State Finances Can’t Depend on Unstable Currency –Union Leader op-ed

SINCE REGAINING the majority in the New Hampshire House of Representatives last November, the Republican leadership has promised responsible fiscal stewardship. Arguably, however, the most fiscally irresponsible bill this year is sponsored by Republican legislators. House Bill 552 would require the state to accept the digital currency bitcoin as payment for taxes and fees.Many people have never even heard of Bitcoin. It is a virtual currency introduced in 2009. Unlike major currencies, however, such as the dollar or euro, it has no central repository, and it is extremely volatile. From a high of $900 in late 2013, the value of a bitcoin has dropped to its current value of $224. That’s a drop in the value of the currency of 75 percent in less than a year!It would be supremely irresponsible for the State of New Hampshire to gamble with the public’s money by taking payments in such an unstable currency. Right now, New Hampshire’s cash reserves are approximately $160 million. Imagine if, all of a sudden, that reserve was worth 70 percent less. It would become more expensive to pay our financial obligations, for example, on our $1.6 billion of bond debt.Bond rating agencies look for stability and prudent fiscal policy. New Hampshire’s bond rating outlook was just improved to “stable” by Standard & Poor’s, due in large part to the settlement of a large hospital lawsuit. Currently, our average interest rate on outstanding general obligation debt issued in the last 10 years is just over 3 percent. This rate is based in large part on our bond ratings. It’s difficult, if not impossible, to imagine our bond ratings not being downgraded if our cash flow was dependent on such a volatile currency!Our financial obligations are not only to our debt service. We have 15,000 state employees whose families’ security depends on their paychecks not bouncing. We send money to our local communities to help pay for schools. We pay contracts to thousands of outside companies as well, and we also have financial obligations such as for rent and to the utility companies for lights and heat on 3.4 million square feet of building space.Imagine if we had to meet all these obligations and were doing so based on revenue collected that could be worth significantly less the day after it was received.The New Hampshire House has a long history of working hard to build responsible, frugal budgets that deliver essential services without overburdening taxpayers. Accepting tax and fee payments in bitcoin is not in keeping with responsible fiscal stewardship.We cannot afford to take our bonds to market with a scheme to pay the debt in a currency CNN recently termed “worse than the Russian ruble.” We cannot pay our employees with what Bloomberg has called “the worst currency of 2014.” Our state can and must be governed responsibly if we are to retain our New Hampshire Advantage.

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