Son of HB576 lives! Maybe NO will Finally Mean NO - Granite Grok

Son of HB576 lives! Maybe NO will Finally Mean NO

Budgets

When a Budget Committee decides to zero out a General Ledger account line item in a budget, it is supposed to be No means No! For that line item, you can’t spend a penny on it. I wrote House Bill 576 (HB576) because I learned that is not how it really worked.

Sidenote: A BudComm reviews a Governing Body’s budget (be it the Municipality or the School District or the Water District) from the very bottom – it can’t just look at the overall spending of the Town (as an example) and decide to slice 10% off it and let them figure out who gets what to spend. Instead, the BudComm MUST go over every single line in every department’s budget. For instance, for the Police, there are Wages and Salaries, Training, Office Supplies, Phone, Radios, Maintenance lines for a bunch of stuff, replacement equipment, Vehicles, K-9…these can end up being a couple of dozen lines to hundreds of lines long. And each one has to get reviewed.

That was a No! for spending. No means No. And when everything was done, the BudComm would present the budget(s) to the voters for approval. Unless a line item was reinstated with some amount of money during the Town Meeting or Deliberative session, No meant No.

Until it didn’t. Without getting really into the Budget weeds, once the townfolk approved a budget, all those line items were rolled up into a single number for a department and those numbers were put onto MS forms and sent onward to the NH Department of revenue. Those MS lines were declared to be “purposes” for spending. And at that time, ANY of that money could de facto be spent for anything the Governing bodies wanted within that purpose. Including the line items that the BudComm, after spending hundreds of manhours developing, zeroed out.

Why bother?

So my HB576 of two years ago was developed to really make No Means No – a technical fix to a loophole that can and has been exploited many times over the years. Simply, it proposed a spreadsheet of line items that had been zeroed out and the Governing Bodies could no longer transfer monies from within those MS “purpose” lines to spend against the “purposes” of those zeroed-out lines. The reverse was also true – if the BudComm ADDED money to a line or created a new line, the Governing Bodies MUST spend that allotment for that line item’s purpose.

As I pointed out here, it failed within the NH House Municipality Committee and I pointed out two factors as to why:

  • A bit earlier, Cordell Johnston (NHMA) spoke again and as he was going back to his seat, the Chair said “we all have to congratulate OUR Mr. Johnston for being on NHPR this morning
  • When the Chair started the Exec Session, he led off with “I am ready to entertain a motion to ITL this bill“.

Yeah, good times, good times. That “OUR” bit said a lot.  In fact, that single word said WAY too much:

  • Was I working against a too powerful lobbying group, one that exists on the dues paid by my town, using (in part) my property taxes?  Using my money to lobby against MY interests?  I had heard about these kinds of stories for years – now, I have my own personal story of getting smacked right in the face.

and:

  • It was also clear that there was some no small amount of animus from Jim Belanger (R-Hollis) who has served, it seems, on almost every committee in town including Selectmen.  And like many Selectmen, how DARE a Budget Committee rain on MY parade?

But that was with him in the House and a Democrat-controlled Committee. So we try again! This time, collaborating with Norm Silber (Representative-elect from Belknap District 2 (Gilford-Meredith) who had been Chair of our BudComm and has now put in an LSR into the Legislative hopper to try to fix this technical problem in that an entire season’s work of a BudComm could go for naught.  It has been put in as LSR 2021-0678.

While the text has not yet been entered into the system, here is the current working version (emphasis mine); I am sure that it will undergo a couple of revisions:

Revise the Municipal Budget Law as follows:

Name of this law: The “No Mean No Law

Statement of Findings & Purpose:

Budgets approved by relevant voters by each municipality and school board, as well as budgets approved by county delegations or by the governing bodies of municipalities that do not require voter approval of budgets) often contain general ledger line items containing an entry of zero dollars (whether so dictated by an applicable budget committee, or in a town deliberative session or in a town meeting, or by a county delegation, or otherwise), it being the reasonable expectation of those empowered by law to grant final approval of budgets that while the governing bodies of the municipalities, counties and school boards have discretion to transfer funds between general ledger line items, no such transfers are to be made to general ledger line items that contain an entry of zero dollars in the approved budgets.

Nevertheless, because the general ledger line items in the approved budgets are grouped and aggregated together for purposes of reporting the budgets to the Department of Revenue Administration on its forms, the governing bodies of the municipalities, counties and school boards are known to make transfers between general ledger line items into such general ledger line items containing entries of zero dollars as long as the transfers to not exceed the total budget allocation contained in the larger categories of budget categories in the DRA budget reporting forms.

This practice effectively contravenes the intent of the voters and, as applicable, the governing bodies, that approved the respective budgets with the expectation that an entry of zero dollars in a line item means that no money shall be transferred into such a line item in the approved budget.

