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N.H. Senate panel okays $10.7 billion version of next two-year state budget

The Senate Finance Committee put the finishing touches yesterday on a state budget that spends $10.7 billion over two years and blocks Medicaid expansion in New Hampshire, at least for now.

“In the end, we found a way to build a budget for the next two years that is balanced and invests in education and critical services without raising taxes or fees,” said Sen. Chuck Morse, a Salem Republican and the chairman of the Senate Finance Committee, in a statement.

The committee’s final vote on the budget was 4-2, with all four Republicans supporting it and both Democrats opposing it. Unlike the budget passed by the Democratic-controlled House in early April, it doesn’t accept federal money to expand the Medicaid program and instead creates a commission to study the expansion option, which is provided under President Obama’s 2010 health care reform law.

The Republican-controlled Senate’s draft budget increases funding for the University System of New Hampshire and the Community College System of New Hampshire compared with the budget passed two years ago, making no cuts in those areas from the House’s budget.

It does reduce other spending, including an across-the-board cut to the Department of Health and Human Services and a directive for Gov. Maggie Hassan to reduce personnel costs by $50 million over the biennium, including $20 million in general fund savings.

“Senate Republicans have taken the fiscally irresponsible way out. Their back of the budget cuts will impact critical services and cause massive layoffs, but rather than take responsibility for these reckless choices, Senate Republicans are passing the buck,” said Harrell Kirstein, spokesman for the New Hampshire Democratic Party, in a statement.

When the full Senate votes on the budget next Thursday, it will kick off the final stage of the budget process: a committee of conference where negotiators from the House and the Senate will try to hammer out a budget acceptable to both chambers, and to Hassan, a Democrat.

Hassan said yesterday she’s not happy with some of the Senate’s proposed changes.

“These deep cuts to Health and Human Services and employees will cost hundreds of jobs and put at risk critical areas, including mental health care, funding the waitlist for people with developmental disabilities, the (Children in Need of Services) program and the ability to deliver basic services,” Hassan said in a statement.

Revenue and spending

The House’s Democratic majority passed its version of the budget April 3, a plan that spends $11 billion over two years, about $57.7 million less than the budget proposed Feb. 14 by Hassan.

It protected several of Hassan’s priorities, including increased funding for mental health services and the community college system. It trimmed uncompensated-care payments to hospitals by $33 million and her proposed increase in funding for the university system by $12 million.

But senators complained the House’s budget used overly optimistic revenue projections for the state’s Medicaid Enhancement Tax, a 22-year-old levy on hospitals. The Senate Ways and Means Committee has predicted $107.2 million less in revenue from the MET over two years than did the House.

The Senate Finance Committee eliminated an increase in the cigarette tax that passed the House, along with several fee increases. But following the House’s lead, the panel added $16.4 million in revenue from additional auditors at the Department of Revenue Administration.

The Senate committee’s budget also draws $16.1 million from the state’s renewable energy fund to balance the budget in fiscal 2014, and it uses an estimated surplus of $40.6 million from the current fiscal year to balance the next budget instead of placing some or all of the money in the state’s rainy day fund.

Several other sources of revenue appear off the table at this point. The Senate last week killed a gas tax increase endorsed by the House, a day after the House killed a casino bill passed by the Senate. And even if a sales or income tax passed the Legislature, Hassan has pledged to veto it.

The draft Senate budget makes nonspecified cuts to HHS and personnel costs, and it replaces Medicaid expansion with a study commission. The expansion’s cost would have been largely covered by the federal government, but Senate President Peter Bragdon, a Milford Republican, has said the federal government hasn’t always fulfilled its promises to fund other programs.

In all, the Senate Finance Committee’s budget spends $10.7 billion over fiscal years 2014 and 2015, including general fund spending of $1.32 billion in 2014 and $1.34 billion in 2015. Compared with the House’s budget, that’s about $33 million more in general fund spending.

The Senate committee’s budget would end the next biennium in the black, but just barely, with an estimated surplus of $23,000, according to figures provided by the nonpartisan legislative budget assistant’s office.

“Under Sen. Chuck Morse’s leadership, the Senate Finance Committee has crafted a responsible budget that lives within our means, doesn’t raise taxes and increases funding for essential services,” said Jennifer Horn, chairwoman of the state Republican Party, in a statement. “This plan will preserve our state’s fiscal integrity, help grow our economy and protect the New Hampshire Advantage.”

Medicaid reform

The Senate committee’s version of the state budget could lead to big changes in New Hampshire’s Medicaid program.

The budget contains a provision establishing an “Innovation in Medicaid Delivery Commission,” which would work with HHS to apply for a Section 1115 waiver from the federal government.

Such a waiver would allow New Hampshire to make sweeping changes to the Medicaid program, with the goal of improving health and reducing costs.

“We’ve already got a number of innovations that we’re doing right now. . . . We look at the 1115 as a way in which to be able to come up above all of those things and basically encompass all of that into a broader-level transformation for the Medicaid program that looks at how we deliver, how we finance, how we pay for services in the Medicaid program,” said HHS Commissioner Nick Toumpas.

Toumpas said the waiver process is complex and would take time to come to fruition, in the range of 12-18 months.

Sen. Bob Odell, a Lempster Republican and member of the Senate Finance Committee, has worked with HHS on the proposal.

But Morse, the budget writing committee’s chairman, isn’t a fan. He said the state should focus on getting its delayed managed care system for Medicaid up and running.

“I don’t support it,” Morse said yesterday. “It doesn’t do anything that I wanted to accomplish. This doesn’t push one person over the goal line, in my opinion.”

What’s next

The full Senate, where Republicans hold a 13-11 majority, is expected to vote on the budget plan next Thursday.

Unless the House takes the unusual step of agreeing with the Senate’s budget and passes it without changes, the budget will then go to a committee of conference.

A team of negotiators from both chambers would try to craft some sort of compromise, with limited time: The current biennium ends June 30.

(Ben Leubsdorf can be reached at 369-3307 or or on Twitter @BenLeubsdorf.)

Legacy Comments1

The Responsible Republicans AGAIN show the tax and spend democrats how to craft a balanced budget. Maggie's budget and the democrat controlled House budget AGAIN used overly optimistic revenue projections. The last democrat crafted budget left the Responsible Republicans with nearly a $1 BILLION deficit to deal with. The last Responsible Republican budget will show a surplus without raising taxes..........democrats only solution to anything is MORE TAXES

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