More Money Means State Ends FY '09 in Black

Perhaps the most important piece of news that comes from the state’s review of its 2009 budget is that it saved more money than it thought it would.

A lot more money.

The state reduced costs, in part, because the governor issued a series of executive orders to cap agency spending.

Back in June budget writers thought those orders would save about $15 million dollars.

Fast forward three months to today and Department of Administrative Services Commissioner Linda Hodgdon says the number is actually $74 million dollars.

She says a purchasing freeze had a lot to do with it.

TAPE: it’s paper, it’s fuel, it’s salt, it’s plow blades, any kinds of office supplies. And that’s why I am so appreciative of the agencies. Really looking at it and going in and paying attention, ‘do I really need 12 of those, can I do with six?’

On top of the purchasing freeze and similar savings, the state received $15 million dollars in additional revenue and over $18 million dollars in federal stimulus money that had been booked for this budget cycle.

Overall, Hodgdon says the state ended Fiscal Year ’09 a little over $56 million dollars better than she had projected.

Despite all that, the state still ended ’09 in deficit.

To balance the budget, state officials drew $13 million dollars out of the Rainy Day Fund.

So really, this extra money means a fatter Rainy Day Fund that expected.

But that all could change.

Senate minority leader Peter Bragdon.

TAPE: the balancing of 2009 assumes there is $65 million from the JUA.

The JUA is the Joint Underwriting Association.

The state is currently arguing in court that it has a right to $110 million dollars from the medical malpractice fund.

Budget writers have earmarked $65 million dollars of that money for 2009, with the remainder going to the 2010 budget.

TAPE: we are still relying on something that is going ot be heard in the Supreme Court in less than two weeks...it’s our opinion that stealing this private fund money is unconstitutional, and if the court rules that way, we are back to a $65 million dollar hole.

If the state loses its JUA case, the Rainy Day Fund would be drawn down even further, leaving the state with a little over $10 million dollars in reserves.

An amount many agree is well below what could be needed given the Recession.

Josiah Bartlett Center for Public Policy President Charlie Arlinghaus sees some room for hope even if the JUA case doesn’t go the state’s way.

Arlinghaus says the governor’s executive orders offer a roadmap for Lynch to follow.

TAPE: it turns out that through aggressive management of your department heads the governor can save a lot more money than people thought was possible. That’s good news going forward. It points to what he might be able to do.

Governor Lynch spokesperson Colin Manning says that the Governor is very pleased with the additional money.

He credits tight fiscal management.

Going forward, Manning says the governor doesn’t plan to change keeping close tabs on state spending.

TAPE: we took action over a year ago. We are seeing the results of that today of that close scrutiny of the budget, and that’s going to continue. That’s what the governor has done and what he’s going to continue to do.

If the financial picture does in fact get more grim, the governor may have to become much more aggressive in managing the state’s money.

For NHPR News, I’m DG.