Frank’s Statement on Stimulus

This morning reports are circulating that I supported the stimulus plan and requested stimulus monies as Mayor of Manchester. Nothing could be further from the truth. These reports are no doubt being spread by one of my opponents who hopes that by distorting my conservative record, he can gain a political advantage. This story is not only inaccurate, but is easily rebutted by a simple search of statements I have made about stimulus since late 2008 (see below and read carefully).

In the spring of 2009, I was busy drafting my final budget as Mayor. I was focused on preventing a tax hike by keeping spending down and I was concerned about how the State budget might affect Manchester’s budget. Governor Lynch’s proposed budget seized Manchester’s portion of the Rooms & Meals Tax and State Revenue Sharing, and replaced it with unspecified and one-time stimulus monies.

When I criticized the Governor’s budget for how it used stimulus monies, I was not advocating for those monies. I was instead very clearly trying to keep their feet to the fire to make the State fulfill on the Governor’s promise. At no time did I ask for stimulus monies and I made it abundantly clear to Governor Lynch and the Legislature that they should not downshift their budget woes upon the cities and towns, and the taxpayers that bear the burden of funding those governments. According to a Union Leader editorial, “That would be good for the state's bottom line, but it could be a disaster for municipalities.” (Union Leader,19 Feb 2009)

As Mayor, I never once asked for stimulus nor put together a stimulus wish list. I never lobbied the Governor or any other official in public or private to send stimulus funds to Manchester. Instead, I asked that State to restore Rooms & Meals and Revenue Sharing, and advocated that they instead cut spending to balance the budget. I have never supported using one-time money to fill a budget gap and I never will.

From the very beginning, I have opposed the stimulus plan because I don’t believe that our government’s role is to create jobs. Rather I believe that government needs to lift hindrances to private business like over regulation and high taxes. Only the private sector creates jobs; the government just needs to get out of the way. And this why our country is suffering from high unemployment because our elected leaders like Carol Shea-Porter think that they can just spend their way out any problem.


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March 7, 2009 Saturday


By GARRY RAYNO

New Hampshire Union Leader

MANCHESTER -- Uncertainty about future bond payments for Verizon Wireless Arena may be eliminated because Gov. John Lynch yesterday proposed restoring room-and-meals tax revenues to cities and towns.

In his budget address last month, Lynch proposed the state keep money allocated for local aid to help balance the state budget, but yesterday said federal stimulus money would restore the rooms-and-meals funds to municipalities.

Yesterday, New Hampshire Municipal Association officials praised Lynch's plans, but noted the state budget process still has a long way to go.

Lynch proposes taking $120 million from $201 million in stimulus funding allocated to states for education aid and using the money to replace $120 million of state money in the biennial budget for school aid. That would free up state money to restore $120 million of the proposed $187 million reduction in local aid.

Manchester Mayor Frank Guinta has scheduled a briefing for aldermen Tuesday on potential problems with paying for the arena should rooms-and-meals tax revenues for cities and towns be eliminated.

Manchester uses rooms-and-meals revenues from the state to pay off the $50 million bond for the arena. The city is counting on about $4.5 million for this year's payment for the 10,000-seat arena, which hosts concerts, high school graduations, and games played by the Monarchs and Wolves.

But officials say if the funding source goes away, the trustee, Bank of New York Mellon, could gain control of the facility. In a default, the trustee could foreclose and put the building up for sale, hire its own management company to run the arena as it sees fit or use revenue generated by the arena to retire the bonds.

The city is banking on an insurance policy protecting its rights to control the arena, but it's unclear whether the policy would accomplish that goal as intended. The insurer, ACA Financial Guaranty Corp., was caught up in the sub-prime mortgage fiasco, but recently reorganized and had its rating upgraded.

Under the worst circumstances, the city's bond counsel has suggested, the city's and the state's credit ratings could be lowered, although the state treasurer and others dispute his point. A downgrade would make it more expensive if not more difficult to bond major projects.

But all the discussion could be moot if lawmakers decide to restore all $187 million Lynch proposed eliminating, instead sending federal stimulus money to cities and towns, much of it for education.

