NH Gov: $13.8 million surplus at fiscal year end

HOLLY RAMER, Associated Press

CONCORD, N.H. -- Gov. John Lynch said Wednesday that New Hampshire is in pretty good financial shape after achieving a $13.8 million budget surplus in the fiscal year that ended June 30.

The surplus was cited in the unaudited Comprehensive Annual Financial Report released by Lynch's office. The final figure is expected in late December, he said.

Lynch said the surplus will be looked upon favorably by bond rating agencies, and he praised state agency heads for controlling costs at a time when they faced significant challenges in the budget adopted by lawmakers. Lynch let that budget become law without his signature, largely because he objected to large cuts to hospitals and the state university system.

"I still think those were inappropriate," he said, but the alternative _ a veto _ was worse. "I think it would've resulted in maybe no budget at all, throwing state government in chaos, as well as further cuts, possibly to the university system."

Republican lawmakers quickly took credit for the surplus. Sen. Jeb Bradley, R-Wolfeboro, said the surplus was a vindication of the difficult choices the Republican-led Legislature made during budget negotiations to reverse course after Democrats increased spending in previous years.

House Speaker William O'Brien said the fact that revenue projections came in so close to projections was a "stunning, remarkable achievement" that "shows what happens when your focus is on delivering accurate figures and not trying to inflate revenues to spend more money."

Lynch said the surplus was notable given the state had a $22 million shortfall in Medicaid enhancement tax revenues and a $12 million drop in tobacco tax revenue. The state also collected $22 million less in revenue from audited businesses compared to the previous year, which Lynch attributed to the layoff of 14 state auditors.

Offsetting those lower receipts were higher revenues from business and rooms and meals taxes, a $17.7 million surplus from the previous year and various budget adjustments.

Balancing the next budget will be a challenge given that a new Medicaid managed care system is being implemented, and the state will have to continue returning millions of dollars to federal government for failing to comply with Medicaid requirements in 2004, Lynch said.

"I think we're going to have to continue to manage the budget very, very tightly," Lynch said. "It is doable, but there has to be a strong, strong lid on additional costs increases or expenses."