New Hampshire state budget

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New Hampshire received a wave of late tax payments from businesses that bumped the state's surplus for Fiscal Year 2010 to $63 million the state announced on July 21, 2010. Gov. John Lynch had been estimating a surplus of $25 million.^[1] Lawmakers made $150 million in budget cuts to state agencies and the judicial branch for FY2010 because the surplus amount was unknown. The business tax payments do not change the size of the Rainy Day Fund that is roughly $9 million, down from nearly $90 million when Lynch began his third, two-year term in 2007.^[1] Since 2006, New Hampshire's debt has increased by 30 percent, from $634 million to $823 million.^[2]

New Hampshire will receive approximately $96 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.^[3]

See also: The New Hampshire State Budget on State Budget Solutions

[edit] Fiscal Year 2012-2013

New Hampshire will begin its next biennial budget cycle on July 1, 2011, encompassing FY2012 and 2013. Gov. Lynch began planning for that budget in June 2010 when he announced plans to cut spending by 5 percent in each of the next two years for the budget cycle that begins July 1, 2011.^[4] He did so in light of the fact that the state faces a $300 million hole due to a combination of a built-in inflation increase and lost stimulus money.^[4] Lynch encouraged state agencies to centralize programs and purchasing and specifically called cuts in overhead, including building costs, telecommunications, consultants, travel, equipment and printing costs.^[4]

[edit] Fiscal Year 2011

New Hampshire has a budget of $11.5 billion, including federal and other funds, for the two-year period that ends June 30, 2011.^[5] On June 9, 2010, the New Hampshire House of Representatives in a one-day special session voted 177-167 to pass the supplemental budget measure, Special Session House Bill 1, which closed the state's projected $295 million budget gap using a combination of spending cuts, borrowing, and potential state land sales.^[5] The House and Senate had been at an impasse regarding the inclusion of gambling in the bill addressing the budget deficit, and the issue of gambling was removed and put in a separate bill.^[5]

The state relied on $48 million in federal Medicaid assistance that has not been approved by Congress^[6], but received only $29 million because the state's unemployment rate dropped to 5.9% and states with higher unemployment rates received more federal money.^[7] Federal education officials estimated the $41 million New Hampshire will receive in federal funds for education would save 700 teachers' jobs, but state education officials say that estimate is likely too high.^[7]

Gov. Lynch signed the budget bill, which bore resemblance to the proposals that Lynch had offered in March to the problem though, at that time, the deficit estimate was only $220 million.^[8] The state ended FY2010 with a smaller deficit than had originally been projected, in part due to better than expected revenues in June 2010.^[6] However, the state has also relied on several large transfers between Fiscal Years that make the FY10 deficit look smaller than it actually is.^[6] One example is the shifting of over $80 million in federal stimulus money from FY11 to FY10: the American Recovery and Reinvestment Act sent $80,078,000 to New Hampshire in each year, but the new budget credits the entire $160,156,000 to FY10.^[6]

In the supplemental bill, the legislature offset the deficit with transfers from the state’s Rainy Day Fund and Education Trust Funds, which are scheduled to be returned in FY 11^[6] Lawmakers approved his non-budget cutting proposals to generate $40 million in savings by stretching out the state’s borrowing schedule and a $25 million payment from the University System of New Hampshire to support the same amount of state-backed bonds for maintenance upgrades on the campuses.^[8] Gov. Lynch suggested that the state allow the University System to add $25 million to the Capital Budget next year and because the Capital Budget is separate from the General Fund, repayment of the $25 million loan will not be included when the state determines its deficit.^[6]

It also includes in revenue $60 million from the sale of state assets that have yet to be identified.^[6] Recently, the state found out it might receive an additional $22 million from the state bailout bill.^[9]

The bill requires state agencies to save $44 million by eliminating equipment purchases, leaving vacant jobs unfilled and restricting travel out of state, in addition to requiring agencies to make approximately $52 million in specific spending cuts.^[5] Programs targeted for reductions include a land conservation program, reducing state aid to schools with severely disabled students by $8 million^[8], energy efficiency measures funded by the state's regional greenhouse gas initiative, the judicial branch and payments to hospitals.^[5] Additionally, Lynch is asking that all department trim their budget by 5 percent.^[10]

In terms of raising funds, the budget fix bill would raise tobacco taxes on products such as snuff but not on hand-wrapped cigars and cigarettes, and also freezes a tax on insurance premiums at 1.25 percent instead of letting it drop to 1 percent in January. It also repeals the extension of a tax on investment interest and dividends to include the earnings of some owners of limited liability companies and partnerships.^[5]

$110 million for the budget was to come from the New Hampshire Medical Malpractice Joint Underwriting Association, which was blocked by legal action in July 2009. Superior Court Judge Kathleen McGuire sided with the policyholders, ruling that the state's claim to the malpractice money is unconstitutional. The case has gone to the New Hampshire Supreme Court.^[11] The state employee union rejected Gov. Lynch's plan of taking 19 unpaid furlough days to balance the budget after receiving 2 years of 10% salary raises. Gov. Lynch announced in October of 2009 250 layoffs of state workers to save $25 million after the union rejected the furlough plan.^[12]

The state is also applying for bonds four months early, $90 million in tax-exempt bonds, and $60 million in Build America Bonds, which are authorized under the American Recovery and Reinvestment Act (ARRA).^[13]

[edit] Budget Background

New Hampshire does not have a state income tax.^[14] New Hampshire operates on a biennium, covering two fiscal years at a time. A fiscal year begins on July 1 and ends on June 30 of the following year, however the biennium begins July 1 of odd-numbered years. According to the state Constitution the Governor must pass a balanced budget and cannot carryover deficits. ^[15] Initially individual state agencies submit their budget requests in the fall, prior to the Governor's completion of the recommended budget. At the beginning of the Legislative session the Governor presents a recommended budget to both the House and the Senate. But before the bill can be enacted into law the bill must pass both houses in the Legislature. ^[16]

[edit] Budget figures

The following table provides a history of New Hampshire's expenditures and gross domestic product (GDP).

• NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
• See New Hampshire state budget (2008-2009) for more information.

[edit] Budget transparency

In June 2010 New Hampshire launched a new website ^[18] to improve transparency in state spending and released the first monthly Governor's Expenditure Report ^[19] on July 16, 2010 for the months of May and June 2010 . The information is broken down by department, agency, and expense category and is searchable in both excel and PDF formats.

The site also includes other important financial information, including budgetary information ^[20] (bottom right corner of web page) and revenue reports ^[21].

[edit] Government tools

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

See also: Evaluation of New Hampshire state website

[edit] Economic Stimulus Transparency

New Hampshire will receive approximately $70 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010. The state received $29 million for Medicaid and $41 millionfor education.^[7]

New Hampshire received an estimated $592,154,447 from the American Recovery and Reinvestment Plan of 2009 ^[22] Of this $359 million of it is stimulus money went towards operational costs for the state, instead of one time projects.^[23] $44.4 million of the stimulus funds will go towards New Hampshire developing a broadband network to rival private sector companies.^[24]

The Office of Economic Stimulus claims that the stimulus money created 8,303 jobs, and saved an additional 361 jobs were saved or created through direct grants to colleges, health centers and other agencies that state does not control.^[25]

• The economic recovery website to show how legislators and government officials in New Hampshire are spending Federal funds is available here.

[edit] Error in ARRP

On November 16 and 17, 2009, many errors were found in the $747 billion plan that showed the plan set aside money for districts that do not exist. According to Recovery.gov, the plan shows its funds will go to 884 Congressional Districts, though there are only 435.^[26][27]

The ARRP website invented three or four more Congressional Districts in New Hampshire, creating 2,879.1 jobs in these non-existent Districts (2,873.9 of which were in the 00 Congressional District, though one does not exist), using $197,167,473.^[28]

[edit] Independent transparency sites

None.

[edit] Public employee salary information

See also New Hampshire state government salary

Public employee salaries for 2008 have been obtained by the New Hampshire Union Leader and can be found at this site.

[edit] Accounting Principles

Main article: New Hampshire government accounting principles

The Office of Legislative Budget Assistant (LBA) was created in 1953 to conduct investigations, analyses, or research into the financial activities of New Hampshire State government entities. Pursuant to RSA 14:31, the Office consists of two divisions, the Audit Division and the Budget Division. The legislative budget assistant is appointed by the joint legislative fiscal committee prior to the beginning of each regular session of the legislature, and is responsible for the proper execution of the respective functions of the audit and budget divisions. The LBA's audit reports are published online. Jeffry A. Pattison is Legislative Budget Assistant.^[29]

The Institute for Truth in Accounting (IFTA) rates New Hampshire “Tardy” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider New Hampshire's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[30] New Hampshire's CAFRs are prepared and published online by the New Hampshire Department of Administrative Services, Division of Accounting.^[31]

The Division of Accounting Services is headed by the State Comptroller and is divided into two bureaus:^[32]

• Bureau of Accounting
  • Responsible for developing, administering, and maintaining the State's integrated financial system (IFS) of governmental appropriation accounting and State's payroll.
• Bureau of Financial Reporting
  • Monthly Revenue Focus - The State's Monthly Unrestricted Revenue Report.
  • Annual Reports - The State's Annual Report to the Citizens, Comprehensive Annual Financial Report, the Supplemental Budgetary Financial Data Report, and the State Owned Real Property Report.
  • Interim Reports - Unrestricted Revenue Financial Review, Monthly Fund Appropriation and Undesignated Fund Balance, 10 year Trend and other special reports as requested.

Stephen C. Smith is Acting Comptroller.^[33]

[edit] Economic Stimulus Package

New Hampshire is expected to receive $750 million from the $787 billion dollar economic stimulus.^[35] All told, the federal stimulus plan would create or save 16,000 jobs in New Hampshire, based on White House estimates. ^[36]
For more information on how the federal stimulus funds are being used in the state of New Hampshire, visit the state recovery website.

According to preliminary reports, New Hampshire is expected to receive:

• $258.3 million for education ^[37]
• $250 million in Medicaid funding ^[37]
• $129.4 million for transportation ^[37]
• $47 million for special education ^[37]
• $200 million for state stabilization funding ^[37]

[edit] See Also

New Hampshire taxpayer-funded lobbying

[edit] External links

[edit] Additional reading

• Gov. John Lynch,"Inaugural address," January 8,2009
• Gov. John Lynch,"Budget Address," February 12,2009

[edit] References

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