New Hampshire state budget (2012-2013)

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See also: Archived New Hampshire state budgets

New Hampshire began its biennial budget cycle on July 1, 2011, encompassing FY 2012 and FY 2013. House Bill 1 and House Bill 2 constituted the budget. Gov. John Lynch signed the $224 million budget, including an $88 million public works budget, into law on July 13, 2011.[1]

Higher Education

Lawmakers cut $50 million from the university system in FY 2012, which reduced by half the amount of state funding for the university system. State funding accounted for seven percent of the University of New Hampshire's overall budget, which was the lowest rate in the country.[2]


In the FY 2012 state budget, the state taxed hospitals 5.5 percent on net patient revenues. The state also lowered payments for caring for the poor by $115 million. For many years, the state taxed hospitals to gain matching federal Medicaid funds, then returned the amount of the tax to the hospitals, so they effectively lost no money. From 1991 through 2009, the lawsuit estimated the state acquired $1.8 billion in matching federal money this way. Hospitals anticipated paying $250 million under the new tax over the two-year budget.[3]

Ten hospitals sued New Hampshire in federal court claiming that the state violated the federal Medicaid Act by making deep cuts to their reimbursement for budgetary reasons, not out of consideration of what amount was needed to adequately cover the costs of treating Medicaid patients.[3]

The state also faced the possibility of having to repay $35 million in Medicaid funds that the federal government determined were improperly used by the state. The state challenged the decision but did develope a contingency plan to make $35 million in cuts to the state budget to free up the money to repay the federal government.[4]

Budget Fix

On September 7, 2011, the New Hampshire State Senate passed a budget fix to help with the repayment of the Medicaid funds by saving the state $8 million a year with cuts to welfare benefits for recipients who also received federal Supplemental Security Income Program checks. The New Hampshire House of Representatives passed the bill on October 12, 2011, by a vote of 237-126, but Speaker William O'Brien insisted on an amendment dealing with marital masters, who presided over family law and divorce cases, which sent the bill back to the Senate instead of to Gov. Lynch for his signature.[5] Senate President Peter Bragdon, however, said he had no intention of reconvening the Senate to act on any additional budget cuts before the new session began in January 2012.[5][6] As of Octpber 12, 2011, the delay had cost the state $2 million and waiting until January for the Senate to act would have cost another $2 million.[7]

Union issues

The State House of Representatives approved House Bill 2, a key piece of its $10.2 billion budget package that made deep cuts to social and health programs and limited collective bargaining rights, on March 30, 2011.[8] House Bill 2 limited ability of labor unions representing state workers to collectively bargain on issues like wages, hours, working conditions and benefits. Labor union members rallied at the capitol the day after the bill was passed. It also made public workers at-will employees if their contracts ended before a new contract was in place.[8] The measure, however, had little backing in the Senate and was opposed by Gov. Lynch.[9] Lynch vetoed legislation that would make New Hampshire a right to work state, meaning it would have barred unions from collecting a share of bargaining and administrative costs from nonmembers.[10]

Gov. Lynch announced on July 29, 2011, that the state had reached tentative agreements with negotiators for three labor unions on contracts that would save the state nearly $50 million and avert the need to lay off potentially 500 workers in September.[11] The contract contained roughly $40 million in savings, which came primarily from changes to the health insurance plan, as well as a freeze on pay hikes and regular step increases.[12] The state continued to bargain with several other unions, such as those that represent state troopers, Fish and Game officers, corrections workers and liquor enforcement officers.[12]

Gov. Lynch issued an executive order freezing the salary of executive branch employees not covered by a union agreement. The executive order was effective through August 30, 2012.[12]

Legislative Proposed Budget

The New Hampshire State Legislature passed House Bill 1, the two-year $10.3 billion state budget, as well as House Bill 2, its massive trailer bill, on June 22, 2011. The closest vote was on House Bill 2, which passed by a vote of 259-119, eight votes more than needed to override a veto. The budget cut state aid to higher education 45 percent, the largest cut by any state that year, and made New Hampshire the first state in 50 years to reduce the cigarette tax. The budget also ended a 20-year practice of repaying hospitals all that they pay the state in a legal bed tax used to generate bonus, federal Medicaid money for New Hampshire’s government.[13]

