Governor Jeanne Shaheen released her budget on February 15th and addressed a joint session of the Legislature to explain her priorities. As part of the budget request process, the State Library asked for $468,000 to replace the existing automation system (Galaxy). This item was not in the Governor's capital budget. Although this was a disappointment, it is not uncommon for items that eventually get into the State's final budget to not be included in the Governor's budget. This was the case in the last Biennium with the database-licensing project. Working with Senators and Representatives, this project was partially funded by the State. Federal funds were used to supplement the state funding to cover the full cost of the databases. The same approach may be necessary in order to purchase the next automation system for the union catalog. This may have an impact on the State Library's ability to provide direct grants to New Hampshire libraries from its federal allocation. The State Library will keep the library community informed about the progress of the state budget.