Everything the N.H. Legislature is hoping to spend this year: A breakdown

  • The State House dome is seen on Nov. 18, 2016, as the restoration project nears completion. (ELIZABETH FRANTZ / Monitor staff) ELIZABETH FRANTZ

Monitor staff
Wednesday, May 23, 2018

Last month, New Hampshire received welcome fiscal news. Two months before the end of the fiscal year, the state took in $99 million of unexpected revenue, driven by unexpectedly strong returns in the business enterprise and business profits tax.

The windfall, widely credited to companies’ “repatriation” efforts after the passage of a tax overhaul legislation in Washington in December, accompanied other positive fiscal developments. A $26.5 million tranche of excess federal money for the state’s Children’s Health Insurance Program came through in February, with another $26 million expected next year. And an audit freed up $26.4 million in deferred revenue originally intended for the Department of Health and Human Services – altogether about $150 million in revenue that legislators hadn’t planned for.

Now, lawmakers are hoping to spend nearly all of it. Through a series of bills and amendments in recent weeks – mostly from the Senate – the surplus has been carved up by committees into a series of spending initiatives, from a contract increase for state employees, to an effort to accelerate the repair of “red-listed” bridges, to a critical hospital payment agreement. Of the surplus, $13.9 million will be left over in the end.

This week, those proposals will come before the Legislature for a final vote. Here’s a look at what’s inside, for both fiscal year 2018, which ends June 30, and fiscal year 2019: 

(Scroll down to see a graphical view of the spending). 

Hospital payment settlement: $44.6 million

After seven years of acrimony, negotiations, and ultimately compromise, this month’s settlement between the state and New Hampshire hospitals over uncompensated care payments caps a weighty legal saga. The pricetag: $22.1 million this year and $22.5 million next year in additional general fund revenues, followed by five more years of payments under the new formula into 2024. Not following the agreement would likely invite future lawsuits.

Red-listed bridge fund/state bridge aid: $30.4 million

New Hampshire’s list of red-listed bridges – those deemed in need of critical repairs by the Department of Transportation – has stayed persistently high in recent years; the funding coming in can’t keep pace with the deterioration rate, officials have said. An appropriation under House Bill 1817, this year’s “omnibus” catch-all spending bill, would set aside $20 million in non-lapsing funds for state bridge repairs and $10.4 million for financial aid for city and town repairs.

State employee contract raises: $12.7 million

Since July 2017, the start of the 2018 state fiscal year, state employees from each of the four unions have been without contracts, after negotiations broke down over Gov. Chris Sununu’s preference to keep salaries level funded. In April, negotiators reached an agreement, with three unions receiving 1.5 percent raises and the state corrections officers receiving a 9.1 percent raise to keep competitive with other states.

Public school infrastructure fund: $10 million

As governor, Sununu has championed a new “Public School Infrastructure Fund,” securing $20 million in the 2017 budget to go toward security and facility upgrades. After a deadly February school shooting in Parkland, Fla., state lawmakers moved to add to the fund as a way to “harden” New Hampshire schools, opting to focus on schools despite Democrats’ calls for more stringent gun control measures.

DCYF funds: $3.7 million

Following two high-profile child deaths and a damning outside audit released in late 2016, New Hampshire’s Division for Children, Youth and Families has added new positions but is struggling to reduce a daunting backlog of caseloads. Senate Bill 592 seeks to help reduce that load, including money to hire 25 more social workers as well as additional administrators and attorneys. The bill doesn’t include some of the measures sought by DCYF advocates that would go toward programs to prevent abusive family relationships, but supporters have characterized it as a welcome step forward.

Mental/behavioral health programs: $3.1 million

With lengthy waitlists for behavioral health patients at state emergency rooms barely receding over two years, New Hampshire’s mental health crisis remains at peak levels. Money appropriated under Senate Bill 590 would add $2.7 million in state funding to go toward reducing the developmental disabilities waitlist in the state, to be matched by the federal government for an additional $2.7 million, and $400,000 to the state loan repayment program, intended to attract mental health workers to the state. An additional $300,000 has been added to the latter program in House Bill 1817.

