By GARRY RAYNO, InDepthNH.org
CONCORD — The House Finance Committee put off a final vote on its work for the next biennial budget for several hours Wednesday, and then voted nearly down party lines to approve the two-bill package.
The two sides will continue to negotiate to attempt to work out some key differences that prevent most Democrats on the committee from voting for the two-year plan.
While there is agreement on such things as pay raises for state employees, delaying an overhaul of the state’s licensing and regulatory agencies and changing retirement benefits for some retirees, one big area of disagreement is the Education Freedom Account program that began in the current biennium’s budget. Other problem areas are school building aid, Medicaid reimbursement rates, and limiting the Medicaid expansion to only two more years while the Senate has voted to make it permanent.
Earlier in the day, Rep. Mary Heath, D-Manchester, suggested the committee recess saying there were many good things in the budget the committee produced and it “deeply bothers me to not be able to vote for this budget.”
She noted her concerns that school building projects will continue to be delayed due to the lack of money for building aid, and also mentioned adult education as another area.
Heath said the Education Freedom Account program cost the state $14.6 million last year and the budget includes almost $30 million in each of the next two fiscal years of the biennium. She said they have asked for oversight by the Department of Education over the program and the contractor who administers it, she noted.
“Some things in this budget we got right,” Heath said, “now if we could compromise I would feel so much better.”
She asked to delay the vote so negotiations could continue.
Rep. Jess Edwards, R-Auburn, said little progress was made Tuesday and to “figure out what we are doing, the idea to recess until tomorrow morning has a great deal of validity.”
Other members said they were prepared to be there all day, and another suggested voting on the proposal now and have any negotiated agreement be an amendment when the full House votes April 6.
But the House Clerk said the committee could not meet on Thursday and the committee returned in the afternoon to vote on the two bills, House Bill 1 and House Bill 2.
At issue is the House’s proposed $6.37 billion general fund budget, with revenues of $6.2 billion. The governor proposed a $6.29 billion budget with $6.3 billion in revenues.
Total spending under the House’s two-year plan would be $15.7 billion, a nearly $1 billion increase over the current biennium which ends June 30.
The House plan would end the biennium with a balance of $52.2 million that would go into the rainy day fund bringing the total to $256.1 million
The governor’s proposed budget would end the biennium with a $235.4 million surplus with $87.4 million going into the rainy day fund to bring the total to $341.3 million.
The governor assumes the balance at the end of this fiscal year would be $315 million, while the House budget writers predict it will be $227.8 million.
Rep. Peter Leishman, D-Peterborough, the only Democrat to chair a subcommittee, said he would be voting for the budget.
“I can’t abandon the work Division I has done on retirement, COLA, food waste and elderly services for fraud,” he said. And the work Division III did to eliminate the waiting list for developmentally disabled services, he said, and praised the 12 percent pay raise for state employees over the next two fiscal years costing more than $200 million in total funds.
He noted the Republicans have put an offer on the table to give up the $52 million that would go into the rainy day fund under the plan to be used to fill in some of the holes his caucus wants.
But Rep. Mary Jane Wallner, D-Concord, said Democrats are willing to continue working on an agreement, but they are not there yet, noting there remain some pretty strong differences.
There are a lot of good things in the budget, she said, noting they took a big step forward in addressing Medicaid rates but they did not go far enough and the system may collapse.
She said the House did not need to address the Medicaid expansion program until the Senate bill extending it permanently came to the House. That is a problem for many of us, she said.
“I hope we can work out some of these differences,” Wallner said, “and I hope we see a different outcome (April 6).”
Rep. Joe Sweeney, R-Salem, said he looked forward to voting for a bipartisan budget the committee built over the last month, noting it spends almost $1 billion more than the current biennium without a tax or fee increase.
He said the budget delivers for the people of New Hampshire, for police and firefighters and for Medicaid providers.
While there are a lot of pieces in the budget he does not like, it is good policy for the state for the next two years, Sweeney said, and “a lot for everyone to love.”
A lot of the good will be gone if the budget does not pass, he noted.
“We should not let the perfect be the enemy of the good,” Sweeney said, “that’s bad policy and a bad way to budget.”
There are a number of areas Sununu emphasized in his budget address that are not in the House budget.
Sununu wanted to put a one-time $75 million into the school building aid program in the second year of the biennium, but the House removed that, as it did $40 million for a new men’s prison in the second year of the biennium.
Instead the House wants to apply $50 million to the unfunded liability for the State Retirement System, and also adjusted the retirement benefits for Group II (law enforcement and firefighters) members who were not vested when the last major changes in benefits were enacted in 2011, costing $50 million and also gave the group a one-time cost of living increase costing $9 million.
The transition money for the Group II members is paid for by retaining the state’s communications tax, which Sununu eliminated under his plan, and the House accelerated the phase out of the interest and dividends tax so it ends a biennium early.
The House also did not enact many of the changes Sununu sought in the regulatory and licensing agencies, saying more time is needed to sort it out, and reduced the money for the Invest NH program to spur housing construction from $30 million to $15 million, and the Affordable Housing Fund from $25 million to $15 million.
The House added $18.5 million in state money for nursing homes, to keep the cap for counties the same as it was last year. Sununu’s budget increased what counties would have to pay as did his budget two years ago, but legislators added state money so the county portion of property tax bills would not increase.
The House plan did not increase the rates for the Medicaid program as much as Sununu $12 million annually versus $17 million, but did provide $30 million in provider rate increases in the first year of the biennium and $40 million in the second year, but targets the money to various programs and not across-the-board increases
The House budget also set aside $30 million due to a change increasing eligibility for the free and reduced lunch program.
The House did however institute an across-the-board, back-of-the-budget cut of $23.4 million for the Department of Health and Human Services and capped employees at 3,000 which is about 250 less than authorized currently.
The House plan also changes the formula for funding the Education Trust Fund, which pays for adequacy grants to school districts, per-pupil grants to charter schools, and EFA grants, but removes school building aid, special education and tuition and transportation costs for students attending regional technical centers.
Those areas would be funded with general fund money under the House budget plan and would compete with other state programs including health and human services for funding.
The change in the formula from 50 percent of the business profits and enterprise tax revenues to 22.5 percent for the education trust fund, reduces the money flowing into the fund by $448 million.
With the reduction, the fund would be in deficit under the House plan at the end of the biennium, and would need $42.6 million from the general fund to balance.
Some of the money moved into the general fund under the House was used to increase the Medicaid reimbursement rates for providers.
The amendment to House Bill 1 was approved on a 15-10 vote, with two Democrats joining Republicans in approval, and the bill as amended passed on a 14-11 vote.
The amendment to House Bill 2 was approved by the same 15-10 vote, before the amended bill was approved on a 14-11 vote.
The House will vote on the budget April 6, the last day before all House bills have to “crossover” to the Senate and vice versa.
The House was unable to agree on a budget package in 2017 and the Senate essentially wrote the budget for the biennium.
Garry Rayno may be reached at email@example.com.