Emphasizing the need to lead the way to encourage innovative economic growth that will create good jobs, Governor Maggie Hassan today presented her FY 2014/2015 balanced budget proposal to a joint meeting of the House and Senate Finance committees.

The Governor's budget proposal takes a fiscally responsible approach, cutting state agency general fund budget requests by more than $500 million and keeping general fund spending below FY 2008 levels, while addressing the priorities that are critical for building a more innovative economy.

"The budget plan that we present today is a fiscally responsible proposal, balanced with no income or sales tax, that is focused on innovation, economic growth, and creating good jobs to support a strong middle class," said Governor Hassan. "It is also a budget that recognizes that we cannot address all of our challenges all at once in these uncertain economic times."

"But by making tough decisions, encouraging new innovations to make government more efficient, and by making responsible revenue choices, we balanced the budget and made critical investments in public safety, higher education, economic development, and health care in order to put New Hampshire back on the path to a strong and innovative economic future."

Governor Hassan's budget begins implementing her Innovate NH jobs plan, substantially restoring funding cuts made to New Hampshire's public universities and colleges in exchange for a tuition freeze, doubling the Research & Development Tax Credit, and providing technical support to help businesses grow and create jobs.

"First and foremost, we must attract the innovative businesses and good jobs that will drive our economy forward," said Governor Hassan. "That's why this budget works to make strategic investments, such as funding incubators like the Green Launching Pad, and doubling the research-and-development tax credit. But our most important task is to ensure that our workforce is the strongest in the nation by making higher education more affordable and more accessible for all of our people." The Governor's proposal also invests in priorities that are critical for keeping New Hampshire's communities and people safe, healthy and productive, including public safety, health care, and protecting our natural resources.

To responsibly fund New Hampshire's priorities in order to build a more innovative economy, the Governor's proposal includes $80 million from licensing one high-end, highly regulated casino, which would create thousands of jobs, provide an economic boost, and help the state restore funding for important areas such as higher education and mental health.

"I know expanded gambling has been an on-going and difficult debate, but I ask that you keep an open mind as we all work together to advance the priorities that will help us build a more innovative economic future," said Governor Hassan. "Because the true risk we all face is the risk of letting our economy fall behind and allowing the good jobs and growing businesses of the innovation economy to develop elsewhere.

"I believe the fiscally responsible approach that we have taken puts our state back on the right path and will help set the foundation to build a more innovative economy with more good jobs that can support a growing middle class."

The following is the full text of Governor Hassan's testimony to the Joint Finance Committee:

Madam Chairwoman, Mr. Chairman, and members of the House and Senate Finance Committees:

Thank you for the opportunity to appear before you today to present my balanced budget proposal for FY 14/FY 15. Let me take a moment to introduce my Budget Director, Gerard Murphy, who many of you know and have worked with on previous budgets.

The budget plan that we present today is a fiscally responsible proposal, balanced with no income or sales tax, that is focused on innovation, economic growth, and creating good jobs to support a strong middle class.

It is a budget that begins rebuilding, based on the priorities that are critical for an innovative future: ensuring that all of our people can receive an education and develop skills for good jobs, attracting and growing cutting-edge businesses, and sustaining our high quality of life by keeping our communities and people safe and healthy.

It is also a budget that recognizes that we cannot address all of our challenges all at once in these uncertain economic times. We made difficult choices, cutting state agency budget requests by more than $500 million dollars and keeping state general fund spending 7 percent below 2008 levels in fiscal year 2014.

But by making tough decisions, encouraging new innovations to make government more efficient, and by making responsible revenue choices, we balanced the budget and made critical investments in public safety, higher education, economic development, and health care in order to put New Hampshire back on the path to a strong and innovative economic future.

First and foremost, we must attract the innovative businesses and good jobs that will drive our economy forward. That's why this budget works to make strategic investments, such as funding incubators like the Green Launching Pad, and doubling the research-and-development tax credit.

But our most important task is to ensure that our workforce is the strongest in the nation by making higher education more affordable and more accessible for all of our people.

Ever-rising tuition rates can force many families to avoid even considering New Hampshire's public colleges and universities, hurting our competiveness. If we hope to encourage job creation and innovative economic growth, we cannot keep losing our young people or fail to develop our workforce.

That's why our budget substantially restores the cuts made to our community college and university systems.

The University System will receive an increase of $20 million in fiscal year 14 with an additional increase of $15 million in fiscal year 15, bringing the system back to 90 percent of where it was before the cuts.

And funding for the Community College System is fully restored in the first year, with an additional $3 million in the second.

In exchange, the leadership of both the community college and university systems have made it clear they will present to their boards plans to freeze tuition for the next two years.

This budget also protects our state's commitment to our public K-12 education system by fully funding the existing Adequacy formula. And in the second year of the biennium, this budget begins to increase local aid, fully funding the building aid formula, increasing catastrophic aid, tuition and transportation assistance, providing $3 million to delayed and deferred wastewater projects, and increasing meals and rooms revenue distributions to communities by $5 million.

