Press Release

For Immediate Release February 17, 2011

Contact: Communications Director Office of the Governor 603-271-2121

CONCORD - Governor John Lynch today presented his budget to the House and Senate Finance Committees as lawmakers began hearings on the two-year state operating budget. The Governor's budget proposal lowers the cost structure of state government to below spending in 2008-2009. It cuts programs, offices and personnel to ensure state government can meet its core responsibilities, and contains neither new taxes, tax increases or one-time funds.

"With this budget, we continue re-thinking every aspect of state government. We have pored over every line in every budget," Governor Lynch said. "The result is a thoughtful, responsible budget that is balanced and sustainable."

"Let me be clear - there is a lot of pain in this budget. We had to make a series of difficult choices to help protect the strategy that has made New Hampshire a national leader - keeping taxes low and making smart investments in education, public safety, safeguarding health care for our most vulnerable citizens," Governor Lynch said. "We did our best to spread the pain evenly so no one area of the budget would be impacted greater than any other area."

The budget cuts spending by significantly reducing the state's cost structure, spending $160 million - or 5.5 percent - less than the state spent in general funds in 2008-2009.

In order to ensure the budget is sustainable for the future, Governor Lynch's budget recommends eliminating programs and positions that were not funded.

"None of us can say, cut state government spending, but don't impact me," Governor Lynch said. "We are all in this together."

The budget redirects existing state revenues to support higher priorities. Uncompensated care payments to hospitals will be reduced by $20 million to fund federally optional Medicaid services, such as prescription drugs, nursing services and wheelchairs. Cuts to these Medicaid services could negatively impact 40,000 people.

Approximately $8.5 million in supplemental payments to nursing homes will be re-directed to support home- and community-based care services for seniors. And funds from the Unique Program, which currently go to fund scholarships and build endowments at public and private colleges and universities, will be redirected to support the community college and university systems.

Nearly half of the state budget is aid to communities and school districts. One of the challenges of this budget was replacing lost federal stimulus dollars, including replacing $180 million in stimulus funds that were used to support aid to schools in 2010-2011.

When compared to 2010-2011 general, education and stimulus spending, overall aid to schools and communities will be about 94 percent, comparable to the reduction in general and stimulus fund spending for the rest of state government.

Adequacy aid, a constitutional responsibility, is level funded at 2011 levels. In addition, the state this year distributed an additional $20 million in federal stimulus funds to school districts, many of whom are planning to use the funds in 2012. The catastrophic aid formula is redesigned to recognize the per-pupil disbursement the state now makes for special education students.  Building aid is pro-rated at 40 percent in 2012 and returns to full funding in 2013.

Meals and rooms distributions to communities are level-funded in 2012, and grow by $5 million in 2013. Existing state commitments for wastewater, water treatment and solid waste programs are fully funded. The state will also distribute $70 million directly to communities for road and bridge projects.

This budget eliminates the state's subsidy for municipal retirement costs, but recommends reforms to the system that will save municipalities, school districts and the state $1.5 billion over the next 20 years.

"Let's be clear - these are municipalities' costs, not state costs. Nearly 50 percent of the state budget goes out in the form of subsidies to cities, towns and local schools. We worked to reduce spending by 5 percent in just about every area of state spending in the budget, including state subsidies for cities and towns," Governor Lynch said. "We are working to lower the cost structure of state government, making it more efficient and we know cities and towns are working to do that with their own cost structure."

"Our final product will not be the governor's budget, or the house's budget, or the senate's budget. It will be a budget of New Hampshire, for the people of New Hampshire. Let us work together to meet our responsibility to them," Governor Lynch said.

Budget Highlights

• Proposed 2012-2013 budget spends $4.7 billion in general and education funds over the biennium, one percent less than 2008-2009 actual spending.
• Reduces the overall state cost structure to sustainable levels.
• Spends $160 million, or 5.5 percent less in general funds than 2008-2009 actual spending.
• Budget spends 3.3 percent less, than comparable general, education and stimulus fund spending in 2010-2011.
• Budget is structurally balanced and sustainable. It uses no one-time revenue or across-the-board back-of-the budget reductions.
• Budget includes no new taxes or tax increases. It doubles the research-and-development tax credit and repeals the gaming winnings tax.
• Funds core responsibilities of state government - public health, safety and education.
• Rebuilds the Rainy Day Fund to at least an estimated $30 million at the end of the biennium. Also dedicates any revenue from the sale of property to rebuilding the Rainy Day Fund.
• Most state agencies will spend less in 2012-2013 than general and stimulus fund spending in 2010-2011.
• For the next biennium, overall state aid to communities, which includes school aid, will be about 94 percent of spending in 2010-2011, comparable to the reduction in general and stimulus fund spending for the rest of state government.
• Most state agencies funded at 95 percent of 2010-2011 general and stimulus fund spending for 2012-2013.
• Public Safety agencies funded at between 95 and 100 percent of 2011 levels.
• Judicial Branch and Safety funded at about the same level as 2011.
• University and Community College systems funded at 95 percent of 2010-2011 levels.
• Veterans Home and the Department of Corrections are the only major agencies to receive an increase over general and stimulus funding in 2011.
• Re-directed funds to protect higher priorities.
• Eliminated 1,100 positions, including approximately 255 filled positions.
• Closed and consolidated state programs and agencies.
• Most programs and positions not funded in the proposed budget were eliminated to ensure budget sustainability.
• Allowed agencies to invest in technology to reduce operating costs.
• Assumed modest revenue growth of 3.5 percent in 2012 and 3.8 percent in 2013, less than estimates of the independent Center for Public Policy Studies and lower than neighboring states. Budget assumes that 2012 revenues will be lower than 2008 levels.
• Eliminates the Post-Secondary Education Commission as a stand-alone agency.
• Consolidates the administration of the Boards of Accountancy, Manufactured Housing, and Real Estate Appraisers into the Joint Board of Licensure and Certification.
• Closes four Health and Human Service district offices; closes four Motor Vehicle substations.
• Consolidates the Public Health and Environmental Service labs.
• Privatizes Tirrell House in Manchester.
• Closes welcome centers.
• Requires the mergers of the administrations of some community mental health centers and developmental disability agencies.
• Moves the administration of the Healthy Kids Children's Health Insurance Program into the Medicaid program.
• Moves some youth and shelter programs into under-used space at the Sununu Center.
• Transforms the Health and Human Services contracting process.
• Begins the consolidation of human resources and some business functions across state government.