By GARRY RAYNO, Distant Dome
Like father, like son.
Irony may not be quite the word, but for people who were around nearly 40 years ago and remember another gubernatorial transition involving a Sununu, the current transition from his son to Gov. Kelly Ayotte had an eerily similar echo.
Gov. John H. Sununu left the corner office after six years to go to Washington and be President George HW Bush’s chief of staff having helped the then-vice president win the New Hampshire primary defeating Senate Majority Leader Bob Dole sending Bush on his way to the nomination and the presidency.
In his six years, Sununu earned a reputation as a good administrator, particularly for his handling of the state budget even if he was viewed as a cold technocrat.
In his farewell speech, Sununu cited as one of his achievements wiping out a $44 million deficit left by his predecessor Gov. Hugh Gallen who died in office.
Sununu also noted he moved the state government into the computer age and cited the expansion of the state prison and the new state psychiatric hospital as hallmarks of his administration.
John H. was also known as somewhat of a bully to lawmakers using the power of his office and his intellect to get what he wanted.
The more mild mannered Gov. Judd Gregg followed Sununu into the corner office and despite Sununu’s assurances on the state finances, the new governor soon began lamenting the state’s precarious fiscal position and seeking ways to stem the tide while implying Sununu left him a mess.
The new governor and lawmakers crafted a budget that was out of balance almost before it was signed as revenue went through the floor and shortly the nation and the state settled into a deep recession that took down five of the state’s largest banks due to their investments in a booming housing market that quickly went bust under some questionable lending practices.
In two short years, the Federal Deposit Insurance Corporation owned most of the buildings along Elm Street in Manchester and more housing complexes than could be filled in a decade or more.
And then Public Service of New Hampshire went bankrupt under the weight of Seabrook Station.
Today a recession may not be on the horizon, but again it could be.
The younger Sununu left Concord after riding a historic revenue stream fueled by billions of federal relief and recovery money here and nationally that boosted the profits of large corporations who pay most of the state’s business profits taxes.
Together the two money streams were a heavenly manna that made budget writing about as easy as it is in New Hampshire with its revenue inelasticity and limited nature.
And the state was able to use the money to take care of long-standing needs like a mental health facility for children and major repairs and renovations to state government facilities.
But the warning signs have been flashing for a year or so with declining business taxes which support much of state government spending.
When new governor Kelly Ayotte unveiled her budget proposal last week, it showed the state expects to end the fiscal year with a $154 million deficit and a biennial budget deficit of $81 million that Ayotte proposes to cover by withdrawing that amount of money from the state’s rainy day fund or savings account.
Thank you Gov. Chris Sununu, who has been appearing on CNN and was called a questionable name by Anderson Cooper because of behavior we are familiar with in New Hampshire.
Sununu also included in the current budget what everyone agrees is a long needed 12-percent pay raise for state employees paid for by surplus funds from the last biennium.
The problem is going into the new biennium the raises remain in place and have to be paid from general fund money and is another example why you should not use one-time money to fund operating expenses, which was ongoing when the state was flush with federal relief funds.
Sununu left Ayotte with one of the most difficult budgets to balance going into the next biennium the state has seen since the great recession around 2010.
But before you feel too sorry for Ayotte, her budget uses one of the tricks many governors have used over the years, boosting state revenues beyond reality.
The governor’s budget includes general and education trust fund revenues of $6.4 billion, which is $505 million more than the “final estimates” by the House Ways and Means Committee although the House has not yet voted on that.
Of the $505 million, more than $300 million is from business tax collections which her budget projects to reach nearly the record level collected two years ago, something you could call a pipe dream.
Boosting revenue estimates avoids major layoffs as the House Finance Committee is considering and instead laying off just eight employees in the governor’s budget, four because the project they worked on will be finished when the new biennium begins July 1.
The boosted revenues allows for a boost to spending that tops $1 billion for services to those with developmental disabilities with no wait list, and $33 million to fix the Group II retirement issue that resulted in changes to benefits in the 2011 session, $32 million to make school districts whole for the state’s share of special education costs in what once was called catastrophic aid, $10 million for community mental health centers for uncompensated care, $4.4 million so the Community College System of New Hampshire may continue its tuition freeze, a $5 million increase in municipal revenue sharing, etc.
The budget she presented includes some “belt-tightening” or recalibrating by cutting state aid to the University System of New Hampshire by $7.5 million over the biennium, and the Department of Corrections by $8 million, the Division of Plants and Properties by $30 million in the Department of Administrative Services.
One of the biggest cuts in general fund spending is for Medicaid, the state and federal health insurance program for the poor, those with disabilities and the infirm.
The state general fund appropriation in Ayotte’s budget is $90 million less than in the current biennium, which means $90 million less will be coming to the state in federal funds for health care as well.
The secret about Medicaid appropriations is that if a person qualifies under the federal guidelines, the state has to provide the services even if the state has budgeted less than is needed.
Other programs have similar provisions so the state really cannot short-change the programs because state money will have to pay for the services.
The Justice Department, or Attorney General’s Office, will receive an additional $10 million in general funds and an additional $23 million in total funds. Ayotte is a former state Attorney General.
What does not appear to be in the governor’s proposed budget is the $75 million annual commitment to the Youth Development Center Settlement Fund for the more than 1,000 victims of alleged physical, mental and sexual abuse at the hands of state workers.
Last year, lawmakers said they anticipate adding $75 million annually to the fund over 10 years or $750 million, which may not be enough with over $1 billion in claims filed.
What all of this means is the House Finance Committee particularly, and the Senate Finance Committee have much work to do before a final budget is adopted in June.
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.