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New Hampshire state budget

New Hampshire
Biennial
Fiscal Year 2012-2013
Signed into law July 13, 2011
GF Revenue


New Hampshire began its current biennial budget cycle of FY2012 and FY2013 on July 1, 2011. Gov. John Lynch signed the $224 million budget, including an $88 million public works budget, into law on July 13, 2011.[1]

New Hampshire has a total state debt of approximately $14,955,434,000 when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the budget gap. [2]

See also: The New Hampshire State Budget on State Budget Solutions
2011 State spending & deficit in billions[3]
Total spending Pension Health care Education Welfare Protection Transport Debt
$6.9 $0.6 $1.5 $1. $0.9 $0.4 $0.6 $9.4
2011 Local spending & deficit in billions[3]
Total spending Pension Health care Education Welfare Protection Transport Deficit
$6.5 $0.0 $0.0 $2.5 $0.3 $0.7 $0.3 $3

[edit] Fiscal Year 2012-2013

New Hampshire began its current biennial budget cycle on July 1, 2011, encompassing FY2012 and 2013. House Bill 1 and House Bill 2 constitute the budget. Gov. John Lynch signed the $224 million budget, including an $88 million public works budget, into law on July 13, 2011.[4]

Medicaid

In the FY2012 state budget, the state is taxing hospitals 5.5 percent on net patient revenues. Th state is also lowering payments for caring for the poor by $115 million. For many years, the state taxed the hospitals to gain matching federal Medicaid funds, then returned the amount of the tax to the hospitals so they effectively lost no money. From 1991 through 2009, the lawsuit estimates the state acquired $1.8 billion in matching federal money this way. Hospitals anticipates paying $250 million under the new tax over the two-year budget. [5]

Ten hospitals sued New Hampshire in federal court claiming that the state violated the the federal Medicaid Act by making deep cuts to their reimbursement for budgetary reasons, not out of consideration of what amount was needed to adequately cover the costs of treating Medicaid patients. [5]

The state also faces the possibility of having to repay $35 million in Medicaid funds that the federal government determined were improperly used by the state. The state is challenging the decision, but has also developed a contingency plan for making $35 million in cuts to the state budget to free up the money that may be needed to repay the federal government.[6]

[edit] Budget Fix

On Sept. 7, 2011, the Senate passed a budget fix that would help with the repayment of the Medicaid funds by saving the state $8 million a year with cuts to welfare benefits for recipients who also get federal Supplemental Security Income Program checks. The House passed the bill on Oct. 12, 2011, by a vote of 237-126, but Speaker William O'Brien insisted on an amendment dealing with marital masters, who preside over family law and divorce cases, which sent the bill back to the Senate instead of to Gov. Lynch for his signature. [7] Senate President Peter Bragdon, however, said he has no intention of reconvening the Senate to act on any additional budget cuts by the before the new session in January.[7][8] As of Oct. 12, 2011, the delay has cost the state $2 million and waiting until January for the Senate to act would cost another $2 million.[9]

[edit] Union issues

The New Hampshire House approved House Bill 2, a key piece of its $10.2 billion budget package that would make deep cuts to social and health programs and which limited collective bargaining rights, on March 30, 2011.[10] House Bill 2 limits ability of labor unions representing state workers to collectively bargain on issues like wages, hours, working conditions and benefits, and labor union members rallied at the Capitol the following day. It also makes public workers at-will employees if their contracts end before a new contract is in place.[10] The measure, however, is believed to have little backing in the Senate and is opposed by Gov. Lynch, a Democrat.[11] He vetoed legislation that would make New Hampshire a right to work state, meaning it would have barred unions from collecting a share of bargaining and administrative costs from nonmembers.[12]

Gov. Lynch announced on July 29, 2011, that the state had reached tentative agreements with negotiators for three labor unions on contracts that will save the state nearly $50 million and avert the need to lay off potentially 500 workers in September.[13] The contract that the State Employees Association and state entered into contains roughly $40 million in savings which come primarily from changes to the health insurance plan, as well as a freeze on pay hikes and regular step increases. [14] The state continues to bargain with several other unions that represent state troopers, Fish and Game officers, corrections workers and liquor enforcement officers.[14]