Just as we need to prepare our workforce for 21st century jobs, we need to lay the groundwork and provide the support innovative businesses need to create those jobs.

Our economic success, however, will depend on our efforts to maintain our high quality of life as one of the safest states, healthiest states and most livable states in the nation. We cannot walk away from our responsibility to provide the basic services that are critical to the overall well-being of our families, our businesses, and our communities.

This includes ensuring that all of our citizens are able to live healthy, productive lives with access to quality, affordable health care, which is why our budget proposal moves forward with accepting the $2.5 billion in federal funding available for expanding Medicaid.

An independent study by The Lewin Group concludes that these funds will help thousands of individuals and families access health coverage, create an estimated 700 jobs, and save Granite Staters more than $92 million.

The federal government will provide 100 percent of the funding for the first three years and no less than 90 percent thereafter, and the federal government has historically fulfilled its commitments to the Medicaid program.

As both Democratic and Republican governors around the nation have said, it's a good deal that will allow us to save money in existing state programs, while increasing state revenues and boosting our economy.

To maximize the potential of expansion and our health care dollars, this budget continues the implementation of Medicaid Managed Care.

At the same time we need to reexamine the massive tax increase imposed by the last budget on New Hampshire's hospitals, which has put a strain on their ability to maintain their operations, and has caused a delay in implementation of Medicaid Managed Care. This budget begins to restore those funds by reducing Medicaid Enhancement Tax revenues to the general fund and provider payments, making more funding available for uncompensated care payments.

Our balanced budget proposal also recognizes the need to address our strained mental health system, one of our most pressing public health challenges. Our plan resumes efforts to repair our mental health system, helping us move forward with implementing the state's 10-year mental health plan by phasing in changes with a systematic approach that will strengthen all aspects of mental health care in our state and move us toward more community-based care.

Supporting the health and well-being of all of our citizens also means ensuring that they can work, live, and raise their families in the safest possible communities, and this budget takes steps to strengthen our public safety infrastructure, beginning to restore funding for the Children in Need of Services Program, putting 15 more state troopers on the road and allowing us to continue operating three drug task force teams.

Our budget also recognizes that as we strengthen and protect our communities and grow our economy, we must always preserve our beautiful natural resources that make New Hampshire such a special place to live, work and raise a family.

This budget restores $1 million for the Land and Community Heritage Investment Program in the first year of the biennium, and fully restores the program in the second to help protect our cultural, historical, and natural resources.

As we make this progress, we must continue to reform state government, and our budget moves forward with efforts to make state government more innovative and efficient.

It continues to consolidate the state's office functions. It remakes the Liquor Commission, moving from a three-member commission to a single commissioner model. And it will move all of our boards and commissions to one licensing system, modernizing the system for the agencies and for the public.

In addition, this budget creates the Office of Innovation and Efficiency at the Department of Administrative Services, which will work with state agencies on streamlining, implementing recommendations of performance audits, and developing transparent performance measurements. The office will also lead efforts to implement recommendations from a Commission on Government Innovation, Efficiency and Accountability, which I will soon be creating by executive order to bring the public and private sectors together to modernize state government and provide state services more efficiently.

I recognize that the Ways and Means Committee will be likely dealing with the revenue portion of this bill. But I have also proposed what I believe are appropriate actions to ensure a balanced budget that meets our state's priorities.

To help reduce New Hampshire's youth smoking rate, this budget reverses the tobacco tax cut of the last biennium and increases the tobacco tax by an additional 20 cents. It restores positions in the Department of Revenue so we can properly process returns, and ensure that the system is fair. The previous legislature passed a number of tax law changes, but never paid for them. This budget delays implementation of some of those changes. And it also proposes using revenue from the licensing of one high-end casino to pay for our priorities.

The revenue from one casino would mean tens of millions of dollars a year that can be used to strengthen our economy and address our priorities, as well as funds to address social costs like substance abuse and gambling addiction.

A high-end casino would also bring a significant economic boost, creating more than an estimated 2,000 jobs during construction and 1,000 long-term jobs, while attracting new businesses and economic development.

I know expanded gambling has been an on-going and difficult debate, but I ask that you keep an open mind as we all work together to advance the priorities that will help us build a more innovative economic future.

Because the true risk we all face is the risk of letting our economy fall behind and allowing the good jobs and growing businesses of the innovation economy to develop elsewhere.

I believe the fiscally responsible approach that we have taken puts our state back on the right path and will help set the foundation to build a more innovative economy with more good jobs that can support a growing middle class.

I am ready to roll up my sleeves and work with you, because we have the opportunity and the capacity to build a bright economic future for our people.

We must lead the way and work together to build a stronger, more innovative New Hampshire. I look forward to working in partnership with all of you throughout this budget process.

Thank you.

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