By Garry Rayno,
With new administrations in Concord and in Washington D.C., a long-running Broadway musical comes to mind — Promises, Promises — a play about power and lust.
Voters have to wonder whether promises made during the heat of the campaign will be kept as the long, complicated legislative process unfolds.
But in Concord, perhaps, the more appropriate question is: “What promises made by past legislatures and governors will be broken by this legislature and governor?”
Promises made by past legislatures may be and often are changed by future legislatures leaving a trail of tears for anyone — public employees; cities, towns, school districts and their taxpayers; service providers, and state contractors — who believes they have a permanent deal with lawmakers.
For example, state employees were promised free healthcare when they retired if they served the state for more than 10 years as retired State Police Major Ernie Loomis likes to remind lawmakers.
Around the turn of the century with state finances hurting, lawmakers doubled the service time to 20 years for free healthcare.
Slipping revenues later meant retirees under 65 years old had to pay a portion of their health premium which is now close to 20 percent.
Co-pays and deductibles were added, but the state continued to pay “Medi-gap” insurance for retirees over 65 years old at least until the latest budget proposal was unveiled.
When new Gov. Chris Sununu presented his proposed budget last month, retirees over 65 years old will be expected to pay half of what he called a $12 million shortfall in the account.
The current two-year budget did not fully fund the cost of older retirees’ healthcare resulting in the shortfall.
The next two-year spending plan is not finalized and changes may be made.
More broken promises
Another trail of promises broken in the proposed budget involves the state’s hospitals and the Medicaid Enhancement Tax.
The tax was instituted in the early 1990s to use federal money to balance a state budget several hundred million in deficit.
The state taxes hospitals for services they provide, and uses the money to match federal Disproportionate Share Hospital (DSH) funds intended to help health facilities that provide a significant amount of free or what is called uncompensated care.
After the federal match, the state returns the money to the hospitals. New Hampshire literally reaped billions of federal dollars over the years from what was known as Mediscam.
With many states using the scheme, the federal government clamped down and required the money going back to hospitals to actually reflect the uncompensated care they provided so it was not necessarily revenue neutral as some hospitals receive less than they gave and others more.
But when budget resources tightened in 2011, lawmakers kept most of the money for other purposes and the hospitals successfully sued claiming the tax was unconstitutional. Rehabilitation centers also sued successfully.
Former Gov. Maggie Hassan’s office negotiated a settlement that guaranteed smaller hospitals would receive at least 75 percent of their uncompensated care and larger hospitals 50 percent. Any left over money had to be used for healthcare services for the poor.
With the agreement, hospitals agreed to drop their constitutional challenges and to continue to pay the tax.
According to the settlement, hospitals are projected to pay taxes of approximately $236 million in fiscal year 2018 and $243 million in fiscal year 2019.
The DSH payments were expected to be at the cap established in the settlement of $241 million per year.
However, Sununu’s budget allocates $166 million for each to the next two fiscal years, and Steve Ahnen, president of the NH Hospital Association said that potentially puts the state in violation of the settlement agreement.
“We will work with the governor and lawmakers as the budget moves forward to address these concerns and the significant risks to the state and patient care of not budgeting in compliance with the settlement agreement,” Ahnen said in a statement.
Translated: “If you don’t live up to the agreement, we’ll be back in court where you lost twice.”
Speaking to lawmakers after he presented his budget, Sununu said there is disagreement over the amount of uncompensated care the hospitals provide.
This will be interesting to watch as the budget progresses.
Cities, towns on their own
Cities and towns, however, do not have the court system as a back stop when the state breaks its promises to them.
The state — until about a decade ago — used to pay 35 percent of the state retirement system contributions for municipal, school and county workers. The state agreed to contribute to grow the system to make it more robust and stable.