Gov. Lynch issued an executive order freezing the salary of executive branch employees not covered by a union agreement. The executive order is effective through Aug. 30, 2012.[14]

[edit] Legislative Proposed Budget

The legislature passed House Bill 1, the two-year $10.3 billion state budget, as well as House Bill 2, its massive trailer bill, on June 22, 2011. The closest vote was on House Bill 2, which passed by a vote of 259-119, eight votes more than needed to override a veto. The budget cuts state aid to higher education 45 percent, the largest cut by any state this year, and could make New Hampshire the first state in 50 years to reduce the cigarette tax. The budget also ends a 20-year practice of repaying hospitals all that they pay the state in a legal bed tax used to generate bonus, federal Medicaid money for New Hampshire’s government.[15]

On June 16, 2011, House and Senate negotiators approved a $10.3 billion biennial budget. As part of the compromise, the budget lowers the cigarette tax from $1.78 to $1.68 cents exchange for the Senate getting its education funding plan and a bill to streamline the shoreland protections permitting process. Legislators are scheduled to vote on the plan the week of June 20, 2011.[16]

On June 9, 2011, House and Senate members began negotiating a compromise on the state's new budget in a conference committee. The committee consists of three members from the Senate and five from the House. Both chambers' plans cut spending and assume modest revenue growth over the next two years, although the Senate budget spends $70 million more than the House version and the Senate assumes that the state will take in about $40 million more in tax revenue over the next two years. Estimates of a revenue shortfall for the year range between $53 and $47 million dollars.[17]

The proposed House legislative budget would spend 11.3% less from the state operating budget and general and education funds than in the prior budget, resulting in an actual cut of $564 million. The budget trims local aid by around 4%, to $2.2 billion, most of which is for schools. The biggest disagreement comes over the state government portion of the budget which the House budget writers reduced by 19% $481 million.[18]

[edit] Governor's Proposed Budget

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.[19] He did so in light of the fact that the state faced a $300 million hole due to a combination of a built-in inflation increase and lost stimulus money.[19] 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.[19]

Gov. Lynch presented his proposed $10.7 billion budget to the legislature on Feb. 15, 2011. It is 7% less than the prior year's budget. The governor's proposed budget does not raise or create new taxes, and it utilizes no one-time money to plug shortfalls. The proposed budget eliminates 900 unfilled state jobs and lays off 255 state employees.[20]

The proposed budget renews a $30 surcharge on vehicle registrations that had been set to expire and cuts the $150 per student subsidy for driver's education.[20]

Lynch said he wants to maintain state school aid at the current level for the next two years, giving communities the same amount they received this year.[20]

Restructuring

Gov. Lynch's proposed budget makes several structural changes to the state government. He proposed streamlining community mental health and developmental disability centers by eliminating administrative positions at six agencies and eliminating the Post-Secondary Education Commission all together. The budget also cuts payments to hospitals and would use the money for Medicaid programs.[20]

The budget would give the prison system received more money than the prior year, but the governor asked private companies to submit proposals to operate parts of the system.[20]

In March 2011, House budget writers were considering making perhaps $450 million in additional cuts and holding hearings.[21]

[edit] Budget transparency

In June 2010 New Hampshire launched a new website to improve transparency in state spending and released the first monthly Governor's Expenditure Report [22] 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 [23] (bottom right corner of web page) and revenue reports [24].

In December 2010, the state launched [1] which shows sources of state money, how it is spent and an outline of the budget process which includes links online to budget documents..[25]

[edit] Government tools

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

Criteria for evaluating spending databases
State DatabaseSearchabilityGrantsContractsLine Item ExpendituresDept/Agency BudgetsPublic Employee Salary
Transparent NHY
600px-Yes check.png
Y
600px-Yes check.png
P
Partial.png
Y
600px-Yes check.png
Y
600px-Yes check.png
Y
600px-Yes check.png
  • Transparent NH's applications are searchable.[26]
  • Grants are viewable as a class when navigating the expenditure report.[27]
  • Contracts are listed under expenditures, but details are not provided.[27]
  • Line item expenditures are listed in the Expenditure Report.[27]
  • The site links to agency and department budget requests.[28]
  • Employee salaries are published.[29]
See also: Evaluation of New Hampshire state website

[edit] Fiscal Year 2011

Find the state’s FY2011 Comprehensive Annual Financial Report (CAFR) compiled by the state government here.

