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The Citizen

By NORMA LOVE
Associated Press Writer

Thursday, January 29, 2009          

CONCORD, N.H. (AP) — Gov. John Lynch says layoffs will be unavoidable in the budget he is preparing for the next two years. Lynch said Thursday he is looking at every dollar the state spends to determine what spending is necessary and what services can be cut or delayed. "Some layoffs are unavoidable, particularly as we look to eliminate programs," Lynch said. He said he is still working on which programs will be eliminated and did not have an estimate on the number of jobs that will be cut. He said he has not discussed across-the-board layoffs with agencies. "I don't know whether we'll eliminate programs in every department," he said.
Lynch said all state spending — except for debt payments — is being scrutinized, including state aid to communities which has been immune to budget cuts in the past. Lynch did not estimate the size of the revenue-spending gap he is trying to fill for the budget that covers the two years beginning July 1.
He said indications are revenue will grow little or not at all until the economy rebounds, perhaps in a couple years. "This is not a forever problem," he said. Gary Smith, president of the State Employees Association, said laying off state workers would be counterproductive and prolong the economic recovery by putting more people out of work. "During tough economic times, people turn more to government for services," he said.
Lynch should wait and plug holes with federal stimulus funds, he said. Smith said Lynch also should look first to cutting back on consultants. The union represents most of the state's 11,500 workers. Lynch noted that the state provided $550 million in aid to communities, not counting school adequacy grants, over the last two years. State aid is for a range of programs, including school construction and direct aid to communities.
A new school aid formula will increase state adequacy grants in the next budget by roughly $100 million. Lawmakers developed the new aid system to comply with a constitutional mandate — but have frozen aid in the past to deal with economic cycles. "We're not looking — at this point — at level funding adequacy grants," Lynch said. But Lynch said he must examine all spending — including other local aid programs — because the times are extraordinary. "We are looking at all of our costs," he said. "I certainly don't want to downshift costs onto cities and towns, and I don't want to affect local property taxes. But we're all in this together." He said communities know they also need to defer nonessential spending. The state must consider the $550 million in aid in determining how to produce a balance budget, he said. Lynch said that he won't consider tax increases until he has cut spending. He reiterated his pledge to veto sales and income taxes.
"If you look at the revenue side first, you don't deal with the cost structure," he said.
He said he has not changed his position on gambling, a revenue source gambling advocates are pushing as a partial answer in the tough economic climate. "I would want to see compelling evidence that it doesn't impact our quality of life," he said. Lynch said he won't spare what he judges to be nonessential programs just to continue receiving federal matching funds. That could affect the social services the state provides.
In his inaugural address, Lynch outlined what he considers the state's core missions: public safety, education, helping the most vulnerable and preserving New Hampshire's quality of life. He repeated those priorities Thursday. Spending on other services may be cut, he said. "That is the criteria. What can't we afford to do now or what can we delay," he said.