Hillsborough County Republicans

Over the past three months members of the New Hampshire Senate have focused on passing legislation that will bring expenditures into line with revenues, reform antiquated programs, enhance public safety, protect both the environment and property rights, and improve the business climate.

Noteworthy legislation includes:

Senate Bill (SB)-183 introduced by Senator Jim Rausch and Senator Nancy Stiles reforms the current education funding formula that pits town against town and has growing unsustainable costs. Senators Rausch and Stiles devised a new formula that assures that every community receives the same level of education funding next year, prevents funding decreases to nearly 125 towns, and blocks the return of donor towns. It will also reduce state expenditures by $140 million by level funding the formula. This critical legislation passed the Senate on a bi-partisan voice vote and enjoys the support of Governor Lynch.

I sponsored SB-3 which addresses the New Hampshire Retirement System’s dangerous unfunded liability of $4.7 billion. It will ensure that the pension system is viable for current and future retirees, while lowering skyrocketing rates that cities and towns (taxpayers) must pay for employees, teachers, police and firefighters. Current retirees will not be affected. Employees close to retirement will in most circumstances only experience increased contribution rates. Some younger employees may have to work one to four years longer and be unable to add items such as unused sick and vacation time to pension calculations. While most employees affected by these changes have concerns and many have expressed those concerns to me personally, everyone realizes the current unfunded liability and corresponding increase in property taxes is unsustainable. No one understands this reality better than struggling taxpayers. SB-3 passed the Senate 19-5.

Senator Chuck Morse sponsored CACR-5 (a Constitutional Amendment) to give New Hampshire governors line-item veto power. New Hampshire is one of a handful of states whose governor does not have the ability to veto extraneous spending. The proposal would include a 2/3rd override provision by the Legislature and could only be used to eliminate spending items – not language in legislation. Given that spending increased 24% over the previous four years, the line-item veto would have proven a useful tool. CACR-5 passed the Senate 19-5, must still be adopted by the House and then approved by 67% of voters in November 2012.

Senator Bob Odell sponsored SB-1 which restores parity between public employees and employers in contract negotiations by repealing the so called “evergreen” law. “Evergreen” allowed step pay increases to continue even after the expiration of a contract. This provided a powerful disincentive against employees negotiating new contracts. Cities and towns can still agree on an “evergreen clause” if local voters approve it. SB-1 passed 19-5 in the Senate, 282-70 in the House, and Governor Lynch allowed it to become law without his signature. It should be noted, amidst all the recent controversy about collective bargaining, the focus of SB-1 is very limited and does not undermine public employee’s rights to organize collectively in a union.

Senate President Peter Bragdon sponsored SB-52 which corrects the ill-fated provisions of SB-500 which allowed early release of violent offenders and took away discretion of the Parole Board by limiting parole violations to no more than a 90 day return to prison. Bragdon’s legislation gives the Parole Board the ability to block early release and allows the board far greater latitude to return repeat offenders to prison for more than a 90 day “slap on the wrist.” This legislation ends the minimal administrative supervision for high risk sexual predators that have completed their prison terms and replaces it with active supervision. SB-52 passed the Senate on a bi-partisan voice vote.

I sponsored SB-154 to clarify the Shore Land Protection Act. SB-154 maintains important environmental and water quality protections while also respecting the rights of property owners. It is supported by the NH Lakes Association, the Department of Environmental Services, home builders and property rights advocates. It passed the Senate on a bi-partisan voice vote. If enacted into law SB-154 will simplify the permitting process and give a boost to the depressed construction industry in the Lakes Region.

I also sponsored SB-147 which will implement managed care for Medicaid eligible residents. Managed care has been utilized by many states to lower the cost of Medicaid (the largest cost center in NH government) while maintaining quality services. A private entity such as an insurance company competitively bids to serve the Medicaid population and assumes the financial risk. By creating a medical home for patients and better management of chronic conditions, quality care is maintained while costs are curtailed. Governor Lynch has embraced managed care and estimated $33 million in savings in his budget. Savings over time could be far more significant. SB-147 has passed the Senate on a bi-partisan voice vote.

Lastly, I have sponsored SB-125 which would give business owners protection from intrusive Department of Revenue Administration (DRA) audits which often result in assessing the 8.5% Business Profits Tax on much of the compensation a business owner pays him or herself. These audits have increased in scope and frequency, have become an income tax on business owners, and are undermining the ability of NH to attract and retain successful and job producing small business owners. An amendment was added to delay implementation pending resolution of the budget. SB-125 passed the Senate with a bi-partisan 24-0 vote and will, I expect, be supported vigorously in the House.
While Concord headlines often focus on and highlight legislative controversies, the Senate continues to work diligently on the major challenges facing our state, and often in a bi-partisan manner. That is what New Hampshire voters want and expect. It is our job to keep those promises.
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Jeb Bradley is a NH Senator serving District 3

by NH Senator Jeb Bradley

Several weeks ago I wrote a blog: “The New Hampshire Retirement System’s (NHRS) Day of Reckoning” which has elicited a lot of response. Opinions run the gamut. Virtually everyone agrees promises made to present retirees must be kept. Many believe reform is long overdue and that avoiding today’s tough choices increases future problems. Unions contend retirement benefits are locked in the instant someone completes their probationary period and no changes can be made. Lastly, some feel this legislation is “alarmist”.

