By GARRY RAYNO, InDepthNH.org
The legislative biennial budget procession will hit the third milestone this week when the Senate meets Wednesday to vote on its proposed $15.1 billion two-year operating budget.
The Senate budget is the smallest of the three proposed, as Gov. Chris Sununu’s proposed plan would spend $15.5 billion in total funds, and the House $15.7 billion.
That is a $600 million difference between what the House passed and what the Senate Finance Committee approved last week.
Yet the House and Senate spend the same amount of money to increase Medicaid provider rates in the hopes that will translate into additional health care workers who are so scarce today.
Both budget proposals include the 12 percent pay raise for state employees over the next two fiscal years and includes the same amount of money for housing although the Senate divides it up differently, including the controversial historic building restoration tax credit.
The Senate did not include $50 million dollars for restoring pension benefits to 1,824 Group 2 (law enforcement and firefighters) members that the House included in its plan nor another $50 million for a one-time payment to offset a small portion of the state retirement system’s unfunded liability.
Both the House and Senate included additional money to revamp the state’s education funding formula which is being challenged in two lawsuits currently before a superior court judge.
The House increased the education aid program by about $157 million to $2.08 billion, which includes the $363 million from the statewide education property tax, while the Senate’s plan increases funding over fiscal 2023 levels by $169 million.
The two plans work differently however, as the Senate provides greater benefits for districts with large enrollments and students on free and reduced lunch, which particularly benefits Manchester and Nashua.
The House’s plan provides less per pupil grants but more in aid directed to property poor communities and those with higher levels of poverty.
Both formulas provide greater help to the needy communities than the plan proposed by Sununu in his budget proposal.
The Senate also made greater use of the $361.4 million projected revenue surplus for the current fiscal year to pay for programs in the next biennium totaling well over $100 million.
While that will reduce the surplus to be carried into the next biennium, it makes the size of the 2024-2025 biennial budget look smaller than it really is.
Some of the money used from the projected surplus would pay for what would normally be capital projects, but instead reduces the money the state would need to bond in the future.
As Senate President Jeb Bradley, R-Wolfeboro, said in the Finance Committee meeting, “we got the money so we might as well use it.”
And using the money for one-time expenses instead of on-going operating expenses slows down any expansion of government.
The University System of New Hampshire and the Community College System of New Hampton both receive more funding in the House and Senate budgets than they received during the current biennium.
However, the university system is still waiting to reach the level of state support it had before its appropriation was slashed in half for the 2012-2013 biennium.
The system received $200 million for the 2009-2010 biennium but would receive just shy of that figure in the House budget and the Senate approved $195 million with another $3 million earmarked for the Keene and Plymouth campuses, which will need to produce matching money.
The general fund and education trust fund spending in the two-year budget also varies between the two budgets.
The Senate always has the advantage of two additional months of revenue figures when it sets its budget and those two months are critical because they include large business tax collections.
To date the state through May has collected $2.88 billion in revenue, which is actually $21 million less than at the same point a year ago, but budget writers two years ago, believed revenues would be $2.4 billion, with one month to go in the fiscal year.
The budget writers projected revenues for the fiscal 2023 year would be $2.69 billion, which has already been surpassed this year.
June is a large collection month for business taxes as well and is projected to be just short of $300 million.
So if revenues are close to the projections, the state is likely to collect $3.18 billion for the fiscal year ending June 30, which is what the Senate projects in its budget blueprint.
The House used a figure of $3.12 billion for its projected surplus at the end of this biennium and projected revenues of $3.13 billion for fiscal year 2024 and $3.14 billion for 2025.
The Senate however projects fiscal year 2024 will be $3.19 billion and 2025 will be $3.17 billion.
That means the Senate revenue projections are $90 million higher than the House’s.
The Senate budget plan has a projected surplus of nearly $240 million at the end of the next biennium, almost all but $3 million in the Education Trust Fund.
While the House plan projects a $5.42 million balance that would transfer into the state’s rainy day fund, and Sununu’s budget plan projects a $235 million surplus with $87 million of general fund money transferred to the rainy day fund, leaving $148 million in Education Trust Fund money to carry over to the next biennium.
If you read the fine print, you realize the Senate budget spends less in each fiscal year than the revenues produced and that does not include the surpluses which add to the amount of money available to spend although much would remain in the Education Trust Fund.
But obviously the Republican majority of the Senate Finance Committee has decided they do not want to spend a significant amount of projected available money either from the general fund or the education trust fund.
There are many things that could be done with the money that would not “expand government” such as take care of the waitlist for school construction projects and pay a higher percentage of the costs.
The state could also pay more of the catastrophic special education costs that cripple some local school budgets when the unforeseen happens.
Law enforcement and firefighters are not happy with the Senate budget, and will pressure lawmakers during the expected budget conference committee.
But there are other retirement system members who were not vested at the time the benefit formula was changed and also could make a case for restoring their benefits as well which could mean a significant state payout.
And with the state’s affordable or just plain housing crisis, or with the state’s health care system teetering on the edge of collapse there are good arguments to be made for spending additional money increasing reimbursement rates or for housing projects.
Those contentions will be made between now and when a final vote comes on what is likely to be a compromise budget package.
The wildcard is the House passed its budget with Democratic support because there were not enough Republican votes, although they are the majority, slim as it might be.
How that impacts the vote for a compromise budget in the House is the elephant in the room.
Is there enough in the compromise for Democrats to vote yes or does more need to be added before that happens?
Garry Rayno may be reached at garry.rayno@yahoo.com.
Distant Dome by veteran journalist Garry Rayno explores a broader perspective on the State House and state happenings for InDepthNH.org. Over his three-decade career, Rayno covered the NH State House for the New Hampshire Union Leader and Foster’s Daily Democrat. During his career, his coverage spanned the news spectrum, from local planning, school and select boards, to national issues such as electric industry deregulation and Presidential primaries. Rayno lives with his wife Carolyn in New London.