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Hassan calls for increased state services, spending ‘to choose our own path forward’

Last modified: 4/2/2013 9:29:56 AM
New Hampshire Gov. Maggie Hassan yesterday called for the state to spend more over the next two years on higher education and mental health services, financed in part by revenue from casino gambling and an increase in the tobacco tax.

Hassan, a Democrat, told a joint session of the House and Senate that her budget will expand Medicaid, freeze in-state tuition at public colleges and begin to restore critical services that were cut two years ago by a Republican-led Legislature.

“Now is the time for New Hampshire to choose our own path forward, to build the foundation for a stronger, more innovative economic future that harnesses the greatness of our people and allows all of our citizens to succeed,” Hassan said.

In presenting her spending and revenue proposals for the 2014 and 2015 fiscal years to the Legislature, Hassan kicked off a process that will last into June as the Democratic-led House and Republican-led Senate hammer out details of the two-year state budget.

The new biennium begins July 1.

Elements of Hassan’s plan face a tough road ahead. The House, for example, has long been hostile to any proposal for expanded gambling in the state.

“I think that the verdict is out on that,” said Speaker Terie Norelli, a Portsmouth Democrat. “But as with every bill that comes before the House, we will take a serious look at it and try to work and see if there is a compromise position.”

Republicans may oppose Hassan’s proposed 20-cent increase in the cigarette tax and were critical yesterday of her decision to rely on $80 million in licensing revenue from a casino to finance state services.

“I don’t know when we’ve ever built a budget around something that’s illegal in the state of New Hampshire right now, and has never passed the House of Representatives. . . . It’s a gamble to gamble, and it’s setting us up for failure,” said House Minority Leader Gene Chandler, a Bartlett Republican.

In any case, a final budget is a long way off, said Salem Republican Sen. Chuck Morse, chairman of the Senate Finance Committee.

“Will it look the same when we’re done? Absolutely not,” he said.

Higher education spending

Hassan’s proposed budget for the next two years would increase general-fund spending by 7.1 percent from the current biennium, to $2.8 billion.

Counting all state funds, including federally financed programs, spending would increase 10.2 percent, to $11.1 billion, biennium-to-biennium.

Two big winners yesterday were the University System of New Hampshire and the Community College System of New Hampshire. Both saw deep cuts in the last state budget e_SEnD the university system saw state aid cut nearly in half, while community colleges had state aid cut by about a fifth.

The university system requested its funding be fully restored to $100 million a year. Hassan didn’t go that far, but did propose state aid of $75 million in fiscal 2014 and $90 million in fiscal 2015. The community colleges would get $40 million in fiscal 2014 and $42.5 million in fiscal 2015, more than restoring what was cut in 2011.

“We need to make it possible for our middle-class families to compete and share in the American dream. Ever-rising tuition rates can force many families to avoid even considering New Hampshire’s public colleges and universities, hurting our competitiveness,” Hassan said. “If we hope to encourage job creation and innovative economic growth, we cannot keep losing our young people or fail to develop our workforce.”

Rep. David Kidder, a New London Republican, was pleased with the boost for community colleges.

“From my perspective, as a state, we get a huge bang for the buck from community colleges,” he said. “That is where we need to be spending the money. Those kids who come out of there get jobs and stay in New Hampshire.”

Todd Leach, president of Granite State College and, as of March 1, the interim chancellor of the university system, said the system’s four schools – including the University of New Hampshire – would use the money to freeze in-state tuition for two years.

“We are grateful to Gov. Hassan for her leadership in re-establishing public higher education as a priority for the future of New Hampshire,” he said in a statement. “Our students and their families deserve this investment, and all New Hampshire citizens will benefit. We look forward to working with the governor and the Legislature to restore the budget fully as soon as fiscally possible.”

Troopers, charter schools, LCHIP

Hassan also dedicated an additional $28 million over the biennium to mental health services, including money for community housing programs, 16 new short-term treatment beds and 10 new receiving beds.

There are 31 state trooper vacancies at the Department of Safety; Hassan’s budget would fill 10 of them, and move five troopers from the Division of Motor Vehicles to patrol duty. Three vacant positions for lawyers in the attorney general’s office would be funded, along with two judges for the superior court system.

New Hampshire Legal Assistance and the Judicial Council would also get more money, and Hassan said $200,000 in general-fund money would go to the Fish and Game Department to help pay for search-and-rescue operations.

The state’s adequacy formula for local school aid would remain unchanged under Hassan’s budget, and charter schools would get an additional $18 million over the biennium to finance enrollment growth and some new schools. The state Board of Education has refused to approve new charter schools since last September, citing a lack of funding; Hassan said the Department of Education will also get new authority to “prioritize new charter school approval to under-served communities.”

Sen. Nancy Stiles, a Hampton Republican and chairwoman of the Senate Health, Education and Human Services Committee, said she liked what she heard from Hassan on charter schools.

“I do agree that we need to take a look at the approval process and make sure they are actually filling the needs that are out there,” Stiles said.

The state’s Land and Community Heritage Investment Program was cut to $1.7 million in 2012 and got just $120,000 in the current fiscal year. Under Hassan’s budget, LCHIP would get an additional $1 million in fiscal 2014 and be fully restored in fiscal 2015, for a total of $5.45 million over the biennium.

