Deficit Hangs Over Lynch Inauguration

After his prior inaugurations, John Lynch celebrated twice; one ball up north; one ball in Manchester. In 2006, he danced in black tie to his favorite band, Gary Lewis and the Playboys.

“If you need someone to count on, count me in.”

In deference to the economy, the Governor is skipping the parties this time around. And as for Lewis and the Playboys, they’ll be in Arizona, gigging at a string of RV parks.

"Count me in through thick and thin or it won’t count."

Key lawmakers in both parties are counting as well – on the Governor, to lead the state out of deficit.

“I have no doubt that the Governor wants to get us there. I don’t think he needs to convince me.”

Republican Peter Bragdon is state senate minority leader.

“The people elected him to lead, and I expect to see some progress on this remaining 100 million dollar gap we have.”

“We’re all interested and eager to hear how the Governor foresees getting through the next 6 months on the budget, and we are all eager to work with him on doing it”

Democrat Maggie Hassan is the senate’s majority leader.

"I also think we need to be focused on the future. And there are some real opportunities for some visionary thinking and making government work better for the people of NH."

Given the tight budget, few, if any new initiatives, will likely involve much spending. But Lynch is expected to unveil a few ideas to stimulate the local economy. Incentives for companies to increase their employee rolls, for instance, and perhaps to encourage the growth of renewable energy businesses in the north country. House speaker Terie Norelli says that much would be of a piece with Lynch’s past priorities.

“In the last session the governor put forth some job creation programs that really have put us in a good place in terms of being able to weather this storm. And so I really hope that we will invest in the future of NH in ways that will save us money down the road as well as save us dollars now.”

The House’s top Republican, Sherman Packard of Londonderry, says he’s also hoping for forward thinking on the jobs front.

“It could be tax credits, you know, anything to try get people in here. And I know we are short of money but there are a number of innovative ideas out there, and we ought to see if they would work, and work practically for NH, so in the long term we won’t have the mess we are having now.”

Packard adds that he doesn’t anticipate agreeing with Lynch and the Democrats on all the issues. But the house’s new GOP leader believes the public wants more from his party than complaints about the budget Democrats enacted in 2007.

"That was two years ago, ok. We have to put that behind us. Going back is not going to help us solve the problems we have today. And I don’t think anybody anticipated the economy getting as bad as it did. I am committed to working with the Speaker on all issues.”

Good thing, because lawmakers and the Governor have tough terrain to navigate. Ray Sheppach is executive director the National Governor’s Association. He says the slumping economy has already plunged more than 40 states into deficit.

“It’s fairly early in this down turn, it’s going to get worse.”

Sheppach says many states have cut in areas they like to avoid , like as education spending, Medicaid eligibility, and jobs. Governor Lynch has so far resisted proposing such cuts here. A wild card is the federal stimulus package now pending in Washington. Sheppach says there’s been talk of states sharing up to 15 billion dollars in new aid to schools that enroll a high percentage of low-income students. Congress is also looking at releasing up to 100 billion dollars in additional Medicaid money. That would be on top of billions in new spending on infrastructure projects. Sheppach says the Medicaid money would go the farthest to ease states budget problems, and he says if it comes, it will most likely be in the form of a 4 to 5 percent increase to the federal Medicaid match rate.

“The Medicaid piece is quite fungible; and even if that doesn’t pass until late February, it may well be retroactive, potentially filling as much as 40 to 50 percent of what we would estimate to be the shortfall for the next couple of years.”

Such help would surely make it easier for states to get out from under an economy he compares to the early 1980s. But it would be far from a cure-all. Tough decisions will persist for policymakers here and elsewhere. Governor Lynch will lay out his plans for facing some of these when takes the oath of office tomorrow. More will come during his budget address next month.