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Governor Lynch had some good news to announce for a change today: the state actually ran a budget surplus of $70 million in Fiscal year 2010 (July 1, 2009 to June 30, 2010). This is not a structural surplus: the next budget will still start out several hundred million dollars in the hole. But nevertheless the state government actually has positive cash flow.
$20 million of the surplus comes from larger than expected lapses: the last budget anticipated $23.6M in lapses, but there were $44M. Lapses are money which is appropriated but not spent when (for example) a worker leaves his or her job and the state doesn't have to pay the salary while a replacement is being recruited.
The Union Leader is reporting that Belknap Superior Court Justice Kathleen McGuire has ruled the state cannot take 110 million dollars from the Joint Underwriters Association, a malpractice insurance fund created, but not controlled by the state.
A group of doctors, hospitals and other medical care providers challenged the state's attempt to tap surplus funds, arguing the surplus should be paid back to them through rebates or lower premiums.
The state is appealing the ruling. Actually, both sides said they would appeal a decision not in their favor.
If this ruling is allowed to stand, it will create a huge hole in an already tight budget.
(H/t to Kathy Sullivan)
More (Dean): Statements from Terie Norelli and John Lynch below the fold...
(Quitting like Sarah for dreams of higher things. So much for promises. - promoted by Dean Barker)
AP is reporting that Attorney General Kelly Ayotte - the woman who appears to have cost the state a budget shortfall of $110 million - is resigning to run for U.S. Senate:
New Hampshire Attorney General Kelly Ayotte is resigning to explore a campaign for U.S. Senate. Ayotte submitted her letter of resignation to Gov. John Lynch, effective Friday, July 17. In a statement Tuesday, Ayotte says many people have urged her to run. She said she made her decision after discussing the matter with her husband, Joe.
Tom Fahey of the UL is reporting that the House and Senate Committee of Conference has come to an agreement on the budget. Each chamber has to vote on it as a whole as well.
Cuts to social services include assistance to the developmentally disabled. There is a waiting list for services for young people who age out of the school system. Often family members must quit their jobs to care for disabled adult children at home because no programs are available to them in the community. Last session, the legislature voted to fund these services. State workers may be asked to take one unpaid day off a month. Also, the state will give less support for special ed ($13 million cut in total).There will be money for charter schools ($5450 per student as opposed to $3450 for regular public schools), but there was also a moratorium placed on new charter schools. Allenstown homeowners are getting $650k for flood damage. Money for senior volunteer programs was restored.
Just read this report by Tom Fahey at the UL. It seems the House side of the committee of conference voted down expanded gambling. The votes aren't there, for one thing, and Finance Committee Chair Marjorie Smith (D-Durham) does not believe it is a long term solution.
"I have no problems with gambling. What I do have a problem with is that I do not believe that gambling is a reliable funding source," Smith said, adding that her preference is an income tax.
Representative Dan Eaton (D-Stoddard) confirmed the votes in the House are not there.
I cannot count to 201," he said, praising D'Allesandro's dedication.
For their part, the Senate refused to allow the estate tax and the capital gains tax to move forward.
According to Fahey, the state will tap into the "Rainy Day Fund" and then still have to close a $30 million hole in the present budget.
Plans waiting in the wings when talks resume today would close a key business tax loophole, set a new tax on mortgage refinancing, boost the Rooms and Meals tax rate and possibly create a tax on entertainment.
If you feel strongly about the refinancing tax, call the Governor and your State Senator and Reps and register your opinion. Once it's put in, it will be very difficult to change down the road.
The subject of the week is the state budget, which has to be approved by the end of the month. The House and Senate Conference Committee is set to meet this week to come up with a final plan. The shortfall is $150 million and there are a few ideas on the table to bridge that gap.
Republicans are yelling cut! cut! cut! To Lynch's credit, this quote from the article about the refinancing tax, shows his thinking on that:
Lynch said he does not support an across-the-board spending cut as a solution. He called that option "simplistic and poor financial management." He said he will consider specific cuts but said he and lawmakers have already made deep cuts, which will result in about 200 layoffs.
