyone that understands how this mess was made. Skip states at the start of his post about the budget increase that came from the Convention over the budget that was proposed by the Commissioners. I see this as more evidence supporting my belief in the true problem with this budget.

Skip continues this train of thought as follows:

The sensible thing would be to ask yourself "what is the proper role of government at the County Level"? and prioritize those things that are the main responsibilities.  In this case - Sheriff, Deeds, Corrections.  A lesser degree would be the Nursing Home.  Anything after that should be examined closely for elimination.

Note: there are always things to spend more on - those are wants.  It is the easy road to "go along and get along" especially with other peoples' money.  It takes a courageous person in politics to be able to say "no" and protect the ordinary taxpayer.

I agree with this statement and it is something that should be debated prior to the November elections so we know what our elected representatives feel is “the proper role of government at the County Level” and how they will prioritize those things.

Again I point to Arizona in regards to the Sheriff and Corrections. In Arizona the County Sheriff is also responsible for corrections and the County Jail. When Sheriff Joe Arpaio was elected in Maricopa County he was facing a budget shortage of over $1 Million and was under a court order to find revenue or release prisoners. He did neither one of these things. Through some “out-of-the-box” thinking he was able to keep the prisoners incarcerated and reduce expenses. He instituted the “Tent City” for housing prisoners, the change in meals (bologna sandwiches and fruit) and the “Chain-Gang” to curb costs and expand the jail facilities. That is why he is called the Toughest Sheriff in America and the prisoners complain on national TV that they are “treated like prisoners”.

I am not saying that his methods would work here but they could be looked at and with some other “out-of-the-box” thinking we should be able to reduce costs for the Corrections Department.

The Nursing Home is a responsibility that comes from the federal level. I have previously stated that I believe the feds should be following through on their promise and commitment more but, unfortunately we have no control over this. It is set by the State and Federal government, who pass the costs down to the local taxpayer.

It does take courage to say “no” and protect the ordinary taxpayer and we need to ask ourselves before we go to the polls in November “what type of courage have we seen?”

Skip quotes me as saying “That being said it is important to take the revenue side into account when determining expenses when preparing a budget. There is nothing to suggest that this wasn’t done with this budget,”

I return to my argument that this budget crisis was intentionally created and that the expenditure increase is “fairly reasonable”. More examination should have been done but there is no “large increase” in the overall expenditure side to suggest that this wasn’t looked at, even if it was minimally done.

You quote me talking about the issues concerning HB2 that were discussed at the meeting. You state in your post:

“you spent a lot of time on this - and I believe it to be a "red herring".  This is nothing more than account transfer gooble-dee-gook from the individual taxpayer level.  No matter what, the taxpayer still has to ante up lots more, one way or another.  

I stated my thoughts on this before and that hasn’t changed. The only thing I will remind you is that this cost-sharing program was set up in Washington D.C. and we have to live with the state’s take on it (HB2) until we get representatives with enough courage to lookout for the ordinary taxpayer. The “account transfer” you refer to is just that, but remember that the transferred funds are paid through a variety of taxes and not just property taxes at the local level. At least until the state gets a hold of it.

I don’t believe the “red-herring” is in HB2. This bill has some to do with the reason this scare tactic was tried. The rest of the reason for our County Representatives to try this tactic on us is because they are upset over the rest of the state budget and school funding.

Unfortunately I feel that they are trying this as a partisan method to get the Dems out of control at the state level. If we had true conservatives in office we wouldn’t have to resort to these measures.

True conservatives know how to lead, make positive changes and more importantly protect the taxpayers. An example of true conservatism would be taking the announcement Gov Lynch made about incentives for jobs in the North Country and turning that around to other areas of the state to increase jobs for the taxpayers and the revenues received from businesses across the state.

New Hampshire has a unique tax structure and there are some out there who can’t think of how to work within that structure to affect positive change and would rather apply more taxes to the ordinary taxpayer. This is definitely a hot button for me because it doesn’t take much to make the changes needed, increase revenues and reduce the property tax rate we have to pay.

I suppose this can be left to another debate, hopefully before November. The main thing to remember when we go to the polls in November is “what courage have we seen”, “what new ideas are being put forward”, “are these ideas outside the box” and “are we going to be protected”. Hopefully we can find candidates with positive answers to these questions.

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.