CONCORD, N.H. (AP) - A sharp springtime drop in revenue has shaved the state’s budget surplus to less than $4 million and Gov. Maggie Hassan said Wednesday she will seek a freeze on hiring, equipment purchases and out-of-state travel.
Hassan will ask the Joint Legislative Fiscal Committee to approve her requests, as other governors have done.
In a letter to the committee, Hassan said a $25 million budget surplus in March had nearly evaporated by the end of April to $3.9 million. The shortfall mostly comes from a decrease in the amount collected through business taxes and the interest and dividend tax. April collections were $22 million below expected.
“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 her request to the committee. “But given the limited information, we should act prudently, responsibly, and expeditiously to continue to ensure a balanced budget.”
Hassan said changes in the tax code and more businesses applying for tax credits are factors in the decrease. Legislators are also hashing out how to manage a looming change in the amount the state collects in the Medicaid Enhancement Tax, which has been ruled unconstitutional by two judges. The tax produces about $185 million annually.
The governor will ask Legislature and judiciary to also consider a spending freeze. Agency spending can still be approved by waiver.
Hassan did not set a target for savings or say how much she thinks the freeze could save.
The state has a $10.7 billion, two-year budget.
Senate President Chuck Morse, a Republican from Salem, said Hassan’s request was overdue but he characterized the issue as a spending problem, not a revenue problem.
“As announced last week, Senate Finance Chairman Jeanie Forrester will continue to work with the departments to evaluate their spending and lapse positions for the current fiscal year in order to prepare legislative leaders should events necessitate additional legislative action,” Morse said.
Democrats also supported the freeze request.
“An executive order directing a freeze in general funded hiring, equipment, purchasing and out-of-state travel is the prudent and responsible action to ensure a balanced budget for the biennium,” said Senate Democratic Leader Sylvia Larsen of Concord.
Former Gov. John Lynch initiated a spending freeze in 2008 when revenue fell some $75 million below estimates.
Please read our comment policy before commenting.