Reducing state services, particularly to the needy, would simply redirect them to communities and their welfare offices, Lynch said.
The NH House passed the budget bill on Wednesday and the budget trailer bill (the bill that makes changes to laws so the budget actually works) on Thursday. The opposition party proposed more than 10 amendments to strip out revenues, including one that would hand out an additional $5 million to insurance companies in the state (talk about screwed-up priorities). None passed. They also proposed to balance the budget by magically reducing total expenses by 13% without saying where and how, or worrying if it is even possible. Now that's responsible!
(This is where the rubber meets the road. - promoted by Jennifer Daler)
As a result of the economic recession, the NH House votes today on a budget that is likely to be the toughest in living memory. Like virtually every state in the country, we are facing a double fiscal whammy- rapidly shrinking revenues (the biggest single source of money is business profits and these are in the cellar right now) and ballooning demand for state services. Federal stimulus money is helping, but not enough.
(Title threw me for a bit... - promoted by Dean Barker)
The Center for Budget and Policy Priorities periodically provides an update on the deteriorating situation with the various states' budgets. Their latest update came out last week (http://www.cbpp.org/9-8-08sfp.htm). Here is the nickel tour, focusing on NH.
President-elect Obama is to meet with the nation's governors next week to discuss the severe economic crisis facing the states.
Many economists think that aid to state and local governments should be tops on the agenda for any new stimulus spending, as they have less borrowing authority than the federal government during an economic downturn. That means that states are slashing budgets as the slowdown causes tax revenues fall.
Already the Governor has cut 25.4 million dollars from the Health and Human Services budget. From the news reports, it was unclear to me whether this number takes the federal matching monies into account. Whatever money the state cuts will also be cut in terms of federal grants coming in to the state.
I'm not sure whether Governor Lynch is attending, but assuming he is, what should he tell the President-elect? What should he request for our state?
(Part put below the fold. - promoted by Dean Barker)
John Lynch stood his ground, with Democrats in the Senate and the House, when the Republicans tried their mischief on Wednesday night. This is not the time to let petty political concerns masquerading as principled policy, not the time to let them raid the rainy day fund, now $89,000,000.00 and growing.
http://www.politickernh.com/br...
House, Senate finish year with special session
By Brian Lawson
CONCORD- Late last night the House and Senate finished their legislative year with a special session.
The session was called by Gov. John Lynch (D-Hopkinton) to attempt to close the looming budget deficit.
During the session, lawmakers approved the bonding of school aid, allow the community college system to sell the Stratham system and require the Pease Development Authority to repay the state $10.5 million.
"We've acted to ensure the state remains on solid ground financially as we weather the national economic downturn. This will help us preserve our ability to provide essential state services," said Senate President Sylvia Larsen (D-Concord) in a statement.
We read with interest Managing Editor Rick Fabrizio's column on Sunday, "$50 million reasons to question NH budget." We appreciate Mr. Fabrizio's interest in the state budget and its impact on New Hampshire taxpayers, but we would like to clarify a few issues for Seacoast readers.
Governor John Lynch delivered his state budget to the Legislature this past week. In it are peeks of New Hampshire's future.
On the sunny side, he stepped up funding for conservation programs, "LCHIP" preservation, environmental protection, energy research, tourism marketing, and transportation needs. He also supported needed funding for AIDS service agencies to replace lost federal funds, and adding more of our young to the Healthy Kids Program. All good things. Thank you, Governor.
But there are storm clouds on the horizon. John Lynch proposes "investing," as he calls it, in additional advertising to get people to buy more lottery tickets and to visit our state liquor stores more often. He also wants to have an auction on moose hunts (some 50 up for bid per year), meaning the rich will probably put in the highest bids to take a shot at their favorite animal head for their wall display. Not so good, Governor.