Additional funding to the Sununu Youth Services Center: $3.6 million

Aiming to draw the program down, lawmakers last year reduced funding for the Sununu Youth Services Center in Manchester, a juvenile detention facility, and instructed the state-led agency to reduce its bed count and relocate some children to other facilities. But the Legislature overstepped its cuts by $3.6 million, according to Department of Health and Human Services Commissioner Jeffrey Meyers. The allocation is necessary, Meyers says, if the facility is to remain open through 2019.

Recovery-friendly workplace tax credit program: $1 million

In a striking comeback, a program championed by Sununu to put in money for recovery-friendly workplace initiatives was saved by House and Senate negotiators at the eleventh hour. The initiatives provide training for businesses that want to recruit people in recovery from opioids and other substances. However, in a deviation from Sununu’s original plan, the appropriation will fund a tax credit for businesses to contribute themselves; rather, it’s a one-time $1 million appropriation to be spent by the state.

So what’s behind the fiscal gains powering these initiatives? This spring’s revenue estimates came after Congress passed a sweeping tax reform bill that would incentivize companies to transfer overseas profits back into the United States by taxing those gains very lightly. That process, known as repatriation, may be fueling New Hampshire’s state business tax increases, economic analysts have said, since the lowered tax rates apply only to federal returns.

The near-$52 million in extra Children’s Health Insurance Program (CHIP) funding, meanwhile, emerges out of legislators’ decision to plan ahead. New Hampshire’s CHIP program is anchored to the state Medicaid program, which by default splits the bill 50/50 with the federal government for qualifying, low-income children’s health insurance. Under CHIP, the federal government provides additional money, bring its match up to 83 percent. But state lawmakers didn’t bank on that; budgeting on the safe side last year at the 50/50 rate.

When Congress failed to reauthorize CHIP in October, New Hampshire was one of two states at an advantage, with money in the bank to tide it over into 2019. Then, when the federal government finally restored the program in February, the additional money flowed back into the state’s general fund, fueling the last-minute spending initiative.

The $26.4 million in deferred Department of Health and Human Services revenue, on the other hand, comes out of a different narrative. In 2017, the department ended the year with a major surplus – all $26.4 million – but no immediate answer as to why. Worried that the state had potentially overdrawn federal funds that it would need to pay back, department officials moved to hold onto the money, not allowing it to lapse back into the general fund for other initiatives. After an audit earlier this year revealed that the revenue was properly “earned,” the money was released back into the state coffers for spending.

However New Hampshire obtained the money, lawmakers hope to spend it fast. Many of the end-of-year appropriations emerged from late-night additions by the Senate earlier this month, justified by Senate President Chuck Morse, R-Salem, as one-time spending initiatives in response to potentially one-time revenue gains. Operating that way, Morse argued, is more responsible than pouring it into long-term programs at a rate the state might not be able to keep up with in the future.

The Senate’s spending proposals, spread among several pieces of legislation, faced heavy skepticism from House negotiators last week as the proposals moved through conference committees. But after an intensive markup period, most of the initiatives survived. This week, with House conservatives raising concern about wanton spending and imprudent planning, Republican party leaders are attempting to sell the deal to their party members and move the package to the governor’s desk.

“In my opinion, we’re fortunate to have the unanticipated revenue available to address things like red-listed bridges, improving our Rainy Day Fund, and providing certainty with regard to the state budget by funding the DSH payment settlement with hospitals,” said Majority Leader Dick Hinch, R-Merrimack. “This isn’t a spending spree, as some of my colleagues would like to suggest. This is responsible allocation of revenue that will benefit the state and save us money down the road.”

The spending bills will come before the House on Wednesday.

(Ethan DeWitt can be reached at edewitt@cmonitor.com, or on Twitter at @edewittNH.)