Hassan’s first budget could include casino revenue, more money for university system
Maggie Hassan ; Wednesday, August 22, 2012. ( Alexander Cohn/ Monitor staff) Purchase photo reprints at PhotoExtra »
Gov.-elect Maggie Hassan’s first state budget won’t be unveiled for nearly three months. But she’s already dropped hints about what it’s likely to contain, including revenue from a casino and an increase in funding for public colleges and universities.
“It is early in the process,” she said in an interview Thursday. “We need to bring people together to identify our priorities, identify our resources and then, as we have done in the past, make some tough decisions and forge a compromise budget.”
Hassan, an Exeter Democrat, will take office in January, replacing four-term Gov. John Lynch, a Hopkinton Democrat. Under state law, she’s required to present a budget for fiscal 2014 and 2015 to the Legislature by Feb. 15. The House and Senate will then pass a final budget by the end of June; the new biennium begins July 1.
The budget process has already started, as state agency heads and commissioners submit their proposed spending plans. All together, those proposals would increase state spending by 19 percent from the current biennium, and 21.1 percent just in the state’s general fund.
Hassan will put her own stamp on the budget when she submits her proposal to the Legislature. But with Democrats set to control the House and Republicans holding a slim majority in the Senate, any final budget will have to represent a compromise between the two chambers and the two parties. And Senate Republicans might not prove amenable to raising revenue through significantly higher taxes and fees.
“It’s possible, but I don’t think there’s a lot of appetite in the Senate for major tax increases,” said Grant Bosse, lead investigator for the conservative-leaning Josiah Bartlett Center for Public Policy. (He’s also a Monitor columnist.)
Hassan, a former state senator and one of the architects of the state budget passed in 2009, was sharply critical during the fall campaign of the budget enacted in 2011 by Republicans who then held large majorities in both chambers. Last week, as she has before, she pledged to try to reverse “some of the bad decisions that this Legislature made.”
Among other things, the current budget, which became law without Lynch’s signature, reduced the cigarette tax by 10 cents a pack, eliminated a $30 auto-registration surcharge, slashed reimbursements to hospitals for uncompensated care and cut the University System of New Hampshire’s $100 million appropriation by 48 percent.
Restoring at least some of the money cut from public colleges and universities, as well as from the community-college system, is one of the central pillars of Hassan’s “Innovate NH” plan. She’s also said she wants to make investments in transportation infrastructure, including roads, bridges and the ongoing widening of Interstate 93 in southern New Hampshire.
If those and other spending measures are included in Hassan’s budget, how would the state pay for them? She’s pledged to veto any sales or income tax, eliminating those options for increased revenue. She has voiced support for eliminating that 10-cent cigarette tax cut, and has pointedly declined to rule out options like raising tolls, hiking the gas tax or introducing another vehicle-registration surcharge.
She said she wants to rehire Department of Revenue Administration auditors who were laid off under the current budget, “and I think that that’s a place where we may also see a way some revenues.”
And Hassan supports legalizing a single casino, which would produce revenue for the state.
“That certainly might be a part of the budget proposal,” Hassan said.
That could run into trouble in the House – past attempts to expand legalized gambling have passed the Senate, but have died in the larger chamber.
In any case, revenue estimates can be tricky. Bosse said an overly optimistic revenue projection “solves a lot of problems,” but can cause issues down the road.
“The Feb. 15 budget doesn’t actually have to work. It just has to look like it works,” Bosse said. “Those are two very different things.”
Hassan pledged during the campaign to establish a “Consensus Revenue Estimating Panel,” which would include experts and legislators from both parties, to eliminate politics from the numbers game. She said last week that she intends to keep that promise.
“It’s still early yet, but . . . we are putting together a plan for that and many of our other tasks,” Hassan said.
But there are also challenges on the revenue side – due to the economy, “the expectation is right now that the state will continue to see relatively slow growth in revenue collections,” said Jeff McLynch, executive director of the liberal-leaning New Hampshire Fiscal Policy Institute.
And, McLynch said, there are a number of tax credits and tweaks to state rules that “will begin to come to bear in the coming budget cycle,” including a new education tax credit for businesses that donate to private scholarships and a change in rules regarding net operating losses.
All together, changes that are set to kick in during the coming biennium could cost the state about $150 million in revenue, said Rep. Susan Almy, a Lebanon Democrat and former chairwoman of the House Ways and Means Committee. She said Democrats could try to roll them back, but she said she expects stiff resistance on some provisions.
But since those new credits and other changes haven’t taken effect yet, McLynch said, “If they were to be repealed now, they wouldn’t materially change the amount of taxes that businesses pay. . . . Repealing them would have a positive impact on overall budget balance.”
The politics ahead
Minutes after a recount last Tuesday confirmed his election, Republican Sen.-elect Andy Sanborn of Bedford pledged to vote against any tax or fee increase.
“And I’m sure my Republican colleagues will join me in that effort,” Sanborn said.
That attitude could put the Senate at odds with House Democrats and Hassan as they look for ways to raise revenue.
Sen. Chuck Morse, a Salem Republican and chairman of the Senate Finance Committee, said the last state budget didn’t raise any taxes or fees, “and I don’t anticipate there’ll be any in the next budget.”
After all, he said, “I would think living within our means, like we built our last budget, I think that will be a priority.”
But Morse also acknowledged that the state needs more money for projects like the I-93 widening in his district.
“I think there’s things that need to be debated,” he said. “I point to I-93 because I’m so close to it, but we know we need a bond of up to $250 million, and it’s going to take some work to do that.”
(Ben Leubsdorf can be reached at 369-3307 or email@example.com or on Twitter @BenLeubsdorf.)