HB 1694-FN-LOCAL – AS INTRODUCED
2006 SESSION
06/10
HOUSE BILL 1694-FN-LOCAL
AN ACT relative to a spending cap on municipal and school district budgets.
SPONSORS: Rep. Asselin, Rock 7; Rep. Weyler, Rock 8; Rep. Carson, Rock 3; Rep. Wells, Rock 8
COMMITTEE: Municipal and County Government
This bill caps any increase in a municipal or school district budget at the average of the consumer price index for the previous 4 years. The cap may be exceeded with the passage of warrant articles separate from the budget by a 60 percent majority.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
06-2051
06/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Six
AN ACT relative to a spending cap on municipal and school district budgets.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Budget Preparation; Spending Cap. Amend RSA 32:5, I to read as follows:
I. The governing body, or the budget committee if there is one, shall hold at least one public hearing on each budget, not later than 25 days before each annual or special meeting, public notice of which shall be given at least 7 days in advance, and after the conclusion of public testimony shall finalize the budget to be submitted to the legislative body. Public hearings on bonds and notes in excess of $100,000 shall be held in accordance with RSA 33:8-a, I. Days shall be counted in accordance with RSA 21:35. Under no circumstances shall the budget presented exceed the operating budget for the previous year multiplied by the average annual percentage rate of inflation for the immediately preceding 4 calendar years based on the northeast region consumer price index for all urban consumers, as published by the Bureau of Labor Statistics, United States Department of Labor provided, that under no circumstances shall the total amount appropriated exceed the operating budget for the previous year multiplied by the average annual percentage rate of inflation for the immediately preceding 4 calendar years based on the northeast region consumer price index for all urban consumers, as published by the Bureau of Labor Statistics, United States Department of Labor.
2 New Paragraph; Exceeding Budget Cap. Amend RSA 32:5 by inserting after paragraph I the following new paragraph:
I-a. If the governing body wishes to propose additional budget items which would cause the budget to exceed the spending cap, it shall do so in a separate warrant article for each budget item. Such special warrant articles shall require a 3/5 affirmative vote. Special warrant articles that are approved may be included in the budget for the next year when calculating the budget cap under paragraph I.
3 Limitation of Appropriations; Budget Committee. Amend the introductory paragraph of RSA 32:18 to read as follows:
32:18 Limitation of Appropriations. In any municipality electing this subdivision, or any district wholly within a town electing this subdivision, the total amount appropriated at any annual meeting shall not exceed by more than 10 percent the total amount recommended by the budget committee for such meeting. In official ballot referendum municipalities, the recommendation of the budget committee made for the first session of the meeting shall be used for determining the 10 percent limitation and compliance with the spending cap. These totals shall include appropriations contained in special warrant articles. Money may be raised and appropriated for purposes included in the budget or in the warrant and not recommended by the budget committee, but not to an amount which would increase the total appropriations by more than the [10 percent allowed] spending cap under this paragraph. The 10 percent increase allowable under this paragraph if it does not exceed the spending cap shall be computed on the total amount recommended by the budget committee less that part of any appropriation item which constitutes fixed charges. Fixed charges shall include appropriations for:
4 Use of Official Ballot; Default Budget Calculation. Amend RSA 40:13, IX(b) to read as follows:
(b) “Default budget” as used in this subdivision means the amount of the same appropriations as contained in the operating budget authorized for the previous year, reduced and increased, as the case may be, by debt service, contracts, and other obligations previously incurred or mandated by law, and reduced by one-time expenditures contained in the operating budget. For the purposes of this paragraph, one-time expenditures shall be appropriations not likely to recur in the succeeding budget, as determined by the governing body, unless the provisions of RSA 40:14-b are adopted, of the local political subdivision. The default budget shall be calculated based on the amount in the previous year’s capped operating budget and shall not include items passed as special warrant articles in excess of the capped amount.
