New Hampshire urged to pay down pension debt

(The Center Square) – New Hampshire policymakers are being urged to divert more surplus tax revenue to paying down the state’s pension obligations.

The Josiah Bartlett Center for Public Policy, a conservative think tank, is calling on the state to tap into a record level of surplus tax revenues to make a “catch up” payment toward the New Hampshire Retirement System. The group says the “fiscally prudent” move will help reduce the state’s pension-related costs and financial risks while yielding long-term savings.

“This would save taxpayers money in the long run and be a responsible use of these unexpected revenues,” Drew Cline, the center’s president, said in a recent policy statement. “The state’s tremendous budget surplus is a windfall that should be used wisely.”

New Hampshire’s revenues have exceeded budget writer’s expectations with the state banking more than $252 million in surplus revenues.

The center, which teamed up with the Reason Foundation to make the recommendation, said given the windfall of surplus revenue “there is no better time” to pay off debt servicing payments to the state’s retirement fund.

Unfunded liabilities to the state’s pension fund are accruing at an interest rate of 6.75% – making it the “most expensive taxpayer backed debt” held by the state, the center points out.

Meanwhile, the state holds about 18% – or nearly $818 million – of unfunded liabilities held by the state retirement system, according to the center.

“Unfunded liabilities operate just like a debt,” the center said. “The longer they are held, the more interest they will accrue and the more their costs would be passed onto future generations.”

Last year, Gov. Chris Sununu signed a two-year, $13.5 billion budget that included a buffet of tax cuts and diverted more taxpayer dollars to school choice programs.

The Josiah Center pointed out that the lawmakers have been careful not to spend surplus revenue on recurring state programs but haven’t devoted a significant enough portion of the funds to pay down the state retirement fund obligations.

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