There was a modest bit of drama as the committees of conference convened for their first session on Thursday. Before the meeting, an added contingent of state troopers were being briefed on the first floor of the Legislative Office Building and there was a buzz in the hallways as legislators, lobbyists, press and observers made their way to the second floor room, 210-211, which normally is the meeting room of the House Finance Committee.
The House Finance Chair, Representative Ken Weyler (Kingston), serves as the conference committee chair and kicked off the meeting. He outlined the budget situation noting that in January the Legislative Budget Assistant had said we faced a potential $895 million deficit in the next biennial budget. The fact that both the Senate and House have come up with balanced budgets with only tens of millions separating us shows how far we have come.
Chairman Weyler then announced that the committee proceedings would be live streamed this year, an innovation, and that anyone in the meeting room would have to be seated. Two other hearing rooms had TVs and if an observer did not have a seat, they could watch the proceedings in one of those rooms.
Then it was on to business. The first duty was to agree on the revenues anticipated from state taxes and fees over the upcoming two years. These are called general fund revenues to distinguish them from money that goes to the highway fund, Fish and Game accounts and some others.
The decision on the revenue projections is critical because that figure determines the upper limit on how much money can be appropriated. Senator Jim Rauch (Derry) and I had met over the preceding two days with Representatives Steve Stepanek (Amherst), the chair of the House Ways and Means Committee, and Norm Majors (Plaistow) to compare notes on revenues. The House and Senate positions were within one percent of the each other with tobacco tax revenue and the profits from the Lottery Commission are the most significant differences.
I use the Lottery Commission revenue projections to highlight the process we go through as we make budget decisions. There was concern that the projections from the Lottery Commission were too high. The Lottery Commission projected profits of $77 million in fiscal year 2012 and $85 million in the following year for a total of $162 million over the biennium. We were very skeptical and reduced those numbers to a total of $142 million for the biennium.
In his budget, the Governor accepted the Lottery Commission projections of $162 million but the Senate/House revenue projections are now $20 million lower. In the current year with one month to go, lottery is struggling to reach its revised goal of $66.2 million, so our conservative estimates for the next two years seem well grounded.
The discussion and vote on revenue projections by the committee of conference took less than five minutes and it was on to the appropriations part of the agenda.
As I finish writing this week’s column, it is Sunday morning and I am about to leave for Concord for an unusual weekend meeting. The chair of the committees of conference has called a meeting today to make sure we meet the Thursday noontime deadline to complete our work.
There are three Senate conferees and five House conferees. I am one of the three Senators along with our chair, Chuck Morse (Salem), and Lou D’Allesandro (Manchester) on the committee.
Some Senators believe that apart from passing a balanced budget the most significant legislation passed this year will be Senate Bill 3, the bill to reform the state retirement system. The House and Senate on Wednesday voted for a committee of conference report that took three weeks of negotiations to complete. A conference committee can be a tough place to do business. That was true of retirement system reforms in SB 3.
Today, the state’s retirement system is underfunded by $4.7 billion, a figure that will grow rapidly unless addressed. A retirement system that is underfunded runs the risk of not being able to make retirement payments and pay for other benefits to current and future retirees and see costs to public employers rise to an unsustainable level.
No question, for a period of time prior to 2006, employers made up of towns, cities, counties and the state, underpaid their share of retirement expenses due to the actuarial accounting methodology in place at the time. When the actuarial plan was changed in 2006, the underfunding was determined to be $2.75 billion and grew to the current $4.7 billion in the last five years.
An April 29 article published by 24/7 Wall Street, "10 States Where Pensions Are Running Out of Money," the New Hampshire Retirement System was ranked third worst in the nation. Hopefully, passage of Senate Bill 3 will steady the situation and make our system’s costs sustainable for public employers, which comes from taxpayers’ money, and be able to provide the benefits earned by public employees.
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