Retiree hike hits with thud

Tom Fahey reports in the Union Leader on the cost of shoring up municipal pension programs.

Towns, cities, school districts and the state itself could see pension costs for police, teachers and other public workers increase by an average of nearly 23 percent July 1, 2011.

Consultants for the New Hampshire Retirement System yesterday recommended the rate hike. The steep increase stems from a combination of investment losses -- 18 percent for the year that ended June 30 -- and the need to catch up with a long-term funding problem that began building nearly two decades ago.

The rates won't take effect until the NHRS board of trustees formally adopts them in September 2010. At that point, they will become a factor in budget planning for towns and school budgets. A year ago, rates were projected to go up between 25 and 35 percent.

Law stings laid-off workers, employers

Tom Fahey reports in his Under the State House Dome column on higher unemployment claims leading to higher taxes for employers and longer waits for benefits for employees.

Employers will pay higher taxes in 2010 to help sustain the system, and workers will see a one-week delay in their benefits.

Under a change in state law, Gates said, a worker who is furloughed for two weeks will receive a one-week benefit. A worker out of work for 15 weeks will get 14 weeks. A worker furloughed for one week will be out of luck.

With the higher taxes employers will be paying, Gates said, "it was felt that employees ought to participate in some manner in the solution." Cutting benefits would have jeopardized a $25-a-week federal benefit enhancement, he said.

Trust Fund for Municipal Health Care?

Tom Fahey writes in his "Under the State House Dome" column about a new approach to funding health care benefits for municipal workers.

A commission working on the problem of funding health benefits for retired public sector workers agreed on a solution last week. The plan calls for a new system of trust funds that would provide retired teachers, firefighters, police and municipal workers with a health care subsidy.

The current system is broken badly, especially for teachers. Funding for a subsidy for retired teachers was so low that the Legislature cut off eligibility this year.

The new retiree medical trusts would be fed by contributions from both workers and their employers at rates agreed to in local contract negotiations.

Estimates are it will take four years before enough money builds up in the trust to provide a benefit. Trustees of each work group's fund would set benefit levels, based on its finances.

Fahey also writes extensively on the layoffs across state government.

State layoffs hit juvenile services, corrections dept.

Tom Fahey reports on the first round of layoffs following the rejection of the state labor contract.

Corrections, Environment, Health and Human Services, Treasury, Agriculture, Information Technology and just about every other area of government are seeing jobs cuts or transfers in moves to save $25 million in personnel costs. The judicial and legislative branches of government have to contribute $4 million of the total savings. Layoffs will be effective before the end of the month.

JJS director William Fenniman said staff cuts at the Sununu center are easier to absorb right now because population is so low. Built to handle 144 young people, the former youth Development Center had only 63 youngsters yesterday, he said.

What happened to those 750 layoffs?

Tom Fahey reports in the Union Leader on the State Employees Associatin promise to fight to keep every job that Governor Lynch wants to cut. He also shows where the cuts are coming.

Nearly half the workers affected by the changes are at the Department of Health and Human Services, the state's largest agency. HHS Commissioner Nicholas Toumpas said in an e-mail to workers that HHS's share of the cuts comes to $8.8 million, and that he'll cut or transfer 150 workers.

The cuts Lynch is making are well below the 750 jobs he and his staff warned would go if the SEA rejected a contract that called for 19 unpaid furlough days over two years.

Lynch said Tuesday that the first estimate of 750 jobs was not based on hard math, but on averages, figuring between $50,000 and $70,000 in wages and benefits per job. As department heads dug deeper into how they'd implement layoffs, the number of cuts began to fall.

Lynch Layoff Roundup

In the Telegraph, Kevin Landrigan says Governor John Lynch is moving forward with plans to lay off 250 workers and demote 60 more.

Some of the savings will occur through the elimination of vacant jobs that are paid for in the existing $11.5 billion state budget, Lynch told reporters.

