NH cuts $30 million, extends freezes
CONCORD, N.H. --New Hampshire is tightening its fiscal belt again.
Gov. John Lynch won approval from a special legislative committee Tuesday to cut $30 million from next year's state budget and to continue a freeze on buying most new equipment imposed earlier this year.
Lynch said he also will continue a a February order freezing most hiring and out-of-state travel. Lynch expects to save $8 million from the freezes. The purchasing freeze exempts fuel, food, drugs, medical supplies and other items needed in an emergency.
Lynch has proposed a series of measures over the past five months to deal with a possible $180 million revenue shortfall in the two-year $10.3 billion state budget. The state is expected to end this fiscal year in the black, but not next year.
Lynch said he expects the budget to be balanced, though he continues to monitor the state's tax receipts and has not ruled out more spending cuts if they are needed.
Taxes on business, tobacco and property sales are well below projections. Lawmakers are worried high gas prices will keep tourists from coming to the state this summer and fall.
Lynch acknowledged that some of the cuts are painful, particularly a $3.5 million reduction in funding for a new comprehensive cancer screening and detection program. Lynch had already won lawmakers' support in February to cut $1.7 million from this year's funding. Tuesday's cut reduced the program's $6 million funding for the two years to $750,000.
"My hope is they will use the money to expand screening," said Lynch.
Reaction from the American Cancer Society was swift.
"With the drastically reduced funding levels for both this year and next, the vital objectives of the New Hampshire Cancer Plan are on hold, while unfortunately the burden of cancer is not," said spokesman Peter Ames.
The state's largest agency -- the Department of Health and Human Services -- must cut the most -- about $15 million, including the cancer program funds. Cutting the agency's spending costs the state another $6 million in lost federal aid.
Other cuts include:
-- $1.2 million from the state prisons, mostly from psychiatric services.
-- $2.5 million spent on children placed in special programs by the court.
-- $1 million spent on severely disabled students.
-- $2.5 million in aid to the University System of New Hampshire. That is on top of a $2 million cut from this year's budget.
-- $1.3 million is reduced groundwater protection and landfill closure grants.
-- $1.5 million reduction in substance abuse services.
-- $1.1 million reduction in a subsidy for children's health insurance.
-- $300,000 from a work force housing pilot project.
In other steps taken to address the problem, Lynch ordered more than $50 million in cuts in February from the current year's budget.
This month, lawmakers also approved a one-year cut in a discount wine merchants get for buying from the state. They voted to increase the cigarette tax 25 cents per pack to $1.33.
The tax won't take effect if the state gets at least $50 million in revenues from the tax between July 1 and Oct. 1. The delay is to give grocers and convenience stores a chance to market New Hampshire's lower prices to other states, especially Massachusetts, which is considering raising its tax $1 to $2.51 per pack.
They also passed a poker tax.
They ordered the Pease Development Authority to repay about $10.5 million it has owed the state for many years.
Lawmakers also authorized Lynch to borrow up to $40 million of school construction aid in 2008 and up to $40 million in 2009 if the money is needed to ensure a balanced budget.
The House had at first rejected borrowing school aid money, but Lynch pressed hard and won its passage at a late-night special session earlier this month. Statehouse insiders say Lynch proposed laying off 400 workers and deeper budget cuts otherwise.
Republicans objected vehemently to the borrowing plan. They have argued for months that Lynch and Democrats ignored warnings last year that the budget was just too large. Republicans argued the state should instead cut spending.
Rep. Neal Kurk, a Weare Republican and member of the House Finance Committee, said he couldn't support Lynch's spending reduction order because, rather than make deeper cuts, it counts on borrowing $40 million next year to balance the budget. Kurk objected that would shift the problem to future lawmakers to solve.
"We're taking a baby step when we need to take a larger step," he said. 