Strong Executive Branch Budget Management Generates Significant Surplus for FY 2011

Press Release

The Comprehensive Annual Financial Report released today confirms that the state, through strong Executive Branch management, ended the previous fiscal year with a significant surplus.

According to the audited financial report, aggressive measures taken by Governor Lynch and state agency leaders in the Executive Branch to address a potential revenue shortfall have resulted in a $17.7 million surplus for state Fiscal Year 2011, and maintains $9 million in the state's rainy day fund.

Due to unresolved accounting issues regarding Medicaid Enhancement Tax payments from hospitals, expenses budgeted for Fiscal Year 2012 were booked to Fiscal Year 2011 for accounting purposes. This primarily accounts for the final surplus of $17.7 million, rather than the originally projected $26 million.

Under existing law, the $17.7 million surplus from Fiscal Year 2011 will be carried forward to the current fiscal year.

"In the face of very difficult economic challenges, we not only delivered a balanced budget, we managed to generate a nearly $18 million surplus. We were able to do this through aggressive management of spending and reducing costs. This significant achievement results from the strong fiscal management and dedication of our state agency leaders and the entire Executive Branch team.

"I believe in balanced budgets, and I am proud of the work we've done to maintain a balanced budget in these difficult times. That work must continue. As we look at the current Fiscal Year, 2012, there are some promising signs, but some significant challenges as well," Governor Lynch said.

The legislature's budget contains a built-in $14 million deficit for this current fiscal year.

Also, a 10-cent cut in the tobacco tax has wiped out much of the gains in business tax revenues, with tobacco revenues running more than $12 million below last year.

As a result of a federal audit of the 2004 uncompensated care program for hospitals, the federal government will reduce its Medicaid payments to New Hampshire by $35 million over the next three years. Through management and slowing caseload growth, the Department of Health and Human Services has absorbed this year's federal reductions without additional program cuts.

The current budget also dramatically reduced uncompensated care payments to hospitals. As a result, hospitals have been challenging current and past Medicaid Enhancement Tax payments. With the major federal government issues resolved, hospitals should be meeting their obligations.

Outstanding issues with the hospitals was the main reason for the delayed completion of the Comprehensive Annual Financial Report.

"If we carry forward the 2011 surplus, and assuming the hospitals pay the taxes they owe, we should be able to end Fiscal Year 2012 balanced. That should be our shared goal," Governor Lynch said. "That is why we should all be working to ensure a balanced budget for this current fiscal year, and why the surplus we generated from 2011 must be carried forward and applied to Fiscal Year 2012."

"Bringing this CAFR to closure took a lot of hard work by departments throughout state government working together. I would particularly like to thank the staff of the Department of Administrative Services, under the leadership of Commissioner Linda Hodgdon, for their dedication and effort," Governor Lynch said.

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