The three-term Democratic chief executive said some employees at all levels of authority will be let go, but whole agencies and specific jobs solely paid for with federal or other nonstate dollars would be exempt from the layoff.

Many of those vacancies were already included in the budget, which extended the partial hiring freeze imposed by Lynch in February 2008.

Shira Schoenberg gets reaction from the head of the State Employees Association in the Monitor.

"Services are going to go unprovided," said SEA President Gary Smith. "Kids are going to go unprotected. Elderly are going to freeze. And we're going to be able to say this didn't have to happen. . . . This happened because the governor didn't recognize the need and didn't give the resources to it."

Smith said the union is considering whether it has any legal avenue to challenge the layoffs.

He added that after the vote, Lynch had little choice.

"(Lynch) built his own political box," Smith said. "He had nowhere to go but to show that he's tough and can follow through on his threat."

In the Union Leader, Tom Fahey reports that the cuts will come from departments funded with state General Fund dollars.

Lynch would not specify what government agencies will be hit. Only jobs that will save the state money will be cut, he said.

That means layoffs are unlikely at the Department of Employment Security, which is federally funded. Banking, Insurance and the Public Utilities Commission appear safe, too, since they run on fees from companies they regulate.

Many Safety and Transportation jobs rely on highway funds, not general tax revenues. Safety Commissioner John Barthelmes told his workers in a memo yesterday "there will be no layoffs" in his department.

Demotions on tap instead of layoffs?

UPDATE- The Concord Monitor's Shira Schoenberg has more solid numbers on the layoffs and demotions planned by the Governor's Office.

Gov. John Lynch announced this afternoon that he will lay off 250 state employees, and reassign 60 more to lower-paid positions. Layoff notices are starting to be sent out today, and will continue throughout the week

The Union Leader's Tom Fahey reports that Governor John Lynch plans to layoff or transfer 300 state workers by the end of the month in an attempt to save the $25 million in personnel costs mandated by the state budget.

Lynch said he is acting on a choice he warned about throughout the last several months of contract talks with the State Employees' Association. A vote by SEA members to reject a proposed contract that contained a mandatory furlough plan made layoffs unavoidable.

“It’s going to be a difficult time for the affected state employees,” Lynch said. “The opportunity was there to avoid this situation.”

Before the State Employees Association voted down the state's contract offer, Lynch had said up to 750 workers could be laid off. Fahey does not report how many workers would be laid off, and how many would be demoted. Obviously, cutting employees' pay saves much less money than firing them and leaving those positions vacant.

Sunday Column Rundown

Yesterday's political columns were, well, political. But they did report some on state policy as well.

Under the State House Dome, Tom Fahey writes about the upcoming SEA vote on the state contract, and some problems the union has had getting the ballots out properly.

SEA leaders are downplaying the errors that led to some members getting more than one ballot. Spokesman Mike Barwell said a problem with an address label printer led to some duplicate envelopes being sent out. In other cases, two ballots got stuck together and went into a single envelope.

Best reckoning by SEA is that 16 duplicate envelopes went out, and that 40 or 50 people got double ballots.

"At worst it amounts to .008 percent of the membership -- statistically pretty insignificant," Barwell said.

Fahey also writes about the upcoming Veto Day in the Legislature, with the medical marijuana bill drawing the most attention, and on our recent study on vanity license plates.

In the Monitor's Capital Beat column, Shira Schoenberg reports that the State Employees Association is pointing to the large number of vacancies in state positions as an alternative to furlughs or layoffs.

The Legislature has mandated that Lynch find $25 million in personnel savings. "It's hard to believe that the governor can't find $25 million of general fund monies somewhere in that 123-page list of vacant positions," the State Employees' Association said in an e-mail to its supporters last week. Jay Ward, SEIU political director, said the state should examine unfilled positions before resorting to layoffs.