New Hampshire had a FY2011 budget of $11.5 billion, including federal and other funds, for the two-year period that ends June 30, 2011.[30] 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.[30] 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.[30][31]

[edit] Lawsuit

Four New Hampshire residents have sued the state to restore $4 million to the Judicial Branch budget. As a result of the cuts, the judicial branch close one Friday per month and jury trials in civil cases have been scaled back. Four state residents sued the state, asking that the funding be restored so that they can get prompt trials in their civil cases.[32] The case was filed in Merrimack Superior Court.

In addition to restoration of funding for this year, the suit requests an order that the state provide adequately fund for the judicial the branch in the future.[33]

[edit] Federal Funds

New Hampshire received 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.[34]

The state relied on $48 million in federal Medicaid assistance that has not been approved by Congress[35], 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.[36] 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.[36]

The state also applied 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).[37]

[edit] Passage of Budget

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.[38] The state ended FY2010 with a smaller deficit than had originally been projected, in part due to better than expected revenues in June 2010.[35] However, the state has also relied on several large transfers between Fiscal Years that make the FY10 deficit look smaller than it actually is.[35] 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.[35]

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[35] 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.[38] 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.[35]

It also includes in revenue $60 million from the sale of state assets that have yet to be identified.[35] Recently, the state found out it might receive an additional $22 million from the state bailout bill.[39]

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.[30] Programs targeted for reductions include a land conservation program, reducing state aid to schools with severely disabled students by $8 million[38], energy efficiency measures funded by the state's regional greenhouse gas initiative, the judicial branch and payments to hospitals.[30] Additionally, Lynch is asking that all department trim their budget by 5 percent.[40]

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.[30]

$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.[41] 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.[42]

[edit] Budget Background

New Hampshire does not have a state income tax.[43] 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. [44] 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. [45]

[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.[46]

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.[47] New Hampshire's CAFRs are prepared and published online by the New Hampshire Department of Administrative Services, Division of Accounting.[48]

The Division of Accounting Services is headed by the State Comptroller and is divided into two bureaus:[49]

  • 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.[50]

Credit Rating Fitch Moody's S&P
New Hampshire[51] AAAa2AA

[edit] Stimulus

New Hampshire has received $0.978 billion in federal funding from the American Recovery and Reinvestment Act of 2009.[52]

[edit] Public Employees

Main article: New Hampshire public employee salaries
Main article: New Hampshire public pensions

According to 2008 Census data, the state of New Hampshire and local governments in the state employed a total of 87,006 people.[53] Of those employees, 61,395 were full-time employees receiving a net pay of $241,494,405 per month and 25,611 were part-time employees paid $28,122,822 per month.[53] More than 60% of those employees, or 52,352 employees, were in education or higher education.[53]