After Lynch made his proposal, local officials protested, saying local services would suffer if aid were directed to school districts rather than to communities.

Yesterday, Pam Walsh, the governor's deputy chief of staff, said Lynch was sensitive to the need to be sure money went into the "right buckets" and will ask lawmakers to move the money around in the budget so communities get some aid restored.

Walsh noted the governor put together his budget before the federal economic stimulus package was finalized and it was unclear how much discretion states had in allocating the money.

Guinta said that while he was pleased Lynch restored the rooms-and-meals revenues to municipalities, he and other mayors and local officials will continue to work with Lynch to restore the $50.4 million in revenue sharing and the 5 percent reduction in payments to the state retirement fund for teachers, police and firemen.

"It's clear the governor feels his original proposal to suspend rooms-and-meals revenue was a mistake. (He) listened to a bipartisan group of mayors and town officials asking him to reverse his decision," Guinta said.

Manchester would stand to lose $3.9 million in revenue sharing and $600,000 in payments to the retirement fund.

Rooms-and-meals and revenue sharing are 40-year sources of funds for cities and towns, he said. "It's an error in judgment to take that money away and use it for the state deficit. To me, this is Phase 1 of three phases of things that need to be restored."

Ward 2 Alderman and state Sen. Ted Gatsas, R-Manchester, said yesterday he would rather see the rooms-and-meals and revenue-sharing money for local aid left alone and distributed under the current formula.

Before the arena was constructed, city officials decided to use rooms-and-meals money to pay for the project rather than ask city taxpayers to foot the bill.

William Craig, long-time attorney for the Manchester Housing and Redevelopment Authority, which issued the bonds, said the city's only obligation since Day 1 was to include the rooms-and-meals money for the bonds in the budget the mayor presents. "The city does not have to pay for this at all," he said.

The arena bonds are similar to revenue bonds issued for Manchester-Boston Regional Airport construction and repaid from revenues generated by the airport. "As long as the Verizon is doing well, there shouldn't be any concern about the bonds being paid off," he said.

Manchester's bond rating is AA+.

"We should definitely be concerned about our bond rating," Ward 7 Alderman Bill Shea said. "Extremely."

Shea said he supported the arena project as an alderman in the late-1990s but was concerned about plans to use rooms-and-meals tax dollars to finance it. He said he urged the board to consider using a portion of the arena's concession-stand revenues instead. "This was not considered at all," he said.

The arena bonds were recently rated a middling Baa3 by Moody's Investors Service. In December, the rating agency affirmed the bonds' "negative outlook," saying there is a "strong possibility that meals-and-rooms tax revenue will not experience growth sufficient to meet increasing debt service requirements over the near term."

To date, rooms-and-meals revenue -- about half of which is returned to cities and towns -- has been less than was collected a year ago. Through February of the 2009 fiscal year, the state collected $149.8 million in rooms-and-meals revenue compared, with $151.5 million a year ago.

New Hampshire Leader reporter Scott Brooks and The Associated Press contributed to this article.


EDITORIAL: Missing the memo; Our defiant school board The Union Leader (Manchester, NH) March 4, 2009 Wednesday
March 4, 2009 Wednesday

Gov. John Lynch needs to have a talk with the Manchester Board of School Committee. Its members clearly don't understand his plan for juggling public money.

In his new state budget, Gov. Lynch proposes keeping $117 million in rooms and meals tax money and $50 million in revenue sharing, all of which belongs by law to local governments. But he will make localities whole by giving them $120 million more in education aid and $160 million in federal stimulus money (much of which is earmarked for schools), he said.

Manchester school board members didn't get the memo. On Monday night, they proposed using next year's additional $7.4 million in state school aid to increase the city school budget.

Mayor Frank Guinta is not happy. He says, correctly, that the increased school aid was supposed to make up for revenue Gov. Lynch kept for use by the state. It should, therefore, go to the city to fill the hole Lynch created.

"They're in a different world," Guinta says. "They're not adhering to what at least 60 percent of other school boards are realizing."