Regardless of one’s views, what no one can escape are the implications of the numbers and what they mean. Consider the following facts:

1. The current unfunded pension liability is $3.72 billion.

2. The current unfunded medical subsidy liability (a pension adjunct) is $976 million — leaving a total unfunded liability of $4.69 billion.

3. Only 58.5% of the assets needed to fund future pension commitments are available. 80% funding is considered healthy.

4. According to a September 2010 Bloomberg survey, NHRS’s 58.5% funding ranks fourth worst in the nation.

Furthermore, pension systems rely heavily on investment earnings to pay benefits. The NHRS assumes an 8.5% return, but the NHRS average for the last 20 years has been 7.8% and, more alarmingly, only 2.3% for the past 10 years. Under-performing investments didn’t overcome two terribly shortsighted public policy choices made by previous Legislatures that went unchallenged for years by the NHRS Board. An accounting methodology understated employer costs for over a decade and $900 million was skimmed from the pension plan to pay higher employee benefits than required.

These shortsighted choices, combined with recent stock market losses, have dropped the NHRS funding level from 90% in 2000 to today’s precarious 58.5%. If the NHRS board accepts actuary recommendations on investment assumptions, the unfunded liability would grow — dropping NH’s rank to second worst in the nation.

While those claiming the NHRS is solvent are correct, what they ignore is that taxpayers, primarily property taxpayers, are getting walloped with the bills.

Here’s how the unfunded liability will clobber taxpayers. Employees such as teachers and municipal workers pay 5% of their salary to the NHRS. Police and firefighters pay 9.3%. Employers / taxpayers — making up for past mistakes – now pay 10.7% of salary for teachers, 19.51% for police and 24.69% for firefighters. In 2014 those costs are projected to escalate to 13.61% for teachers, 29.20% for police, and 33.90% for firefighters. When investment assumptions are lowered to reflect reality, the costs to property taxpayers will explode again and stay high for a long time.

Meanwhile, retirement benefits paid are growing by $40 million in 2010 alone. Much is made of the average pension for every retiree in the system being $18,650. That’s accurate but doesn’t portend the future. For teachers who retired in 2010 their pensions averaged $29,800, for police $49,200 and firefighters $59,100.
Teachers must work 30 years, police and firefighters 20 years. Just using 2010 snapshots for the average salary, employee pension contributions and pension benefits; a teacher should recoup their 8% compounded contribution in about 10 years and police officers and firefighters in about 5 years.

Perhaps that’s why the two sides are at loggerheads with taxpayers demanding reform and employees threatening to go to court to prevent any reform. That’s why I filed SB-3: to equitably share this $4.69 billion unfunded liability.

Under SB-3, public safety employees with less than 10 years of service would be expected to work 25 years rather than 20, be eligible to retire at 50 not 45, have pensions determined by the highest 5 years of pay rather than 3, and could not count unused sick time, vacation, or career buyouts to increase their pension. For employees like teachers, 30 years of service would remain but the other provisions would apply. No one would be able to supplement pensions through special details outside the scope of their jobs. Newly hired employees would contribute more to the NHRS. The Legislature will study implementing a defined contribution plan for new employees and the NHRS board would be balanced between employers and employees. SB-3 reforms will not impact current retirees!

These changes are equitable to employees and taxpayers and are long overdue. These reforms will reduce the unfunded liability and the crushing property tax burdens, and for employees ensure a viable retirement system.

Only with compromise and each side walking in the other’s shoes will this result be possible. Postponing the day of reckoning only makes the medicine much worse.

Taxpayers are on the hook for the entire unfunded liability right now and those costs are unsustainable. Employees can claim unfairness and threaten litigation all the way to the court house door – but they miss the bigger point — they will have priced themselves out of jobs.
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Jeb Bradley is a NH Senator serving District 3

NH GOP STATEMENT ON GOVERNOR LYNCH’S BUDGET

Concord – Jack Kimball, Chairman of the New Hampshire Republican Party released the following statement today regarding Governor John Lynch’s budget.

“John Lynch must be hiding in the massive hole he has dug us into. Clearly he didn’t get the message on November 2nd. The irresponsible spending has to stop.”

“The governor’s budget clearly demonstrates he is out of touch with his own departments and the people of New Hampshire. It is packed with hidden fees, inflated numbers and broken promises. It continues his out of control spending habit.”

”The taxpayer’s of New Hampshire don’t deserve to pay Governor Lynch’s tab. After years of the Democrats reckless spending and tax increases it is wrong to pass the burden onto New Hampshire families during these hard economic times.”

“I have full faith that Speaker O’Brien and Senator Bragdon will fix this mess in Concord and return fiscal sanity to our state. One thing is clear: Governor Lynch has got to go.”

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Christine Baratta
Communications Director
New Hampshire Republican State Committee
press@nhgop.org
cell: 603-828-8026
office: 603-225-9341