House votes to save $26 million

Last modified: Thursday, February 02, 2012
The New Hampshire House voted yesterday to sock away $26 million for a rainy day, while the governor argued the money should instead be used to balance the state's current budget.

In a 260-81 vote, the Republican-controlled House showed support for putting the surplus from the 2011 fiscal year into the state's rainy day fund. The fund has dwindled to $9 million, said House Majority Leader D.J. Bettencourt, and building up the state's reserves could allow the treasurer to request an increase in the state's bond rating that would lower interest rates for the state and its municipalities.

"If disaster struck, we would hardly be in a position to live off our savings," the Salem Republican said.

Gov. John Lynch wants the money to help the state now. The Legislature's budget has a built-in $14 million deficit, he said, and tobacco tax revenue is down about $13 million due to a 10-cent cut to the cigarette tax. Also, about $13 million in savings the Legislature had counted on from reforming the state's retirement system will be half that amount, he said.

"Through strong fiscal management, we were able to produce a surplus for the previous fiscal year, which should be used to balance the budget," Lynch's spokesman, Colin Manning, said in a statement.

Manning said rating agencies have maintained the state's AA credit rating during Lynch's seven years as governor.

"The Governor believes we need to carry over the surplus so that we have a balanced budget at the end of this fiscal year, which will help us maintain our credit rating," he said in the statement.

Bettencourt rejected arguments that the surplus money should be used for spending or a tax reduction.

"No one in this room is more passionate about reducing taxes than I am. However, this surplus is one-time money," Bettencourt said. "Using one-time money for tax reductions is just as irresponsible as using one-time money to grow government."

As in managing one's personal finances, it's hard to save money, Bettencourt said.

"There are always a lot of things we'd prefer to do and spend money on. There are great restaurants to go to - and, if any of you have seen my waistline lately, you know I've frequented many of them. Exotic vacations to take. For the men, new big-screen TVs to watch the football games. For the women, new designer handbags and shoes that would look great," he said. "All that is great. But it's time to set some money aside, for the kids' college fund, for the 401(k) plan."

State Treasurer Catherine Provencher said under normal circumstances she would always recommend building up the state's rainy day fund. But due to uncertainties in the state's finances over Medicaid reimbursements and other issues, and given New Hampshire's history of not maintaining robust reserves, a mere $26 million isn't going to change the state's bond rating, she said.

"At this time, I don't think putting the surplus into the rainy day fund will improve our bond rating," Provencher said.

House Bill 1652 now goes to the House Finance Committee for review. The bill also requires Senate approval.

(Matthew Spolar can be reached at 369-3309 or mspolar@cmonitor.com.)