On June 16, 2011, House and Senate negotiators approved a $10.3 billion biennial budget. As part of the compromise, the budget lowered the cigarette tax from $1.78 to $1.68 cents in exchange for the Senate getting its education funding plan and a bill to streamline the shoreland protections permitting process. Legislators were scheduled to vote on the plan the week of June 20, 2011.[14]

On June 9, 2011, House and Senate members began negotiating a compromise on the state's new budget in a conference committee. The committee consisted of three members from the Senate and five from the House. Both chambers' plans cut spending and assumed modest revenue growth over the next two years, although the Senate budget spent $70 million more than the House version and the Senate assumed that the state would take in about $40 million more in tax revenue over the next two years. Estimates of a revenue shortfall for the year ranged between $53 and $47 million dollars.[15]

The proposed House legislative budget would have spent 11.3 percent less from the state operating budget and general and education funds than in the prior budget, resulting in an actual cut of $564 million. The budget trimmed local aid by around four percent, to $2.2 billion, most of which was for schools. The biggest disagreement came over the state government portion of the budget, which the House budget writers reduced by 19 percent, or $481 million.[16]

Governor's Proposed Budget

Gov. Lynch began planning for the budget in June 2010, when he announced plans to cut spending by five percent in each of the two years for the budget cycle that began July 1, 2011. He did so in light of the fact that the state faced a $300 million hole due to a combination of a built-in inflation increase and lost stimulus money. Lynch encouraged state agencies to centralize programs and purchasing and specifically called for cuts in overhead, including building costs, telecommunications, consultants, travel, equipment and printing costs.[17]

Gov. Lynch presented his proposed $10.7 billion budget to the legislature on Feb. 15, 2011. It was seven percent less than the prior year's budget. The governor's proposed budget did not raise or create new taxes, and it did not utilize one-time money to plug shortfalls. The proposed budget eliminated 900 unfilled state jobs and laid off 255 state employees.[18]

The proposed budget renewed a $30 surcharge on vehicle registrations that had been set to expire and cut the $150 per student subsidy for driver's education.[18]

Lynch said he wanted to maintain state school aid at the existing level for the next two years, giving communities the same amount they received this year.[18]


Gov. Lynch's proposed budget made several structural changes to the state government. He proposed streamlining community mental health and developmental disability centers by eliminating administrative positions at six agencies and eliminating the Post-Secondary Education Commission all together. The budget also cut payments to hospitals and used the money for Medicaid programs.[18]

The budget gave the prison system more money than the prior year, but the governor asked private companies to submit proposals to operate parts of the system.[18]


  1. The Boston Globe, "Lynch signs $88M public works budget for NH," July 13, 2011
  2. The Nashua Telegraph, "Degrees of debt - NH school officials: Can’t trim any more from budgets," August 12, 2012 (dead link)
  3. 3.0 3.1 The Boston Globe, "10 hospitals sue NH over Medicaid funding," July 25, 2011 (dead link)
  4. The Concord Monitor, "State to propose $35 million in cuts," September 14, 2011
  5. 5.0 5.1 The Boston Globe, "NH House approves budget fix with a catch," October 12, 2011
  6. Concord Monitor, "Senate: Budget hole not our issue," September 22, 2011
  7. The Boston Globe, "NH House approves budget fix with a catch," October 12, 2011
  8. 8.0 8.1 The Union Leader, "Collective bargaining changes pass NH House," March 3, 2011
  9., "New Hampshire workers rally against collective bargaining limits," March 31, 2011
  10. The Wall Street Journal, "New Hampshire Governor Vetoes Antiunion Bill," May 11, 2011
  11. The Boston Globe, "NH, labor unions agrees on new contracts," July 29, 2011 (dead link)
  12. 12.0 12.1 12.2 The Union Leader, "Salary freeze: Lynch makes it official," September 27, 2011
  13. The Nashua Telegraph, "Budget bills pass await Lynch's OK," June 2, 2011
  14. The Boston Globe, "NH negotiators agree on $10B budget," June 16, 2011 (dead link)
  15. New Hampshire Public Radio, "Next Round of Cuts: Budget Conference Commmittee Begins," June 8, 2011
  16. New Hampshire, "The state budget by the numbers," April 6, 2011
  17. The Nashua Telegraph, "Lynch seeks spending cuts across board," July 14, 2010
  18. 18.0 18.1 18.2 18.3 18.4 Bloomberg, "NH gov: Budget proposes restructuring government," February 16, 2011