The Department of Administrative Services has determined the state has generated a surplus of about $26 million for the state budget that ended June 30, Governor John Lynch announced today.
According to the unaudited financial statements, aggressive measures taken by Governor Lynch and state agency leaders in the Executive Branch to address a potential revenue shortfall have resulted in a $26 million surplus for state fiscal year 2011, and maintain $9 million in the state's rainy day fund.
"In the face of ongoing economic challenges, we not only delivered a balanced budget, we managed to generate a $26 million surplus," Governor Lynch said. "Across state government, we have continued to carefully manage and aggressively reduce costs, generating this surplus. This is very good news for our state and it speaks directly to the strong fiscal management and dedication of state agency leaders."
In 2008, Governor Lynch placed a freeze on hiring, purchases of equipment and out-of-state travel. State agency heads have also undertaken numerous measures to trim their budgets, including cutting energy use, in-state travel, and eliminating and reorganizing programs.
Governor Lynch worked with state agencies to strictly manage state spending. As a result, agencies lapsed $26 million more than expected by the previous budget. A budget lapse occurs when a state agency spends less than was authorized in the budget.
Under existing law, the $26 million surplus from fiscal year 2011 will be carried forward to the current fiscal year.
The current state budget passed by the legislature, which Governor Lynch let become law without his signature, has a built-in $14 million deficit at the end of the current fiscal year 2012. In addition, the federal government may demand the state repay $35 million from a 2004 audit of the disproportionate share hospital program. The state continues to pursue reconsideration of that matter.
Revenues for the first quarter of this current fiscal year will likely be $10 million above the legislature's predictions.
"These continue to be challenging financial times for our budget. The $26 million surplus we generated, plus the fact revenues -- especially business taxes -- are coming in above the legislature's estimates, will help us as we continue to manage the budget and address future challenges," Governor Lynch said.