Ward said the list proves that state employees have already taken a hit. "For every person that doesn't get hired, we're picking up the slack for all of those unfilled positions," Ward said. Lynch is asking state employees to give up another $25 million, Ward said, but "how much has he already taken in personnel cuts?"

The vacancies won't save the day for the SEA. Many are not funded with General Funds, where the $25 million in savings has to be found, many are unfunded already in the budget, and more importantly, many have already been counted in the budget. We've done extensive reporting on the Executive Order hiring freeze put in place in February 2008. Those savings have been built into the Legislature's plans, and can't be tapped again. Schoenberg also writes about the 680 House bills filed for next year's session.

In the Nashua Telegraph, Kevin Landrigan writes on the SEA's vacancy argument, the dispute over whether state agencies should have emailed an op-ed on the contract to employees, and the latest news on state revenues.

Vanity Pays

Tom Fahey picks up on our recent study on vanity plates in his Under the State House Dome column in the Union Leader.

VANITY PAYS: Vanity license plates are still popular, despite higher fees, according to a review by the Josiah Bartlett Center. Cost of the plate went from $25 a year to $40 when the state budget passed in June, a 60 percent increase. The price hike took effect Aug. 1, so it's a bit early to go trend spotting.

But the center's investigator Grant Bosse said, "Based on the first month with the higher fee, it turns out our demand for vanity plates is pretty steady at these prices."
Nearly 15 percent of New Hampshire cars carry vanity plates, second in the nation to Virginia at 16 percent.

State workers file labor complaint

Tom Fahey reports in the Union Leader that the State Employees Association has followed through on its threat to file an unfair labor practices complaint against the Governor and his department heads.

The SEA contends in its latest complaint that state department heads wrongly gave workers an opinion piece that the state negotiating team wrote describing the contract.

SEA members have ballots now, and must submit their vote on the contract by Friday, Oct. 9. Union leaders urged roughly 6,400 voting members to reject the deal, saying there are no guarantees against future layoffs even if the contract is ratified.

Gov. John Lynch sent the negotiating team's piece in an e-mail to department heads. He said it could be used to answer workers' questions.

As I wrote yesterday, monopoly of information is always a bad idea. State workers should be allowed to decide on the contract without pressure from their employers. They should also be allowed to decide without being put in a vaccum imposed by their union.

Political fallout from SEA Contract Mess

In the Sunday columns, both Kevin Landrigan and Tom Fahey look at the political fallout of the State Employees Association contract squabble.

In his column, Landrigran reports that union negotiator Diana Lacey says state workers are looking out for New Hampshire residents and not just their paychecks.

SEA chief negotiator Diana Lacey said that in casting their votes, employees will have the proper delivery of state services on their minds as much as their own finances.

"Therein lies the struggle that has far more to do with a long-term issue state employees have been living with, but for which the public is essentially unaware,'' she wrote in an op-ed piece released Friday.

Under the State House Dome, Fahey writes that the contract isn't the only choice facing union members.

This isn't the only big vote coming up for SEA, either. On Oct. 24, about 400 union delegates will gather in Nashua to vote for SEA president, second vice president and secretary. The last time President Gary Smith was elected, the results were challenged. The new vote is the negotiated outcome of a complaint to the U.S. Department of Labor that Smith used a delegate contact list he withheld from other candidates.

The union also faces a renewed effort by the New England Police Benevolent Association to woo corrections officers away from SEA. The group already voted once to join NEPBA, but the results were thrown out because of problems in timing of the organizing petition.

Governor makes plans to lay off as many as 750

Tom Fahey reports in the Union Leader that Governor John Lynch is moving forward with plans to lay off 750 state employees, following word that SEA leadership is recommending that its members reject the contract negotiated last week.

Lynch and his staff are working through proposals that department heads have made on how to cut jobs to save $25 million in state funds over the next two years. The savings are mandated in the state budget that took effect July 1.

"It has been the governor's preference that we achieve that saving through a well-structured furlough program, rather than laying off hundreds of state employees," Colin Manning, Lynch's press secretary, said.