[edit] External links

[edit] Additional reading

[edit] References

  1. ↑ The Boston Globe "Lynch signs $88M public works budget for NH" July 13, 2011
  2. ↑ State Budget Solutions “Report reveals aggregate state debt exceeds $4 trillion” Oct. 24, 2011
  3. ↑ 3.0 3.1 USA Spending, State Guesstimated* Government Spending
  4. ↑ The Boston Globe "Lynch signs $88M public works budget for NH" July 13, 2011
  5. ↑ 5.0 5.1 The Boston Globe "10 hospitals sue NH over Medicaid funding" July 25, 2011
  6. ↑ The Concord Monitor "State to propose $35 million in cuts" Sept. 14, 2011
  7. ↑ 7.0 7.1 The Boston Globe "NH House approves budget fix with a catch" Oct. 12, 2011
  8. ↑ Concord Monitor Sept. 22, 2011
  9. ↑ The Boston Globe "NH House approves budget fix with a catch" Oct. 12, 2011
  10. ↑ 10.0 10.1 The Union Leader "Collective bargaining changes pass NH House" March 3, 2011
  11. ↑ CNN.com "New Hampshire workers rally against collective bargaining limits" March 31, 2011
  12. ↑ The Wall Street Journal "New Hampshire Governor Vetoes Antiunion Bill" May 11, 2011
  13. ↑ The Boston Globe "NH, labor unions agrees on new contracts" July 29, 2011
  14. ↑ 14.0 14.1 14.2 The Union Leader "Salary freeze: Lynch makes it official" Sept. 27, 2011
  15. ↑ The Nashua Telegraph June 2, 2011
  16. ↑ The Boston Globe "NH negotiators agree on $10B budget" June 16, 2011
  17. ↑ New Hampshire Public Radio "Next Round of Cuts: Budget Conference Commmittee Begins" June 8, 2011
  18. ↑ New Hampshire Watchdog.org "The state budget by the numbers" April 6, 2011
  19. ↑ 19.0 19.1 19.2 The Nashua Telegraph "Lynch seeks spending cuts across board " July 14, 2010
  20. ↑ 20.0 20.1 20.2 20.3 20.4 Bloomberg "NH gov: Budget proposes restructuring government" Feb. 16, 2011
  21. ↑ Businessweek "NH gov's $11B budget proposal gets hearing" March 6, 2011
  22. ↑ May/June 2010 Spending Report.http://www.nh.gov/transparency/index.htm/
  23. ↑ Budget Information.http://www.gencourt.state.nh.us/
  24. ↑ Revenue Reports.http://admin.state.nh.us/accounting/reports.asp#Monthly%20Revenue%20Focus/
  25. ↑ Boston.com "NH launches new site on state revenue, spending" Dec. 25, 2010
  26. ↑ Transparent NH Search
  27. ↑ 27.0 27.1 27.2 Transparent NH Expenditure Report
  28. ↑ NH Budget Office
  29. ↑ Pay Transparency Search
  30. ↑ 30.0 30.1 30.2 30.3 30.4 30.5 Business Week "New Hampshire House passes $295M budget fix" June 9, 2010
  31. ↑ New Hampshire Watchdog, NH budget expert: spend less to fix budget mess, Dec. 23, 2010
  32. ↑ The Boston Herald "Four NH residents sue state over court budget cuts" Oct. 1, 2010
  33. ↑ The Nashua Telegraph "Residents sue NH to restore $4m in court budget cuts" Sept. 29, 2010
  34. ↑ Federal Fund Information for States “ARRA FMAP Extension & Education Jobs Fund Totals” Aug. 11, 2010
  35. ↑ 35.0 35.1 35.2 35.3 35.4 35.5 35.6 Newhampshire.watchdog.org "New Hampshire masks large budget hole" July 1, 2010
  36. ↑ 36.0 36.1 [Businessweek "Unclear if NH schools will get federal jobs funds" Aug. 14, 2010 ]
  37. ↑ New Hampshire Watchdog, New Hampshire borrowing $150 million for capital projects this week, Aug. 23, 2010
  38. ↑ 38.0 38.1 38.2 The Nashua Telegraph "Lynch OK's plan to erase deficit" June 11, 2010
  39. ↑ New Hampshire Watchdog, N.H. expects $22 million pick-me-up, Aug. 6, 2010
  40. ↑ New Hampshire Watchdog, Lynch orders 5 percent cuts for next two years, July 14, 2010
  41. ↑ Insurance Journal, "New Hampshire Argues Claim to $110M Malpractice Fund," October 15, 2009
  42. ↑ Concord Monitor, "NH gov explains layoffs in letter to supporters," October 20, 2009
  43. ↑ Govspot.com, "Which states have no income tax," retrieved October 31, 2009
  44. ↑ INPUT,"State Budget Process Tutorial," retrieved April 15,2009
  45. ↑ State of New Hampshire,"Annual Financial Reports," retrieved April 15,2009
  46. ↑ Office of Legislative Budget Assistant Web site, retrieved October 31, 2009
  47. ↑ Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
  48. ↑ New Hampshire Department of Administrative Services, Division of Accounting Web site, retrieved October 31, 2009
  49. ↑ New Hampshire Department of Administrative Services, Division of Accounting Web site, retrieved October 31, 2009
  50. ↑ The National Association of State Auditors, Comptrollers and Treasurers Web site, retrieved October 31, 2009
  51. ↑ State of Indiana, “State Credit Ratings-as of June 24, 2009"
  52. ↑ Recovery, "Stimulus Spending by State"
  53. ↑ 53.0 53.1 53.2 2008 New Hampshire Public Employment U.S. Census Data
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