CONCORD – After approving a recommended $13.33 billion, two-year budget Friday, Senate Finance Committee Chair and Senate Dean Lou D’Allesandro announced, “We are a third of the way there” as he sat with all but one member of the committee talking to reporters.
While that is true from his perspective, the House Finance Committee and the full House did their work before the Senate worked its magic and Gov. Chris Sununu had the first pass on the 2020-2021 biennium budget when he presented his plan in February.
If you count that activity, the budget is well past the one-third mark and headed for the home stretch.
The Senate will vote on the budget Thursday — old home day for lawmakers past and present as part of the State House bicentennial celebration this week — and with Democrats holding a 14-10 advantage, it will pass by at least that margin.
What happens next is up to the House: whether the House takes up the Senate plan Thursday or a week later, and whether to agree with the Senate or seek a committee of conference to reconcile the two budget plans.
The House and Senate budget plans are not that different and not all that different from what Sununu proposed, in terms of total money spent; it is in where it would be spent that the debate lies.
In total spending, which includes state, federal, highway, fish and game, liquor, turnpike, sweepstake and other funds, the governor proposed a budget of $13.2 billion. The House was $208.3 million higher, at $13.41 billion, and the Senate $84 million less than the House and $124 million more than the governor, at $13.33 billion.
Percentage-wise the difference between the Senate and governor’s proposed budgets is 1.2 percent and the difference between the House and governor is 1.8 percent. Neither percentage is a major difference in a plus-$13 billion budget.
Where the stark difference lies is in state general fund spending.
Sununu’s budget proposal was for $4.97 billion, while the House’s stands at $5.55 billion and the Senate’s $5.53 billion.
The percentages are more substantial: the difference between the House and the Governor is 11.7 percent and the Senate and the Governor 11.2 percent.
The easy explanation is the House and Senate took the general fund surplus and used it for the operating budget, while the governor put the surplus into capital projects.
But it is not quite so simple. For example, Sununu proposed spending $40 million for a new 49-bed Secure Psychiatric Unit, but nothing for operating the facility. The Senate included operating money in the second year of the biennium.
The Senate downsized the facility which, after it was proposed, grew to include a number of other services beyond the Secure Psychiatric Unit. Senate Finance proposed a $17.5 million 25-bed facility.
The House made some significant changes in the governor’s proposed budget.
Key among them was his $54 million Capital Infrastructure Revitalization Fund for one-time capital and renovation projects. The House removed the fund from its budget saying the projects should have come through the capital budget process, not through the governor’s decision, based on project requests he heard as he traveled around the state.
The Senate made one significant change in the House budget, removing $150 million in revenue from a capital gains tax the House used to essentially fund its education funding reform plan of $160 million.
The Senate approved a less generous education funding plan of just over $100 million. That is one issue the House and Senate are not going to readily agree on in negotiations during the budget committee of conference.
The House and Senate budgets contain a couple of key areas the governor opposes, one vehemently since he already vetoed the bill establishing a paid family and medical leave program.
The issue was one of the most debated during the last gubernatorial campaign as Democrat Molly Kelly blasted Sununu for upending a bipartisan agreement that year establishing a program.
Sununu along with fellow Republican, Vermont Gov. Phil Scott, proposed a more limited program for state workers in the two states that would allow private companies to join once it was established.
Little has become of the plan, but Sununu not only vetoed the bill passed by both the Democratically-controlled House and Senate but digital ads calling the plan an income tax were all over the Internet.
House and Senate budget writers also agree on “freezing” business tax rates. They both would retain last calendar-year’s business profits and business enterprise tax rates instead of an automatic reduction put into law under the last biennium.
While Democrats characterize the change as a freeze, Sununu and Republicans call it a tax increase — although businesses would never actually see an increase in rates from last year.
This is no small matter as more than $90 million in general fund revenue is at stake.
There are other big-ticket items at stake as well, including a 6 percent increase in Medicaid provider rates over the two years of the biennium totaling between $50 million and $60 million. Sununu did not include any provider raises in his proposed budget, although New Hampshire has some of the lowest Medicaid reimbursement rates in the country — and some providers have not seen an increase in more than a decade, while medical inflation is far above the overall rate of inflation.
The House and Senate are not exactly on the same page for higher education aid, but they are very close and significantly higher than the governor’s budget.
Sununu proposed flat-funding the University System of New Hampshire at $81 million a year, the same figure for the last four years. The House and Senate budgets would raise those totals to $85 million in the first year of the biennium and $88.5 million in the second year when university officials have agreed to a tuition freeze.
That is still $11.5 million below the $100 million the university system received before the 2012-2013 budget, cutting state aid in half.
The Community College System of New Hampshire has fared a little better than the university system after its funding was cut in half.
The House budget would provide $57.7 million for the first year of the biennium and $55.8 million the second year, while the Senate proposed $54.1 million the first year and $55.4 million the second year, or $4.1 million less than the House, but does include an additional $3.2 million for community colleges this fiscal year to soften the blow.
There are three key areas for lawmakers as they try to try to craft a budget in the next three to four weeks that Sununu will either sign —or at least allow — to become law without his signature before the biennium ends June 30.
A budget with paid family and medical leave or the capital gains tax is guaranteed to draw a Sununu veto.
So, the House gives up the capital gains tax, the Senate paid family and medical leave, and Sununu, the business tax rate freeze and everyone goes home for the summer with a new two-year operating budget in place.
But these are not normal political times so Sununu may well veto the budget and Democrats will paint him as the guy who favors business over people, killing paid family and medical leave and the one obstacle to fixing the broken education funding system.
He will blast Democrats, saying they are trying to kill the New Hampshire advantage and trying to institute an income tax. “Tax and spend, tax and spend.” You can almost hear it now.
If cooler heads prevail, no one will have to spend all summer watching the shenanigans and listening to the spinning.
Distant Dome by veteran journalist Garry Rayno explores a broader perspective on the State House and state happenings for InDepthNH.org and ManchesterInkLink.com. Over his three-decade career, Rayno covered the NH State House for the New Hampshire Union Leader and Foster’s Daily Democrat, providing coverage of everything from local planning, school and select boards, to national issues such as electric industry deregulation and Presidential primaries. He may be reached at firstname.lastname@example.org