The layoffs wouldn't go into effect if the contract is approved. But Lynch is right to prepare for the alternative.

Sunday Columns

Shira Schoenberg's Capitol Beat in the Concord Monitor: lots of politics.

Tom Fahey's Under the State House Dome in the Union Leader: not online. Is it in the print edition?

Kevin Landrigan in the Nashua Telegraph: lots of politics, but he also provides some behind the scenes reporting on the negotiations going into the state employees' new contract proposal.

Negotiating tactics

How tough did Lynch have to get in order to gain agreement on a final contract with the State Employees Association?

Answer: Not very. It's clearly in SEA's best interest to reach a deal on furloughing state workers to avoid what would have been as many as 500 employee layoffs.

SEA President Gary Smith was under some pressure as an ex-corrections officer who was trying to deliver for his members a pay increase to make up for the loss of 15 minutes of daily overtime pay they had been getting for a morning briefing.

But Lynch couldn't and wouldn't go along with a pay increase for a small group at the same time he was making more than 10,000 state workers put up with the equivalent of a 6 percent pay cut by taking 19 days off without pay over the next 21 months.

Lynch gave up making all workers join a point-of-service health plan that would have reduced the state's administrative costs. In exchange, the union accepted one more furlough day.

State House Dome: Mental-health budget cuts on the table

Under the State House Dome in the Union Leader, Tom Fahey reports that Health and Human Services Commissioner Nick Toumpas is considering cuts to a mental health program, while state bureaucrats are predicting a parade of horrible should they cuts come to pass.

Roland Lamy, executive director of NHCBHA, said the cuts mean longer waits for services, fewer residential beds in community centers, more admissions to the state hospital, higher criminal-justice costs and elimination of transportation services the mentally ill depend on to take care of basic needs. He noted that the budget assumed case loads would increase during the next two years.

"Our position is that approval of these reductions would be effectively turning our backs on those most in need, knowing what the outcome will be," Lamy wrote Erik Riera, administrator of the Bureau of Behavioral Health.

Committee urged to consider sales tax

Tom Fahey reports in the Union Leader on a House Ways and Means subcommittee opening its study of an income tax bill by hearing from a sales tax advocate.

Gittell said the bill would hit businesses and wealthy individuals hardest. It would also have a disproportionate effect on those who live along the Massachusetts border, where real estate values are higher.

He said any tax policy should tax what a state wants to discourage, leave alone what it wants to encourage, be kept simple, stable and at rates below bordering states. When times are flush, money should be set aside for lean times that inevitably follow, he said.

He offered a sales tax as a solution along those lines, and said it would gradually lower the state's ranking as nation's second highest concentration of retail jobs. He said the jobs pay low and offer little advancement opportunity.

Lawmakers' travel tab takes a GOP hit

When House and Senate Republicans called for budget cuts to balance the state's impending shortfall, Democrats asked for specifics. Tom Fahey reports in the Union Leader that one Republican suggestion is the House travel budget.

They had called on Democrats in June to trim spending on memberships in national organizations, such as the Council on State Government and the American Legislative Exchange Council. They argue there are still savings to be had.

"It's higher than it needs to be and it's higher than it should be. We're cutting state employees, we're cutting spending in departments, we should be cutting here, too," said Rep. Gene Chandler, R-Bartlett, a former House speaker.

One area Republican lawmakers point to as excessive is the budget for out-of-state travel, which went up 25 percent for House members, by $25,000 a year to $125,000 annually.

The Senate actually cut its budget for out-of-state travel by more than half, from $24,000 to $11,500 a year.

The Josiah Bartlett Center has requested and received detailed records of legislative travel for the past ten years. We are still organizing that data, and have not yet shared our analysis with anyone. In light of this issue coming to the fore, and the limits on Executive Branch travel imposed by Governor Lynch's Executive Order 2008-01, we will try to get that information out as quickly as possible.

