'Budgets should be built from the bottom-up'.

To the heads of all departments and agencies:

In preparing the state budget for fiscal years 2008 and 2009, we face the challenge of stretching limited resources as far as possible and ensuring that we are using taxpayer dollars as effectively and efficiently as possible. We must also remember that our first priority is to serve our citizens and invest in making New Hampshire a better place for all our people.

The information that you will provide will be the primary resource in preparing both my budget and the final legislative budget. I ask that you please be thorough and careful in your responses so that the information you provide will be as useful as possible in determining appropriate levels of funding. Please include the appropriate statistics where available, and do not assume others know the details of what your agencies do.

Your submission should include a maintenance-level request and a change-level request, with a focus on defining results-oriented outcomes. The maintenance request should be a strict interpretation of the law (See RSA 9:4) and provide for the continuation of current programs at "the same level of service authorized and funded in the preceding fiscal yeas." The change request may include your recommendations for new or improved programs that you believe are necessary for the efficient operation of your department and that will result in measurable, achievable outcomes that can be measured against competing priorities. Budget changes must be explained in detail on the appropriate Analysis of Maintenance or Analysis of Change forms, with specific information (caseload data, changes in federal or state law, etc.) supporting your request.

Your budgets should be built from the bottom-up using a zero-based budgeting approach. Program areas should be thought of as a unit unto themselves, with total program costs identified in a single organization (org) code. If you have multiple program areas in a single org code, break them out and work with your business supervisor to set up new org codes. Efforts should be made to not mix funding within a single org code.

With this zero-based budgeting approach, you will be reviewing all your program areas. This should aid in prioritization, determining the effectiveness of programs and identifying areas where efficiencies can be achieved.

In addition, this year, I am asking you to pay special attention to your department's use of consultants. In this package, you will find new forms requiring you to identify all of your consultant-related spending, and to determine whether it may be more fiscally prudent for these tasks to be undertaken by stale employees. Be sure to include all costs when undertaking this analysis. New forms will also be provided to help better analyze position counts and identify expenditures for information technology, marketing and public information, state-owned vehicles and class 090 series expenditures not otherwise identified.

The operating budget is your department's strategic plan for the next two years. Your direct involvement, creativity and active participation in the process will ensure we have the best state budget for New Hampshire's citizens.

Editor's note: The following are excerpts of Gov. John Lynch's July 27 order directing all state agencies to use a zero-based budget approach, justifying every cost.

Sincerely,

John H. Lynch

Governor