N.H. Wise to Save for Rainy Day

One of the trademarks of true New Hampshirites was our hard-core Yankee frugality, embracing the old adage “a penny saved is a penny earned.”

New Hampshirites understood more than most other states the need for common-sense prudence in the form of a sufficient rainy day fund. Harsh weather and downturns in the economy taught New Hampshirites the need for a rainy day fund. Unfortunately, far too many in Concord have either long abandoned the necessity for cautious spending, or they never really embraced one of New Hampshire’s most endearing qualities: our thriftiness. As much as we value our state motto, it is an attitude that has served New Hampshire well as other states have struggled in times of fiscal uncertainty.

One does not have to look too far into our past to remind ourselves of the need for an emergency fund. Over the past 20 years New Hampshire has had to deal with significant economic downturns, such as the recessions of 1999, 2002 and 2009. New Hampshire has also had to respond to catastrophic events such as the brutal ice storm and tornado of 2008, and the effects of numerous hurricanes and other severe storms. Granted, some fiscal aid comes from standard state and federal funds, but they are not fluid or guaranteed.

Most fiscal experts contend that in order for a state to have the flexibility that is needed to address negative events that have adverse effects on New Hampshire’s fiscal stability, a rainy day fund of 5-10 percent should be maintained. New Hampshire’s own state treasurer, Katherine Provencher, agrees, having recently stated that ideally 5 percent of the state-supported budget, or $70 million (of an approximate $10.7 billion budget), should be in the rainy day fund. Currently, New Hampshire has approximately $9 million in its rainy day fund, which is a far cry from the absolute minimum recommended by Provencher.

Aside from the human toll, the lack of an adequate emergency fund could have an effect on New Hampshire’s bond rating, and is one of the factors why New Hampshire is ranked 33rd by the Mercatus Center at George Mason University in long-term fiscal solvency.

It was recently announced that New Hampshire had a budget surplus of $15 million, and immediately our representatives were split, mostly by party lines and chamber majorities, as to how to use the “extra money.” One half believes some or all of the money should be spent. The other half feels the surplus should be deposited into the rainy day fund. New Hampshire is now living out one of Aesop’s most famous fables, The Ant and the Grasshopper.

An overwhelming, bipartisan majority in the state Senate (22-2), acting as the ants is this monetary morality tale, voted this past week to wisely place all $15 million into the rainy day fund. However, the House, playing the role of the grasshopper, voted to provide $7 million to the state Department of Health and Human Services, placing the remainder into the rainy day fund.

DHHS has already taken care of $10 million in cuts that were part of the approved budget, most of the cuts being achieved by leaving vacant jobs in the agency unfilled. Additionally, the Legislative Fiscal Committee is expected to hear from DHHS Commissioner Nick Toumpas on his department’s plan for how it will make the remaining $8 million in cuts as prescribed by the approved budget.

Eventually we will hear from those who would rather vilify and play politics instead of trying to do just a little in preparation of the inevitable rainy day. They will use words such as “shredded safety net” (failing to acknowledge the need to fund New Hampshire’s most critical safety net, the rainy day fund). Or, some will predictably refer to these cuts as “draconian” in a false attempt to either guilt people into supporting the misspending of the surplus, or for outright political fodder for the next election. New Hampshire voters should reject both of these false narratives.

Those who present a false narrative should remember that within the overall budget picture, this surplus is a small amount of money whose greatest value, as the Democrats and the Republicans in the Senate clearly affirmed, would serve New Hampshire best in the rainy day fund.

Unlike the end of Aesop’s fable — when the ant refused to help the grasshopper — by placing this surplus into the rainy day fund to strengthen it, we would be taking one small step to ensure New Hampshire is ready to help its citizens in their time of need.

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