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Compromise crafted on N.H. state budget, with a decision delayed on Medicaid expansion

People listened outside a packed room as Rep. Mary Jane Wallner, a Concord Democrat and chairwoman of the House Finance Committee, announces that negotiators were still in a stalemate as of Wednesday evening, June 19, 2013 while the commitee of conference on the budget met in the Legislative Office Building.

(JOHN TULLY / Monitor staff)

People listened outside a packed room as Rep. Mary Jane Wallner, a Concord Democrat and chairwoman of the House Finance Committee, announces that negotiators were still in a stalemate as of Wednesday evening, June 19, 2013 while the commitee of conference on the budget met in the Legislative Office Building. (JOHN TULLY / Monitor staff)

Negotiators from the Democratic-led House and Republican-led Senate yesterday hammered out a two-year state budget that delays any decision on whether to expand the Medicaid program until later this year or 2014.

Both sides described the budget deal as a bipartisan compromise that left everyone a little disappointed, but that all involved could support.

“I think we have built a strong budget, and I think it will make a difference in the state of New Hampshire,” said Sen. Chuck Morse, a Salem Republican and chairman of the Senate Finance Committee.

He added, “There were tough decisions in this budget, and today I think all of us are a little bit unhappy. That’s going to happen. I think there were sincere compromises.”

The budget bills were endorsed, 9-0, by the committee of conference and will go to the House and Senate on Wednesday for final votes.

Gov. Maggie Hassan, a Democrat, said she’ll sign the budget into law, assuming it passes the Legislature.

“This bipartisan, fiscally responsible balanced budget agreement represents true and meaningful progress on the priorities that matter to the people of New Hampshire and that are critical for creating good jobs and building a more innovative economic future,” Hassan said.

The next biennium begins July 1.

The nitty-gritty

The budget deal finalized yesterday, which spends roughly $10.7 billion over the next two years, represents the culmination of more than four months of public debate since Hassan unveiled her budget blueprint Feb. 14.

“I’m really feeling like we have come through with a good product,” said Rep. Mary Jane Wallner, a Concord Democrat and chairwoman of the House Finance Committee. “We started out . . . with a wonderful budget that the governor gave us. She was committed to restoring money to the education system, to our colleges” and other areas. “That is here. It is still here. It made it through the budget.”

The budget spends $1.33 billion in fiscal 2014 and $1.36 billion in fiscal 2015 from the state’s general fund – up from the current biennium and slightly higher than the spending levels in the budgets passed by the House in April and the Senate early this month.

There’s more money for the Department of Health and Human Services, the University System of New Hampshire, the Community College System of New Hampshire and various social services compared with the austere budget passed in 2011 by a then-GOP-dominated Legislature.

The House had proposed a 30-cent hike in the cigarette tax, a 12-cent hike in the gas tax spread over three years and $5 increases in the fees for a saltwater fishing license and marriage license. All were rejected by the Senate, along with higher estimates for revenue from existing taxes and fees that had been proposed by the House.

The budget does allow an automatic increase in tobacco tax rates to take effect Aug. 1, including a 10-cent cigarette tax hike to $1.78 per pack. The tax had been cut 10 cents as part of the 2011 budget.

It draws on revenue from other sources to fund the next budget, including an expected surplus of $56.9 million for the fiscal year ending June 30, extra auditors at the Department of Revenue Administration to generate an additional $16.4 million in revenue and a $16.1 million transfer to the general fund from the Renewable Energy Fund.

The budget uses a number of across-the-board cuts to balance the books, including a $7 million cut to HHS, a $10 million cut to the Judicial Branch, a $2 million cut to the Legislative Branch, $1.25 million cuts to the Sununu Youth Services Center and DRA and a $500,000 cut to the New Hampshire Veterans Home.

Most contentious was the Senate’s proposed $50 million cut to personnel costs, with Hassan instructed to find at least $20 million in general fund savings. Democrats warned that could lead to hundreds of layoffs, and the House negotiators instead proposed a $20 million lapse that would require Hassan to find the savings across all spending, not just wages and benefits.

In the end, they split the difference, with the compromise budget including an additional $10 million lapse and a $25 million personnel cut with $10 million to come from the general fund.

The budget includes an additional $16.9 million in general fund spending needed to fund tentative contracts the state has made with four unions, which include the first cost-of-living raises for state workers since January 2009.

The proposed two-year budget balances, if narrowly, with an estimated surplus of $44,000 at the end of the biennium, according to the nonpartisan legislative budget assistant’s office.

Medicaid deferred

The last major piece of the budget puzzle fell into place shortly after 3 a.m. yesterday, when the House and Senate agreed to study Medicaid expansion rather than move forward with it starting next year.

Hassan and the House Democrats wanted to expand Medicaid as part of the budget, accepting an estimated $2.5 billion from the federal government over the next seven years to cover the bulk of the cost of adding an estimated 58,000 low-income residents to the program.

Senate Republicans instead said more study was needed before such a major policy decision could be made, and expressed wariness about whether the federal government can or will keep its promise to fund at least 90 percent of the expansion’s cost in perpetuity.

The two sides traded offers and counter-offers over the course of two days, in the end striking a compromise.

A special commission – three senators, three representatives and three members of the public, plus the insurance and HHS commissioners as non-voting members – will study “the potential costs and benefits” of expanding Medicaid, as well as ways to tailor an expansion plan to New Hampshire.

The commission will begin its work next month and issue a final report by Oct. 15.

The House proposed holding a special session of the Legislature to vote on Medicaid expansion. While the Senate refused to commit to a specific date, it appears a special legislative session could be in the works for late this year.

Hassan wants to expand Medicaid as close to Jan. 1 as possible.

“I am confident that once members of the Legislature see the results of the study, they will want to move forward as quickly as possible through a special session,” Hassan said.

If that doesn’t happen, a bill to expand Medicaid could be filed for the Legislature’s regular session next year.

Praise all around

The Senate prevailed on a number of disputed points during the four days of budget negotiations, including revenue estimates and the elimination of funding for the Green Launching Pad program and Hassan’s proposed Office of Innovation and Efficiency.

But the nine-member conference committee – three Senate Republicans, one Senate Democrat, four House Democrats and one House Republican – was unanimous yesterday in its support for the final deal.

Following the vote, praise poured in from all corners of the State House.

House Speaker Terie Norelli, a Portsmouth Democrat, said the budget “goes a long way toward restoring the investments in our citizens, communities and state.”

House Minority Leader Gene Chandler, a Bartlett Republican, said, “New Hampshire’s taxpayers deserve an honest and transparent budget that promotes an efficient and accountable government that is built on realistic revenue estimates. I’m confident this budget leads us in that direction.”

Senate President Peter Bragdon, a Milford Republican, called it “reasonable and responsible” and said the deal “strikes the right balance between what our citizens need and what the state can truly afford.”

And Senate Minority Leader Sylvia Larsen, a Concord Democrat, said while Senate Democrats don’t like everything, “at the end of the day, this is a compromise, and the very fact that we can reach one is a good thing.”

The full House and Senate will vote Wednesday on the budget, House Bill 1 and House Bill 2, the “trailer” bill that makes related changes to state law.

In the Senate, a two-thirds vote will be required to suspend the rules and pass the budget, since the deal wasn’t finalized yesterday by the chamber’s noon deadline. It was finished before the House’s deadline of 4 p.m., so a simple majority will be sufficient for passage in the House.

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

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