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Forrester sees surplus replenishing state's Rainy Day Fund

CONCORD — State Senator Jeanie Forrester (R-Meredith), who took the chair of the Senate Finance Committee in September, took her first major initiative this week by openly recommending that $15 million of the $72.2 million budget surplus be transferred to the Rainy Day Fund rather than spent.

"I'm coming from my experience as a town administrator, not as a Republican," Forrester said yesterday, explaining that the New Hampshire Department of Revenue of Administration expects municipalities to maintain undesignated fund balances of between 5 percent and 10 percent of their operating budgets. She acknowledged that there is no consensus about the appropriate balance of the state's Rainy Day Fund, but said sound budget management requires a healthy fund in order to address an unforeseen deficit and maintain a strong municipal bond rating.

Forrester said that Governor Maggie Hassan has indicated that while she wishes to deposit some of the surplus in the Rainy Day Fund she also seeks to spend a portion of it. However, she has specified how much would be spent or to what purposes and how much would be saved. Forrester said she will raise the issue when she meets with the governor next week.

The state established the Rainy Day Fund, or Revenue Stabilization Reserve Account, in 1987 at the urging of Governor John H. Sununu, in whose officer Forrester served. The statute requires that any budget surplus of not more than 5 percent of unrestricted general fund revenues be transferred to the Rainy Day Fund unless the balance in that account exceeds 10 percent of unrestricted general fund revenues, in which case the surplus is transferred to the general fund.

Forrester said that although the Legislature has frequently suspended the law, the Rainy Day Fund grew to $90 million by 2009. However, she said that after $80 million was applied to the 2010-2011 budget, the balance shrunk to $9.3 million, its lowest level in 22 years.

In a column published in the Concord Monitor a week ago, Forrester noted that the state closed its books on the 2012-2013 biennium in June with a surplus of $72.2 million. The surplus is $15 million more than the $56 million projected in the 2014-2015 budget adopted last year, which authorized transferring the money to the general fund. The unanticipated $15 million in revenue represents receipts from business taxes that topped estimates.

Forrester recommends transferring the $15 million to the Rainy Day Fund, increasing its balance to more than $24-million. She said that she took the initiative on her own, but enjoys the support of the Republican leadership in the Senate, including the president of the Senate, Chuck Morse of Salem. She said that she hoped to win the backing of Senate Democrats, particularly Senator Lou D'Allesandro of Manchester, the vice-Chairman of the Senate Finance Committee.

Senator Andrew Hosmer of Laconia is one Democrat who questioned Forrester's proposal. "As much as I think we should replenish the Rainy Day Fund," he said, "it is already raining when it comes to our infrastructure — roads and bridges." Recalling the recent remarks of Christopher Clement, the commissioner of the New Hampshire Department of Transportation, who warned the House Public Works and Highways Committee that without more revenue the highway fund would be in deficit by October 2015. Hosmer said that some towns in the North Country have let paved roads return to gravel for want of funds. "It's 2014 and we're going backwards to dirt roads," he remarked.

Hosmer has invited Commissioner Clement to the Lakes Region to discuss the condition of some of the secondary roads in the area with local officials. "It's an imperative issue," he stressed, suggesting that infrastructure needs should be considered before deciding to set aside money in the Rainy Day Fund.

 
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