The following new Act is hereby adopted:

The legislative body or governing body of every municipality, county, school board, and school administrative unit shall regularly report in detail to the Department of Revenue Administration each and every general ledger line item of its duly adopted budget (whether approved by the voters, the county delegation, or any other governing body having authority to grant final approval of its budgets) that contains an entry of zero dollars. Such report shall be in the form of a detailed spreadsheet with full identifying information of any such general ledger line items, and such spreadsheets shall be deemed to be addenda to, and incorporated within, the MS budget forms filed with the Department of Revenue Administration under penalties of perjury.

Notwithstanding any other provisions contained in applicable law or in the forms and regulations of the Department of Revenue Administration, the governing body of every municipality, county, school board, and school administrative unit shall not transfer funds within its adopted budget (whether approved by the voters, the county delegation, or any other governing body having authority to approve budgets) to a general ledger line item of its adopted budget that contains an entry of zero dollars or to utilize public funds for the purposes enumerated in such line items, and any such purported transfer in violation of this provision shall be null and void.

PROHIBITIONS; PENALTIES.—
(a) Any person, county, agency, municipality, district, board, or other entity, including, without limitation, any school district or school administrative unit, that violates the provisions of this law by purporting to transfer funds from any source into any general ledger item within its accounting system that has been allocated zero dollars in its approved budget shall be liable as set forth herein.

(b) If any county, city, town, or other local government (including, without limitation, any school district or school administrative unit) violates this section, the Superior Court shall have jurisdiction to declare the purported transfer of funds from any source into a general ledger item within its accounting system that has been allocated zero dollars in its approved budget invalid and to issue a permanent injunction against the county, city, town, or other government entity (including, without limitation, any school district or school administrative unit) prohibiting it from enforcing or implementing such purported transfer. It shall be no defense that in enacting the transfer the county, city, town, or other local government entity (including, without limitation, any school district or school administrative unit) was acting in good faith or upon advice of counsel.

(c) Upon a good faith belief that a county, city, town, or other local government entity has violated this section, any citizen of this state believing themselves to be aggrieved by such actions shall give written notice, by certified mail, return receipt requested, or by a nationally recognized courier service, to the county, city, town, or other government entity that is believed to have violated this section of the reasonable belief of such a violation, and the county, city, town, or other government entity shall have a period of not more than ninety (90) days after the giving of such notice within which to rescind any such transfer of funds from any source into a general ledger item within its accounting system that has been allocated zero dollars in its approved budget. However, if after the expiration of such 90 day period, the county, city, town, or other government entity that made such a transfer that is violative of this section has failed or refused to rescind any such transfer, suit may be filed and the elected or appointed local government official or officials or administrative agency head under whose jurisdiction the violation occurred shall be personally liable as provided for in the following subsection. The citizen of this state giving such notice shall be deemed to have standing to bring suit under this Act.

(d) If the court determines that a violation hereunder was inadvertent or the result of simple negligence, the court shall assess a civil fine of $500 against the elected or appointed government official or officials or administrative agency head under whose jurisdiction the violation occurred for the first violation; up to $1,000 for a second violation; and up to $2,500 for a third violation. If the court determines that a violation was knowing and willful, or committed recklessly or as the result of gross negligence, the court shall assess a civil fine of up to $5,000 against the elected or appointed government official or officials or administrative agency head under whose jurisdiction the violation occurred. Any such civil fines shall not be payable by any insurance carried at taxpayer expense.

(e) Public funds and/or insurance purchased with public funds may not be used to defend or reimburse or to indemnify the unlawful conduct of any person found to have knowingly or willfully violated this section.

(f) A knowing or willful violation of any provision of this section by a person acting in an official capacity for any entity enacting or causing to be implemented a transfer prohibited under paragraph 2 of this Act or otherwise under color of law shall be cause for termination of employment or contract or removal from office by the Governor.

(g)  Any person, entity, or organization whose membership is aggrieved by any purported transfer promulgated or caused to be enforced in violation of this section may, after the giving of notice and expiration of the time period set forth in subsection 3-c above, file suit against any county, agency, municipality, school district, school administrative unit, or other entity in any court of this state having jurisdiction over any defendant to the suit for declaratory and injunctive relief and for damages, as limited herein, caused by the violation. Upon such filing, the court shall schedule a hearing on the matter which shall be within 10 days, excluding Saturdays, Sundays, and legal holidays, from the date of filing. After a hearing on the merits, if the court finds in favor of the petitioner, the court shall:

(i) Issue an injunction against the person, public entity, or political subdivision from implementing the prohibited transfer;

(ii) Issue a declaratory judgment that the purported transfer is null and void; and

(iii) Award the prevailing petitioner in any such suit reasonable attorney’s fees and costs, including a contingency fee multiplier if the petitioner was represented by counsel working on the basis of a contingent fee.

Interest on the sums awarded pursuant to this subsection shall accrue at the legal rate from the date on which suit was filed.

(4) EFFECTIVE DATE. This Act shall become effective upon passage.

So, it starts again. Even though I am no longer on the BudComm (I am keeping my promise to TMEW not to run for any other office), I can still be involved.  Let’s see where this goes, shall we?

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