The law of gravity often appears to hold in politics and public policy. There are well-known sayings about things that flow downhill. Sadly, one of them is fiscal responsibility. When it comes to paying for the choices lawmakers and officials make, too often the weight of that responsibility pushes the cost downward.
In public policy circles, such a downhill flow has another name: an unfunded mandate. It’s a dynamic in which a higher governmental body creates an expense that it then refuses to pay, passing it along to a “lower” body. Thus, state lawmakers and politicians are ever bemoaning the unfunded mandates of the federal government that fall to them to pay, and local governments make the same case against the state. A well-known example is the Individuals with Disabilities Education Act, the federal law requiring that all disabled children get access to an appropriate education. The 43-year-old law called for the federal government to pay 40 percent of that cost. That’s never happened. In fact, it’s often seemed to be going the other way, leaving states and school districts to foot the bill.
There are other ways these responsibilities flow downhill as well. One of the most common, at least in New Hampshire, is when the state agrees to share revenues with cities and towns, then withholds all or part of that share. Think rooms and meals taxes, which are supposed to be shared 60-40 between Concord and the municipalities in which they are collected. For years, state lawmakers played with that formula, keeping more of the revenue for the state budget and sending less to cities and towns. The share had dropped as low as 20 percent for municipalities in the last state budget, before a new law in 2021 bumped that share back up to 30 percent — still only 75 percent of what was called for under the original statute.
Alternatively, the state can agree to share expenses with cities and towns — as it does with retirement benefits for a variety of public servants (firefighters, police, teachers, city employees, etc.) — then shrug off that obligation.
That’s also been happening for years. The N.H. Retirement System relies on contributions from two levels of government, in addition to what the employees contribute themselves. Surprising no one, the state has long failed to pay its share, leaving that to local governments and school districts to make up — principally by taxing local property owners more.
In 1977, the state paid 35 percent of the costs. That was gradually reduced to zero; that’s right, zero.
Lawmaker Ken Weyler, R-Kingston, said the state stopped because the payments were too unpredictable. Imagine you bought a house and signed up for a mortgage linked to variable interest rates. After a few years, you decide to just stop paying because the payments vary. How would that go?
This is par for the course for New Hampshire lawmakers. They’ve long refused to pay their obligation to fund education for the state’s children, for example. And when they finally chipped in, after being ordered to by the courts, they simply went to the same well that already paid those costs — local property taxes.
Somehow, though, this session, the N.H. House has decided to step up to its responsibility toward retirees — to a point. The House last week passed a bill that would — if the Senate and governor agree — put the onus back on the state to fund 7.5 percent of the cost of the retirement system.
It’s a far cry from what the state ought to be contributing. Weyler dubbed it a “false promise” that would only amount to paying $20 per Granite Stater. But some financial responsibility beats none. Keene City Manager Elizabeth Dragon estimated it would reduce the city’s costs by more than $200,000. It would help school districts even more.
We hope the bill, HB 1417, succeeds. It’s not often you see the law of political gravity broken. Perhaps it’ll start a trend.