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Gov.-elect Hassan: We must be prepared to make tough budget decisions

New Hampshire Union Leader

November 26. 2012 2:01PM

CONCORD - Gov.-elect Maggie Hassan told lawmakers Monday the state must continue to make tough fiscal decisions and be creative as it builds the upcoming, two-year budget.

In her first appearance in Concord as the governor-elect, the Democrat said the agencies have submitted requests for "more than our economy and taxpayers can afford."

She said she felt the six-month process would work to develop a "fiscally responsible state budget without income or sales tax." Many department heads are asking for increases and for the next few days, department heads will come to the State House legislative office building to make their requests known for fiscal years 2014 and 2015.

Total fund requests for the next biennium are up 19 percent, including money from federal and all other sources. Spending requests for state tax-funded portions of the budget are up 26 percent.

The University System of New Hampshire alone is seeking an additional $100 million for the two years when their current adjusted budget is $54 million. It took a significant budget hit in the current biennium.

Hassan said some cuts were the wrong choice, including that one and also laying off state auditors.

"We will not be able to reverse course all at once," she said. "We must be prepared to continue to make tough, fiscally responsible decisions to ensure that we can invest in our priorities, including protecting the health and safety of our citizens and building an innovative economy that will ensure long-term growth," she said.

The Department of Administrative Services lost 55 positions or 15 percent of its staff in the last budget cycle, said Commissioner Linda Hodgdon.

"We continue to struggle with inadequate levels of staff to accomplish good cost-saving ideas." she said. "We are living with the pennywise and pound-foolish adage, spending more money in the end and burning out our people."

She noted that a majority of state employees are nearing retirement in the next 10 years, something that would be considered a crisis in the private sector.

John Barthelmes, commissioner of the Department of Safety, was among the first to present his budget. He said some communities are reducing public safety budgets and that has shifted the burden to State Police.

The commissioner is seeking a 3 percent increase from the adjusted, authorized budget covering 1,120 full-time employees. He would like to add a total of 31 new troopers.

To Hassan's remarks that the state needs to find innovative cost-savings ideas, Barthlemes said police now turn off their cruisers rather than let them idle for traffic details and have switched to six-cylinder engines and synthetic oil to improve cruiser mileage. He said while the Department of Motor Vehicles has "come out of the dark ages" with computers and has made customer service its centerpiece, that could be threatened, as ideas for further efficiencies are running out.

Hassan said she has chosen former Health and Human Services deputy commissioner and former state Sen. Kathy Sgambati, D-Tilton, to head up the budget effort, and she said a coalition will be chosen to work on the budget before one is presented to the Legislature.

Gov. John Lynch, who chose not to run for reelection, was thanked by Hassan for steps he has taken during difficult fiscal times.

Lynch said New Hampshire currently enjoys a surplus but must repay the federal government $18 million in the next biennium from overpayment of hospital costs, and the economy remains volatile.

While the state has a relatively strong position when compared to other states, with lower unemployment and higher quality of life ratings, he said it cannot rest on that.

"The budget next year is going to be a challenge," Lynch said.

Hassan did not indicate what budget targets she is looking for but said she will soon send them to department heads.

The targets will be conservative, she said, representing the fact that the state faces a number of potential challenges, including the possibility of the federal fiscal cliff.

The governor-elect also made clear that she would advance her reform plan to improve the state budget process, including creating a bipartisan Consensus Revenue Estimating Panel. Senate Finance Chairman Chuck Morse, R-Salem, who serves on the committee listening to the requests, said it is important that commissioners and department leaders do their part to identify efficiencies.

In 2011, the Legislature passed a bill which requires all state agencies and departments to submit alternative budgets, reduced by 10 percent from the prior year's funding, to the Department of Administrative Service by Nov. 15.

"These alternative budgets will give Gov.-elect Hassan, and those of us in the Legislature, an idea of where those who know their departments best believe we can find savings in a difficult budget process," said Morse.

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