5 School Administrative Units; Budget Capped. Amend RSA 194-C:9 to read as follows:
I. At a meeting held before January 1, the school administrative unit board shall adopt a budget required for the expenses of the school administrative unit for the next fiscal year, which budget may include the salary and expenses of supervisors of health, physical education, music, art, and guidance, and any other employees, and shall include the expenses necessary for the operation of the school administrative unit. Under no circumstances shall the budget exceed the operating budget for the previous year multiplied by the average annual percentage rate of inflation for the immediately preceding 4 calendar years based on the northeast region consumer price index for all urban consumers, as published by the Bureau of Labor Statistics, United States Department of Labor. Superintendents, assistant superintendents, business administrators, teacher consultants, and the regularly employed office personnel of the school administrative unit office shall be deemed employees of the school administrative unit for the purposes of payment of salaries and contributions to the employee’s retirement system of the state of New Hampshire and workers’ compensation. The school administrative unit board shall apportion the total amount of the budget among the constituent school districts in the following manner: the apportionment shall be based 1/2 on the average membership in attendance for the previous school year and 1/2 on the most recently available equalized valuation of each district as of June 30 of the preceding school year. Prior to January 15 in each year, the board shall certify to the chairperson of the school board of each constituent school district the amount so apportioned. Each district within a school administrative unit shall raise at the next annual district meeting the sum of money apportioned to it by the school administrative unit board for the expenses of services which each district received in connection with the school administrative unit office. The school administrative unit board in adopting the budget shall not add any new service to the school administrative unit budget unless a majority of the school districts in the school administrative unit representing not less than 60 percent of the total pupils in the school administrative unit have voted favorably upon the establishment of the service. A vote to accept a new service shall not be construed as a vote to raise and appropriate money within the meaning of RSA 197:3.
II. The provisions of paragraph I shall not apply to school administrative units comprising only one district. The budget for these units shall be a part of the school district budget and subject to the vote of the annual school district meeting or, for those districts without an annual meeting, by the legislative body.
III. Paragraph I of this section shall not apply to school districts which have adopted the provisions of RSA 194-C:9-a.
6 Effective Date. This act shall take effect July 1, 2006.
LBAO
06-2051
Revised 12/19/05
HB 1694 FISCAL NOTE
AN ACT relative to a spending cap on municipal and school district budgets.
FISCAL IMPACT:
The New Hampshire Municipal Association and the Departments of Education and Revenue Administration state this bill will decrease local revenue and expenditures by an indeterminable amount in FY 2007 and each year thereafter. There would be no fiscal impact on state and county revenue or expenditures.
METHODOLOGY:
The New Hampshire Municipal Association assumes operating budgets on which the cap is to be computed would exclude any capital projects or acquisitions financed by the issuance of bonds or notes. The Association states the northeast regional consumer price index for all urban consumers averaged 2.42% from 1998 through 2001, and was used in comparing the impact of this bill on the municipal budgets adopted in 2003. The Association calculated the additional amount of reductions that would have been necessary in order to comply with the proposed cap. For example, Acworth would have needed to reduce its operating budget by $81,400 or 12.9% in order to comply with the proposed cap in 2003. Based on the data analyzed, total reductions for all cities and towns to comply with the cap in 2003 would have amounted to $67,000,000 if this bill had been in effect. The Association states the exact fiscal impact cannot be determined at this time since each city and town would be affected differently.
The Department of Education states the average annual percentage rate of inflation for 2005 is 1.926% based on the northeast regional consumer price index for all urban consumers, published by the Bureau of Labor Statistics. Total school district expenditures have increased by approximately 8% per year for the last several years. Any savings attributable to this bill would vary by school district and SAU, and would be realized at the local level. The Department is unable to determine the exact fiscal impact at this time.
The Department of Revenue Administration states this bill would have no fiscal impact on their Department, but would reduce school district and local expenditures by an indeterminable amount.