Health care expansion

One of the big items in Hassan’s budget is an expansion of the Medicaid program, largely paid for by the federal government.

President Obama’s 2010 health care reform law envisioned expansion of Medicaid, a joint federal-state program, as a way to extend insurance coverage to more Americans. The Supreme Court last year upheld most of the law as constitutional but gave individual states the option of accepting, or rejecting, the Medicaid expansion money.

Hassan said during last year’s campaign that she supported expansion, and included it in the budget proposed yesterday.

“It is the right thing to do for our economy, for our state’s finances and for our families,” she said.

Hassan said Washington “will provide 100 percent of the funding for the first three years and no less than 90 percent thereafter, and the federal government has historically fulfilled its commitments to the Medicaid program.”

But Senate Majority Leader Jeb Bradley, a Wolfeboro Republican and former congressman, said it may be unwise to count on that federal money.

“For anybody to think, with trillion-dollar deficits stretching as far as the eye can see, that Medicaid federal funding is a certainty over 10 years, I got a bridge I’ll sell ’em,” Bradley said. “So we had best keep our eyes open and make very sure that we dot the I’s and cross the T’s before saying ‘yes’ to the Medicaid expansion.”

Hassan’s budget also modifies the Medicaid Enhancement Tax, sending less money to the state’s general fund in order to funnel more money to hospitals in the form of uncompensated care payments. It also creates a commission to study possible changes to the tax.

Cigarettes and a casino

Hassan’s budget assumes traditional state taxes – such as the meals-and-rooms tax, the business profits tax, the business enterprise tax and the interest-and-ividends tax – will see mild growth in revenue collected over the next two years.

In all, that revenue is expected to increase 2 percent in fiscal 2014 from the current fiscal year and grow 1.9 percent in fiscal 2015 from 2014.

Hassan described those as “conservative projections,” and Bradley said Hassan should be praised for “very conservative revenue estimates. That’s very good.”

Hassan’s budget also increases the tobacco tax, which was cut 10 cents in the last budget. That cut is scheduled to disappear later this year, and Hassan wants to raise the tax an additional 20 cents, to $1.98 a pack.

A major source of new revenue in Hassan’s budget is expanded gambling. She assumes the state will collect $80 million in licensing revenue from a single casino over the biennium.

No answer on infrastructure

Hassan yesterday bemoaned the state of New Hampshire’s roads and bridges. She said the state must find a way to pay for paving, repairs and the ongoing widening of Interstate 93.

But, while she didn’t rule out any options, she also didn’t offer any plan to finance those projects.

“We must develop strategies for a long-term solution, for both operations and road construction, and we must do it together, working toward a consensus solution,” Hassan said.

She pointed to two plans pending in the Legislature. One, sponsored by Morse, would use some revenue from casino gambling to finance transportation infrastructure. A second, sponsored by Democratic Rep. David Campbell of Nashua, would raise the state gas tax and vehicle-registration fees by 12 cents and $15, respectively, over the next three years.

“I stand ready to work with any member of either party who is willing to bring constructive, long-term ideas to the table so we can build a consensus solution that will help us begin to improve our roads and bridges and finish I-93,” Hassan said.

Campbell, chairman of the House Public Works and Highways Committee, said he didn’t consider that quite an endorsement of his gas-tax plan.

“But I think she was very clear that she recognizes the severity of the problem,” Campbell said.

Study commissions

In addition to the commission set up to study the Medicaid Enhancement Tax, Hassan announced several more new boards yesterday.

She said she would set up a commission to advise her on the implementation of the state’s delayed managed-care system for Medicaid, as well as a “Commission on Government Innovation, Efficiency and Accountability” to suggest ways to modernize state government.

And she said she would create a commission “to consider what type of retirees health program we should offer to new employees in the future.”

Hassan also proposed restructuring the State Liquor Commission, changing it from a three-person board to an agency with a single commissioner.

Negotiations ahead

The printed copy of the budget proposal is 3 inches thick. And much of it is likely to look different in 4½ months, once the House and Senate are done with it.

Yesterday, Bradley, the Senate majority leader, said Hassan’s plan “relies on three very uncertain revenue sources of state funds: gaming, which while it will pass the Senate is questionable in the House; cigarette tax increase of 20 cents, which while it may pass the House is definitely uncertain in the Senate; and the gas tax increase that Gov. Hassan certainly seems as if she endorsed today.”

The budget next goes to the House, where Democrats hold a 219-179 majority. The Senate, with a 13-11 Republican majority, will take up the budget in April.

Assuming the Senate’s version differs from the House’s budget, the two chambers will most likely negotiate in June to craft a final version.

Hassan is familiar with the legislative process. When she was the Senate’s majority leader in 2009, she was one of the negotiators who finalized the state budget passed that year.

And she’ll probably play an active role as July 1, the first day of the new biennium, approaches.

“I know we won’t agree on everything, and I am ready to work with you to develop a final budget plan,” Hassan told lawmakers. “But let me be clear: We must end this process with a balanced budget, and I will veto anything else.”

(Annmarie Timmins and Sarah Palermo contributed to this article. Ben Leubsdorf can be reached at 369-3307 or bleubsdorf@cmonitor.com or on Twitter @BenLeubsdorf.)


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