NH committee approves $25M in budget cuts

By NORMA LOVE

CONCORD, N.H.

A bipartisan legislative committee on Monday unanimously approved $25 million in cuts to New Hampshire's budget for this year by reducing state school aid and staff and canceling planned increases for some state contractors.

Gov. John Lynch presented the cuts to the committee and plans to ask lawmakers Thursday to approve about another $60 million to next year's budget. Lynch's plan could cost 30 to 35 state workers their jobs.

"I don't take these cuts lightly. These are difficult times for our families and our state," Lynch told the joint legislative Fiscal Committee.

Monday's cuts hit the Department of Health and Human Services hardest. The agency must absorb $3 million of the $25 million in reductions. Lynch said he will draw on $11 million in federal funds to replace cuts in spending at the agency supported by state taxes.

State Rep. Neal Kurk, R-Weare, questioned the wisdom of using one-time federal money to substitute for state funding. Kurk said that would make it harder to make up for future shortfalls.

Lynch said the money is available to help states through the tough economic times and will mean fewer layoffs.

Monday's cuts include reductions in travel and training, delays hiring community corrections staff until July, reduces several education aid programs, closes a wing at the state adult psychiatric hospital and uses the space for a children's unit, reduces spending on nursing home and home care and cuts reimbursement rates paid to Children's Hospital in Boston.

The cuts will be made to the state's $3.2 billion, two-year budget from general taxes. The total budget is $11.5 billion once federal and other funds are included.

Lynch's plan also calls for raising the tobacco tax by 20 cents to help close a projected $220 million budget shortfall by June 2011. The proposed tax increase would bring the state's rate to $1.98 per pack of cigarettes but keep it lower than neighboring states. The plan also calls for restructuring some state debt by taking advantage of low interest rates.

The potential $220 million shortfall includes about $19 million in lost revenue from repealing taxes on small businesses and on campsites. It also includes $45 million the state had counted on from a surplus in a fund that underwrites malpractice insurance. The court rejected the state's claim.

The House and Senate budget committees will consider the rest of the plan at a hearing Thursday.

The state has laid off about 200 workers since the start of the two-year budget cycle last June 30. Some layoffs were due to the union representing most of the state's 11,500 workers rejecting a furlough plan that Lynch had proposed as an alternative to layoffs. Other layoffs were due to program cuts and the closure of a prison.

The Department of Health and Human Services also proposed $28 million in budget cuts in February to cover shortfalls caused by rising demands for services.

Lynch said New Hampshire is beginning to see signs of economic recovery but still could end this fiscal year with revenues at 2006 levels.