Senate Committee Approves Budget, Hopes To Avoid Veto

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GARRY RAYNO photo

Senate Finance Committee chair Sen. Lou D’Allesandro, D-Manchester, talks with Gov. Chris Sununu’s budget director Mac Zellem before the committee takes a final vote on its two-year budget plan Friday. The Senate votes on the $5.5 billion general fund proposal next week.

By GARRY RAYNO, InDepthNH.org

CONCORD — Down partisan lines 4-2, the Senate Finance Committee approved a $5.5 billion, two-year budget plan Friday that members hope will elude Gov. Chris Sununu’s veto.

The budget plan includes a $17.5 million Secure Psychiatric Unit to replace the current facility at the men’s prison in Concord, which had been a bone of contention between House budget writers and Sununu who proposed a 40-bed, $40 million facility on New Hampshire Hospital grounds.

House budget writers left the new facility out of its budget saying it would be irresponsible to approve the plan with little to no information.

Sununu focused on the lack of the facility as one of the reasons for his opposition to the House-passed budget.

Both the Senate’s plan and the House-approved budget would spend $5.5 billion in general funds over the biennium, while Sununu’s proposed budget would spend $5 billion.

The proposed 2020-2021 Senate budget plan still needs approval of the Senate next week and the House will have to decide if it will agree to the Senate plan or request a conference committee to reconcile the differences between the two plans, both crated by Democratically controlled bodies.

Senate Finance Committee Chair Sen. Lou D’Allesandro, D-Manchester, said the Senate did more than the House because it had the latest revenue figures. “We did tax reform,” he said. “We both tried to get to the same place.”

He said the senate plan was done in consultation with the governor’s office. “We had an open dialogue,” he said.

The biggest difference between the House and Senate is education funding, which the House funded with a new capital gains tax raising $150 million, which the Senate removed from the budget.

The House education funding proposal would have raised $160 million in additional state funds for state education aid, while the Senate plan raises about $100 million.

The two plans restore stabilization aid to its original level before annual 4 percent cuts that began three years ago and establish a study commission to determine the cost of an adequate education. The two plans differ in how they distribute and fund disparity aid to help property poor communities.

Under the Senate plan, a provision that would increase aid to school districts with more residents in poverty has been removed, making the plan less generous than the House’s.

“We did the job the people of New Hampshire sent us to do,” said Finance chair Sen, Lou D’Allesandro, D-Manchester. “Everybody gets to participate and get a piece of the action.”

He said the Senate budget is sustainable and provides money to cities and towns to help reduce the growing burden of property taxes through increases in education funding and municipal revenue sharing.

“Senate Democrats made a pledge to the voters of New Hampshire that we would pass a budget that worked for everyone,” he said. “Today, the Senate Finance Committee delivered on that promise.”

Committee Vice Chair Dan Feltes, D-Concord, said the senate budget moves the state forward without new taxes or fees.

“We passed a balanced budget that invests in public education, supports our health care workforce, combats our mental health crisis, supports law enforcement, invests in New Hampshire jobs and small businesses, addresses our housing and homelessness crisis, and makes meaningful investments to protect the safety and wellbeing of New Hampshire children,” Feltes said.

He said the money allocated for the community college and university systems will allow the community college system to freeze tuition for the next two years and the university system in the second year of the biennium.

Feltes said the Senate budget contains the greatest increase in state education funding since former Gov. Jeanne Shaheen’s administration two decades ago when a new system was established to address the two Supreme Court Claremont education funding lawsuit decisions.

However, Republicans who voted for many of the proposed changes to the House budget, said they could not support a plan that is structurally in deficit.

“The structural deficit for fiscal year 2021 is $76 million,” said committee member Sen. John Reagan, R-Deerfield, “and we can’t agree to that.”

There are unlimited needs but limited revenues, he said, and lawmakers need to prioritize to bring the budget into balance.

Committee member Bob Giuda, R-Warren, said the legislature is constitutionally required to produce a balanced budget, but the proposed budget is not.

Feltes and D’Allesandro both said the budget is balanced and sustainable and uses surplus funds just as every other budget does when it is available.

The budget uses a projected surplus of $161 million to offset higher spending in both fiscal years than general fund revenues raised but would result in a $24-million dollar surplus at the end of the biennium when $10.6 million of that surplus would be transferred to the state’s rainy day fund.

Sununu’s proposed budget would have $137.3 million in the rainy day fund, while the Senate plan would have $125.7 million and the House plan $116.7 million.

Paid Family Leave

The budget includes a paid family and medical leave plan that is opposed by Sununu who calls it an income tax and has his own plan with Vermont for state employees. Sununu vetoed the bill passed by the House and Senate, but lawmakers have yet to attempt an override.

Felts, the sponsor of the legislature’s plan, said it will help attract and retain the workforce of tomorrow, help address the state’s caretaker crisis, and help combat the state’s opioid epidemic.

Differences with House

The Senate budget increases money for case workers, supervisors and specialists at the Division for Children, Youth and Family Services to better protect children, budget writers said.

Additional money is included for housing as well.

The Senate budget includes $40 million over the two years of the biennium for municipal revenue sharing while the House proposed $12.5 million in the second year. D’Allesandro said the revenue sharing plan has absolutely “no strings attached.”

Tax Changes

Both the House and Senate budgets freeze business profits and business enterprise tax rates at their current level instead of continuing reductions approved by Republicans in the last two-year budget.

The Senate budget also changes how the business profits tax is apportioned from overall business activity within the state to single sales, which will increase taxes on out-of-state businesses selling into the state but reduce taxes for in-state business that sell out-of-state.

And the Senate approved conforming the state businesses taxes to federal tax laws. The two changes are expected to produce an additional $45 million over the biennium.

Including vaping under the state’s tobacco tax, and pre-paid calling cards under the communications tax are expected to increase revenues by $7.5 million over the biennium.

Lawmakers have until July 1 to approve a new budget when the next biennium begins. If no agreement is reached by that date a continuing resolution is likely, allowing agencies to spend at their current levels.

Garry Rayno may be reached at garry.rayno@yahoo.com

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