New Hampshire state budget

New Hampshire began its current biennial budget cycle for FY2012 and FY2013 on July 1, 2011, and each fiscal year begins on July 1.^[1] Gov. John Lynch allowed the $224 million budget to pass into law without his signature, including an $88 million public works budget, on July 13, 2011.^[2] The FY2012-13 state budget can be found here.

New Hampshire has a total state debt of approximately $15,142,336,000 when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the FY2013 budget gap.^[3] The state debt total is for FY2013 is up slightly from the FY2012 state total of $14,955,434,000.^[4]

New Hampshire's total state debt per capita is $11,487.18.^[5]

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

Economic Freedom

A new Fraser Institute report on economic freedom ranks New Hampshire 12th in economic Freedom. Delaware ranks 1st and New Mexico ranks 50th. The study examines the impact of economic freedom on both the level of economic activity and the growth of economic activity. According to the study, the freest economies operate with minimal government interference, relying upon personal choice and markets to answer basic economic questions. More governmental restrictions on those choices curbs economic freedom. The study looks at three major categories per state – size of government, taxes and regulations. ^[6]

Federal Aid to State Budget

The chart below represents how much of the state’s budget comes from the federal government. The number is the corresponding ranking in relation to the rest of the nation (if #1, the state receives the highest percentage of federal funding in the nation):

Figures are calculated by dividing each state’s intergovernmental revenue into its general revenue. Data is available at in U.S. Census.

Fiscal Years 2014-2015

On Feb. 14, 2013, Gov. Maggie Hassan presented her proposed budget for the FY2014-15 biennium to the legislature.^[7] The governor's operating and capital budgets can be found here. Under her proposal, Counting all state funds and federally financed programs, state spending would increase 10.2 percent, from nearly $10.1 billion to nearly $11.1 billion.^[7] The General Fund spending would increase by 7.1 percent, from more than $2.6 billion to nearly $2.8 billion.^[7]

For revenue, the governor's proposal presumes an increase of 2 percent in baseline revenue from state business and other taxes in FY2014 and 1.9 percent in FY2015. The governor also proposed casino gambling and an increase in the state's cigarette tax by $0.20 per pack to generate additional state revenue.^[7]

Spending increases in the governor's proposed budget include:^[7]

• $40 million in FY2014 and $42 million in FY2015 for community colleges;
• the state university system would get $75 million in FY2014 and $90 million in FY2015;
• expand the state’s Medicaid program;
• more money for mental health services; and
• $38 million to build a new women’s prison.

Fiscal Years 2012-2013

• See past state budgets

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.^[8]

Higher Education

Lawmakers cut $50 million the university system in FY2012, which reduced by half the amount of state funding for the university system. State funding accounts for 7 percent of the University of New Hampshire's overall budget, which is the lowest rate in the country.^[9]

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. ^[10]

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. ^[10]

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.^[11]

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. ^[12] 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.^[12][13] 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.^[14]

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.^[15] 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.^[15] The measure, however, is believed to have little backing in the Senate and is opposed by Gov. Lynch, a Democrat.^[16] 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.^[17]

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.^[18] 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. ^[19] The state continues to bargain with several other unions that represent state troopers, Fish and Game officers, corrections workers and liquor enforcement officers.^[19]

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.^[19]

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.^[20]

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.^[21]

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.^[22]

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.^[23]

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.^[24] 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.^[24] 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.^[24]

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.^[25]

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.^[25]

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.^[25]

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.^[25]

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.^[25]

In March 2011, House budget writers were considering making perhaps $450 million in additional cuts and holding hearings.^[26]

Budget transparency

• See sample transparency legislation at the Sunshine Standard

In June 2010 New Hampshire launched a new website to improve transparency in state spending and released the first monthly Governor's Expenditure Report ^[27] 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 ^[28] (bottom right corner of web page) and revenue reports ^[29].

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..^[30]

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 Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary
Transparent NH	Y	Y	P	Y	Y	Y

• Transparent NH's applications are searchable.^[31]
• Grants are viewable as a class when navigating the expenditure report.^[32]
• Contracts are listed under expenditures, but details are not provided.^[32]
• Line item expenditures are listed in the Expenditure Report.^[32]
• The site links to agency and department budget requests.^[33]
• Employee salaries are published.^[34]

See also: Evaluation of New Hampshire state website

Multi-Measure Budget Transparency Profile

The Institute of Government and Public Affairs at the University of Illinois has created a multi-measure transparency profile for New Hampshire, which measures state transparency as of September 2011 using indicators from a range of organizations, including Sunshine Review. These indicators measure both website transparency and other recognized facets of governmental transparency. In addition, IGPA presents four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.

Budget Background

New Hampshire does not have a state income tax.^[35] 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. ^[36] 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. ^[37]

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.^[38]

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.^[39] New Hampshire's CAFRs are prepared and published online by the New Hampshire Department of Administrative Services, Division of Accounting.^[40]

The Division of Accounting Services is headed by the State Comptroller and is divided into two bureaus:^[41]

• 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.^[42]

Stimulus

New Hampshire has received $0.978 billion in federal funding from the American Recovery and Reinvestment Act of 2009.^[44]

Public Employees

According to 2008 Census data, the state of New Hampshire and local governments in the state employed a total of 87,006 people.^[45] 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.^[45] More than 60% of those employees, or 52,352 employees, were in education or higher education.^[45]

External links

Additional reading

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

References

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