However, when state revenues plunged into the nether regions during the financial crisis brought on by bad mortgages that nearly tanked the country’s and the world’s economy, lawmakers first cut back its contribution and then eliminated it, saving the state tens of millions of dollars by shifting the burden to local property taxpayers.
During the same financial crisis, the state also eliminated revenue sharing with cities and towns.
When the state overhauled its tax system under former Gov. Walter Peterson in the 1960s, the stock and trade tax that benefited local communities was eliminated. As part of the bargain, communities were to receive $25 million in revenue sharing money including 40 percent of the rooms and meals proceeds.
Over time, the $25 million never increased and the percentage of rooms and meals revenue dwindled until the 1990s when former Sen. John King of Manchester shepherded a bill through the legislature to begin restoring the municipal share of the tax.
The restoration stopped in the financial crisis about a decade ago and then revenue sharing was eliminated.
Cities and towns also have not always received the state’s share for water and sewer projects.
Under the Clean Water Act, the federal government used to pay 75 percent of water and sewer project costs, but that was eliminated under former President Ronald Reagan and instead states were given grants to establish revolving loan funds, but states still have to pay their share of the costs.
Federal programs that pay to repair damages from disasters such as the Alstead flood or the tornado that ripped a path from Deerfield to Freedom, require a state and local match.
‘Used to pay’
The state used to pay the local share but once again has been slow to reimburse communities as it has for two flood control projects. Massachusetts, which is the chief beneficiary of the projects, is supposed to reimburse communities for lost property taxes on the land taken for the projects. Massachusetts seldom pays but New Hampshire used to cover what towns were owed, but stopped doing that until recently.
The legislature has also reneged on promises to school districts. The state settled a lawsuit over education funding brought by Laconia and agreed to pay more for schools under the Augenblick formula, but never fully funded it.
The state once paid a percentage of school building and rehabilitation costs ranging from 50 to 75 percent depending on the number of communities in the school district.
That program was suspended during the last financial crisis, but reinstated recently. But — you guessed it — without adequate funding to add more than one or two new small projects a year.
And the state has not increased funding for the formula put in place due to the Claremont education lawsuit for a decade while the disparities between rich and poor districts and the educational opportunities they can provide their students grows.
Remember while lawmakers are balancing the state budget, all these broken promises to cities, towns and school districts raise local property taxes.
Cities, towns and school districts are not the only ones to feel the pain of broken promises, those who receive state help are affected too.
When the Laconia State School closed, the state set up area agencies to ensure the developmentally disabled would continue to receive services in their communities. Much like the state’s decentralization of its mental health system when the old New Hampshire Hospital campus was closed, the localized programs received awards and were models for other states.
However funding levels slipped over time and a waiting list for developmentally disabled services grew as those turning 21 years old moved from the local school district’s responsibility to the state’s and continues today. Sununu proposes adding millions of dollars to eliminate the wait.
Mental health morass
Inadequacies in the state’s mental health system prompted clients and the federal government to successfully sue. Not only did the state fail to provide adequate mental health services at the local and state level, but many seriously impaired have had to wait in hospital emergency rooms for an opening at the state hospital, the suit claimed.
An overseer tracks the state’s progress to improve its mental health system. Progress is being made, but not at the speed envisioned in the agreement.
Lawmakers will determine how much additional money goes into the system and that can keep yet another promise from fruition.
Garry Rayno’s Distant Dome runs exclusively on Manchester Ink Link and InDepthNH.org, where Rayno will explore a broader perspective on State House – and state – happenings.Over his three-decade career Rayno has closely covered the NH State House for the New Hampshire Union Leader and Foster’s Daily Democrat, and his coverage spanned the news spectrum, from local planning, school and select boards, to national issues such as electric industry deregulation and Presidential primaries. He is former editor of The Hillsboro Messenger and Assistant Editor of The Argus-Champion. Rayno graduated from the University of New Hampshire with a BA in English Literature and lives with his wife Carolyn in New London. He can be reached at firstname.lastname@example.org.