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May 14. 2014 9:28PM

Governor asks for spending freeze

CONCORD — Gov. Maggie Hassan wants to freeze hiring, equipment purchases and out-of-state travel paid for with general funds.

She issued an executive order for the freeze and will ask the Joint Legislative Fiscal Committee to approve the order at its meeting next week.

The state had a $25 million surplus through March, but April business and interest and dividends tax revenues were well below estimates for April, eliminating much of the surplus.

The governor’s office said the decreases appear to be related to changes in the state tax code in recent years, as well as businesses applying for various tax credits and carry-forwards accrued during the recession.

“The Department of Revenue Administration will need further data and further analysis to determine whether this is a short-term drop or a long-term trend,” Hassan wrote in a letter to the fiscal committee. “But given the limited information, we should act prudently, responsibly and expeditiously to continue to ensure a balanced budget for the biennium.”

Hassan also wants the legislative and judicial branch to agree to the freeze.

“As we further analyze revenues, I will be meeting with agencies to examine additional reductions, some of which may require legislative approval,” Hassan wrote.

The last executive order freezing spending was issued by former Gov. John Lynch in 2008 and was also sent to the fiscal committee for approval.

Like the executive order Lynch issued, Hassan allows state departments to request waivers for special circumstances.

She also said she would meet with agencies to secure additional savings, some of which may require legislative approval.

Senate President Chuck Morse said he welcomes the governor’s executive order and her recognition the state has to restrict spending.

“As Governor Hassan noted, state revenues are slightly above plan for the year as a result of the Senate Republicans’ responsible revenue estimates,” Morse said. “I’m also pleased the governor has finally recognized the necessity of the back-of-the-budget reductions included in the budget, and am confident that today’s letter will put to bed ongoing attempts to reopen that discussion.”

The House has pushed for using some of the state’s $15 million surplus from the 2013 fiscal year to reduce by $7 million the across-the-board cuts in Health and Human Services spending; the Senate wants the $15 million to go to the state’s rainy day fund.

House Speaker Terie Norelli, D-Portsmouth, praised Hassan’s action.

“The House will join the governor in her efforts by taking belt-tightening measures,” Norelli said.

The political parties also got into the fray.

State GOP Chairman Jennifer Horn called the freeze “the height of hypocrisy and a desperate political stunt,” while Democratic Party Chairman Raymond Buckley said Morse was trying to rewrite history and blamed the revenue shortfall on Republicans’ “misguided, far-right budget-made tax changes.”

The state also faces the loss of $185 million in Medicaid Enhancement Tax revenues after two superior court judges declared the levy unconstitutional.

Hassan said her office and department heads continue to meet with hospitals and lawmakers to discuss solutions.

The Joint Legislative Fiscal Committee is scheduled to meet May 22 at 1 p.m.

grayno@unionleader.com


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