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Dave Solomon's State House Dome: State revenues tighten as growth slows down

October 07. 2017 11:13PM

REPUBLICAN GOV. Chris Sununu, now officially a declared candidate for re-election, had an advantage in his first year that few governors have had since the 1990s. He came into office in the middle of an economic expansion that saw state revenues from taxes and fees far exceed budget predictions, which helped generate a big surplus.

He didn't put it all in the bank. Long before the fiscal year ended on June 30, Sununu with the help of a willing state Legislature, doled out $142 million in off-budget expenditures, so-called "additional appropriations."

Those included $36 million for local roads and bridges, $33 million to cover higher-than-anticipated Medicaid costs, $18 million to deal with the closure of Concord Steam, $14 million in additional highway funds, $4.5 million for Granite Hammer drug interdiction, $2 million for dairy farmers, $5 million for the Governor's Scholarship Fund, and $3.5 million for drinking water and wastewater grants.

In addition to higher than expected revenues, the various state agencies left more money unspent (so-called lapses) than was anticipated, further contributing to the black ink on the bottom line.

By the time the Department of Administrative Services closed the books on FY 2017 on June 30, the state still had enough money left over to add $6 million to the Rainy Day Fund, bringing it to $100 million, with an estimated $19 million left over to help school districts with projects related to health and safety, security or internet connectivity.

But revenue receipts in the first three months of the new fiscal year suggest that the party may be over.

The steady increase in revenues the state saw from 2014 ($2.17 billion) to 2015 ($2.26 billion) and 2016 ($2.48 billion) appears to have leveled off. The estimated total for 2017 stands at $2.40 billion. The 2018-19 budget projects an estimated surplus of $671,000.

"The biggest take-away from the revenue projections at this point is that people who got accustomed last year to having these supplemental appropriations should not expect additional new spending in 2018," says Greg Moore, state director for the fiscally conservative Americans for Prosperity.

"The state is going to have to live within its means in 2018, and people who desire enhanced spending on various components are going to have to wait until the next budget to make their case."

That view is shared by the less-conservative New Hampshire Fiscal Policy Institute, which last week also issued a warning about the leveling off of revenue receipts.

"The revenue situation we are in is still good, and appears to enable us to fund the priorities that are laid out in the state budget," said NHFPI Policy Analyst Phil Sletten, who previously served as a performance auditor for the Office of Legislative Budget Assistant. "However, seeing essentially no growth in some of these revenue sources is potentially concerning for the future."

That's particularly true if Keno revenue fails to come in as predicted, while the state is still on the hook for full-day kindergarten funding, another Sununu priority; or if something unexpected happens, like the closure of Concord Steam, which forced the state to find a new way to heat its office buildings.

Sununu is aware that his options will be narrower in the year ahead. "As we move forward, we will continue to manage the budget carefully and in a fiscally conservative manner," he said on Friday.

Nashua gets a hearing

The call by Nashua Mayor Jim Donchess for a public hearing in the Gate City on the state's 10-year transportation plan did not fall on deaf ears.

The state's second largest city was initially not included in the statewide schedule of 19 hearings from Sept. 11 to Oct. 26. Executive Councilor Andru Volinsky offered to host a hearing in Nashua if Executive Councilor Dave Wheeler, whose district includes Nashua, would not.

After a little back and forth between Wheeler, Donchess, the DOT and Volinsky, a Nashua meeting was scheduled at Wheeler's request for 7 p.m., Oct. 19, at Nashua Community College.

Wheeler still thinks Nashua officials should have attended an earlier meeting in Merrimack. "We're happy to do this for them if this is what they feel they need," he said, "but we would hope in the future they would be more of a team player with the region."

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