Shhh, they're talking income tax

Tom Fahey leads his "Under the State House Dome" column in the Union Leader with more details on the Economic Summit that longtime income tax supporters Terie Norelli and Susan Almy are putting together, which they say will be about so much more than the income tax.

Norelli said the best time to look at the revenue landscape is when lawmakers don't have a budget gun pointed at their heads.

"It's an opportunity for us to take a look at all our taxes and fees. Do they help or hurt the economy, or are they neutral? What's good for economic development and what's bad? They will be hearing from economists on a national and state level on the right and on the left and, hopefully, in between, and there won't be any recommendation coming out of it. It's strictly giving people information," Norelli said.

Fahey notes that the House has held onto an income tax bill for further study. This bill could easily serve as the Legislative vehicle for any tax "reform" ideas coming out of Norelli's tax summit.

Fahey also updates the stalled contract talks between the state and the SEA, and has lots of political stuff.

Norelli's mention of a state income tax alarms conservatives

If Terie Norelli's comments opening the door to an income tax was intended as a way to discuss New Hampshire's tax structure, I guess it worked. Tom Fahey reports in the Union Leader ron the immediate backlash to Norelli's pro-income tax article in the Portsmouth Herald.

Several Republican groups jumped on the remark as evidence that Norelli and other Democrats are ready to pass a tax they predict will damage the fragile economy. The phrase "out of touch with New Hampshire voters" appeared in a number of press releases criticizing Norelli.

Norelli, D-Portsmouth, said yesterday her remarks came during a discussion of a planned legislative review of the effect state tax policy has on its economy.

"I said I think we're looking at everything -- this is to look at all taxes and fees, existing and not existing," Norelli said.

August bad month for state revenues

Tom Fahey reports in the Union Leader that August revenues are down, way down, from the budget forecast.

State revenues came in almost 16 percent lower than expected in August, although liquor and tobacco sales are well ahead of last year's performance.

The state collected $94 million during the month, compared to $111.5 million it hoped to collect.

Net liquor revenues and tobacco taxes produced a combined $33 million for the month, well over the $9 million that business taxes produced. In the first two months of this fiscal year, liquor revenue is up 14 percent over last year, and tobacco taxes, which went up 45 cents a pack on July 1 are 41 percent ahead of last year.

However, tobacco still missed its budget target for the month by $2 million and liquor was $1.2 million short of what needed to keep the budget in balance.

Fahey notes that August is traditionally a low revenue month, so missing the projections is less crucial. September brings in quarterly payments of the state's business taxes, and will go a long ways towards determining whether this budget will meet its revenue expectations.

Rep. Steve Vaillancourt had his analysis on the revenue report up yesterday, and offers a tax by tax rundown on the revenue shortfall over at Red Hampshire.

Parties duel over Lynch Waivers

In his Under the Sate House Dome Column in the Union Leader, Tom Fahey includes reaction to the report on the Governor's 352 waivers to his Executive Order on spending freezes.

The waivers for 17 flashlights (at $110 each) given to parole and probation officers got a lot of attention. But GOP spokesman Ryan Williams focused on waivers that allowed government to hire 162 new people.

"If he'd stuck to his original order, we may not have needed 38 new taxes," Williams said. "This should remind voters that the governor has not been public about the details of his disastrous budget. There are more cuts to be made and more savings to be made."

The executive orders were supposed to save $8 million, but Lynch's staff was happy to point out they actually saved $13.3 million. Williams said if the executive orders had been followed strictly, the state would have saved nearly $20 million.

We're pleased to see people talking about this Executive Order, and its impact on the state budget. We're glad Governor Lynch has apparantly saved the state over $13 million because of it. And we're heartened that his Administration has finally reported the waivers it has issues in FY09. We will continue to monitor how the hiring freeze, as well as the travel and equipment freezes, impact New Hampshire's finances.