The New Hampshire School Administrators Association says that 60 percent of the state's school districts plan to cut staff this year to reduce their spending. Not Manchester's. Here, it's spend, spend, spend.

The city schools account for more than half of all city spending. The mayor is trying to prevent a tax increase on people who cannot afford one by controlling costs in the less than 50 percent of the budget he controls. The school board is, as always, doing what it can to make sure taxes and spending go up, not down.

The aldermen need to join the mayor in making it clear that city schools are not going to get a budget increase this year. Spending has to come down to meet revenues. There is no other option. If the school board refuses to accept that reality, the aldermen have to make them by appropriating only what the city can afford.


EDITORIAL: Shifting costs down ; A Lynch property tax hike? The Union Leader (Manchester, NH) February 19, 2009 Thursday

February 19, 2009 Thursday:
Gov. John Lynch proposes balancing the state budget with money that rightly belongs to local governments. It's OK for the state to take that money, he says, because in exchange localities will get even more in state aid and federal stimulus cash. Eh, not necessarily.

The governor intends to suspend rooms and meals tax payments to local governments, which amount to $58.5 million a year, or $117 million over the life of the two-year budget. By tradition and state law, that money belongs to local governments. Legislators would have to change the law to allow the state to keep the cash.

That would be good for the state's bottom line, but it could be a disaster for municipalities. Manchester Mayor Frank Guinta estimates a loss of millions a year. Some of that money covers the city's bond payments on the Verizon Wireless Arena.

The governor also proposes keeping $25 million a year in revenue sharing money, which also legally belongs to local governments. And he wants to level-fund the state's portion of retirement plan cost-sharing, which would equal another $17 million over two years that localities would not receive.

Lynch says local officials shouldn't worry because he is increasing state education aid by $123 million over two years and local governments will get a total of $190 million from the federal stimulus bill. But much of the federal money is earmarked for schools. So while many school boards will have more money, towns and cities might lose millions.

They can make up for some of that by reducing the amount of local property tax revenue they devote to schools. But it is unclear whether every community will receive federal stimulus dollars. Some communities might do better under Lynch's proposal, but others might lose big time.

The governor deserves credit for some creative budgeting. But legislators need to study what this taking of local dollars will do to property taxes. It might not work out as well for localities as the governor suggests it will.

LOAD-DATE: February 20, 2009 Friday


"He should cut items in his own budget, not ask cities and towns to do it for him," said Manchester Mayor Frank Guinta, a Republican. "He shouldn't rely on a federal stream of money to dig the state out of its hole."


Guinta insisted he had no intention of asking the federal government for a handout, at least until federal or state officials ask the city to come forward with some requests. Lopez said he wants the board to put together a list of projects it would like to launch, in case the money really does become available.

Guinta confessed he had had two conversations with U.S. Rep. Carol Shea-Porter in which, he said, "she asked what earmarks I was interested in." But he maintained he wasn't ready to put anything in writing, saying, "I don't think it's appropriate to send a message to people that we're anticipating money. There's no legislation; there's just discussion about it."


EDITORIAL: Begging for bailouts; It's magic money time! The Union Leader (Manchester, NH) January 5, 2009 Monday

Manchester is putting together a list of its top priorities in case a sack of federal stimulus package cash falls from the sky. That's not a bad idea. It's good to be prepared. An even better idea is what Mayor Frank Guinta and Gov. John Lynch are doing: budgeting under the assumption that no stimulus money will arrive.

Mayor Guinta told us last week that he has no intention of including stimulus package money in any of his budget preparations. The city should get its own budget in order without hoping for miracle money from D.C., he said.

Though Guinta and Lynch are taking the right approach, some aldermen, state department heads and officials in other cities are or are considering actively pitching Washington for cash.

Though any money that would come is supposed to stimulate the economy, most of the projects floated would do no such thing. Sprucing up city parks and upgrading municipal buildings won't create permanent jobs for anyone. But that won't prevent such projects from making the wish lists. Hey, if Washington is passing out free money, why not ask, right?

It is good to see that at least Guinta and Lynch are resisting the temptation to beg for bailouts. More public officials should exercise such restraint.