Citing 'fiscal cliff,' Gov.-elect Hassan asks state agency heads to identify budget cuts
Gov.-elect Maggie Hassan yesterday asked state department heads to prepare two-year budgets that contain modest spending cuts, in part citing uncertainty about how the federal government will address the “fiscal cliff,” a combination of year-end budget cuts and tax hikes that economists warn may cause a national recession.
Hassan, an Exeter Democrat who will take office Jan. 3, is required to submit a state budget proposal for fiscal years 2014 and 2015 to the Legislature by Feb. 15. Yesterday, she sent a memo to agency heads asking them to prepare budgets by Jan. 4 that cut 2014 spending to 97 percent of 2013 levels, and keep 2015 spending level with 2013.
“While we are beginning to see signs of recovery and revenue growth; we face fiscal uncertainty – particularly around how decisions in Washington and the so-called fiscal cliff will impact New Hampshire’s state budget, economic growth and revenues,” Hassan wrote in the memo, according to a copy released by her office. “There are also investments that we must make as a state in the coming two years in order to protect the health and safety of our citizens and to build an innovative economy that will ensure long-term growth.”
Hassan wrote that the budget targets and individual agencies’ budgets “may be adjusted higher or lower depending on the economy and revenues, federal actions and state priorities.”
The two-year state budget passed by the Republican-led Legislature in 2011 made deep cuts to many state agencies, and Hassan was critical of it during the fall campaign. She’s said she wants to restore funding for state universities, community colleges and hospitals, among other things.
Democrats now control the state House, while Republicans hold a slim 13-11 majority in the Senate.
Hassan was skeptical last month when state agency heads presented budget proposals that, all together, would have increased state spending by 19 percent in the next biennium, which begins July 1.
“Those requests total far more than our taxpayers and our economy can afford,” Hassan said at a Nov. 26 public hearing.
Yesterday, Hassan also expressed worry about the fiscal cliff. A number of federal tax cuts are scheduled to expire at the end of the year, while big automatic budget cuts are set to begin at the start of January if President Obama and a badly divided Congress can’t agree on an alternative plan to reduce the federal budget deficit.
The nonpartisan Congressional Budget Office has said that a combination of tax hikes and budget cuts would cause a recession.
(Ben Leubsdorf can be reached at 369-3307 or firstname.lastname@example.org or on Twitter @BenLeubsdorf.)