Lynch Budget Fix includes cuts, taxes, and transfers

By Grant Bosse on April 8, 2010
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(CONCORD) At a closed door briefing with invited members of New Hampshire’s press corps, Governor John Lynch today unveiled his proposed fix to the Granite State’s mounting budget crisis. Lynch projects that the package of spending cuts, tax increases, and new federal revenue will total $220 million over the next two years.

Governor John Lynch

The Lynch proposal claims $14.3 million in cuts for Fiscal Year 2010 and another $69.7 million for FY11, but includes $25 million in University System maintenance from the state’s General Fund to the Capital Budget. In the current budget, Lynch pushed to transfer state Building Aid from the General Fund to the Capital Budget as well.

The Lynch package also anticipates an increase in the Federal Medical Assistance Percentage (FMAP) and includes a $.20 per pack increase in the state’s Tobacco Tax, projected to raise $12 million over the next two years.. The overall budget fix includes repeals of the state’s controversial LLC Tax and Camping Tax. Bills to remove those taxes has cleared the State Senate and await action in the House. The proposal would also establish a Commission to study New Hampshire’s business taxes, and directs the Lottery Commission to issue a report on running Fantasy Sports Leagues by November.

Governor Lynch’s Budget Powerpoint

Lynch would eliminate the state’s Retiree Health Care program in FY11, replacing it with the recently enacted Health Care Bill. He says this will save $8.3 million. Other cuts would hit Health and Human Services, the largest agency in state government, and state education to cities and towns. Lynch says that personnel reductions across state government will result in 30 to 35 layoffs.

Lynch’s proposed cuts do not include many of the components of a $47 million budget cutting package tabled by the House, including expansion of the Developmental Disabilities Wait List. The package increases state spending on child care by $1 million.

The plan would also transfer $80 million in federal education aid from FY11 to FY10, which would not impact the state’s overall bottom line. Lynch also recommends borrowing $45 million in new bonds in order to restructure the state’s current debt, which he claims would save $38 million in FY11.

The Legislative Fiscal Committee will take up Lynch’s FY10 recommendations on Monday, April 12th. The House and Senate will hold a joint hearing on the rest of the Lynch budget package on Thursday, April 15th.

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