Governor John Lynch
Testimony - House Finance Committee
Tuesday, January 15, 2008

Good afternoon, Madam Chair, members of the committee.

Thank you for allowing me to appear before you today as you begin your important work this session. Let me begin by thanking you for the incredible amount of effort, thought and commitment you put into developing our current state budget.

Last year, we worked together to craft a responsible budget. It is a budget that makes smart investments, addresses long-neglected needs and builds a better future for New Hampshire’s citizens.

While we have made smart decisions funding our spending priorities, the fact remains that we are not immune to national economic conditions.

The national mortgage crisis and a dramatic spike in energy prices, among other factors, are weakening the national economy. I am very concerned about the direction of the national economy, and the impact it is having here in New Hampshire.

Our budget was put together with sound revenue projections, based on modest economic growth and historic trends. By making tough choices, we were able to re-direct resources to services for our citizens.

In the first six months of the fiscal year, revenues came in close to our projected levels. When we crafted this budget, however, economic forecasters were not predicting the severity of the situation that the nation is currently facing.

The Ways and Means Committee today is beginning to receive testimony from agency heads on expected revenues. The news is sobering. We are beginning to see the impact of the national economic downturn here in New Hampshire. We can minimize that impact, if we continue to be fiscally responsible.

Barring an emergency, I will not support any bills this session that require additional general fund spending.

I also will not support bills that create positions or programs to be funded in the next budget. Those proposals should be considered in the context of the next biennial budget and weighed against other priorities.

Madam Chair, I know we are in agreement on these issues, and I appreciate the leadership your committee is showing.

In addition, I’ve already begun meeting with the heads of the major agencies and directed them to revise their revenue estimates based on these new economic conditions and to develop contingency plans for spending reductions.

We must be prepared to cut spending to keep the budget balanced and meet our responsibilities to the people of New Hampshire. I expect that in the next several weeks, we will know what spending reductions we may need to make, and I will be able to present you with a proposal. I will work closely with you to make sure that any reductions minimize impacts on our citizens.

We can and will weather this storm. New Hampshire’s economy, while it is feeling the impacts of the downturn, is stronger than the rest of the region. That is due in part to the investments we have made in New Hampshire.

By reinstating the job training fund, creating the research and development tax credit, by investing in higher education, we are giving businesses the tools they need to compete and grow, and to strengthen our economy for the future.

I look forward to working closely with you to ensure fiscal responsibility and to help our citizens through these times.

Thank you.