6/13/2013 - The numbers aren’t all that different, but that doesn’t necessarily mean the road to the next two-year state budget isn’t fraught with obstacles.
Whereas the last budget go-round was marked by protest and controversy, this round has been less dramatic, though not drama-free. The governor initially proposed an $11.1 billion budget, the House proposed an $11.0 billion budget, while the Senate settled on $10.7 billion budget. The three budgets don’t all get to their final numbers in the exact same ways, but in terms of spending, the similarities are striking, said Charles Arlinghaus, president of the Josiah Bartlett Center for Public Policy. Looking exclusively at general fund spending, the numbers are even tighter, said Daniel Barrick, deputy director of the New Hampshire Center for Public Policy Studies.
“If you really look through the budget, the real flashpoint differences of the governor’s budget, the Senate and the House are relatively minor,” Barrick said.
The House and Senate must agree on a budget before a final budget bill goes to Gov. Maggie Hassan’s desk. Lawmakers have until the end of this month to finalize a two-year state budget.
The Senate recently rejected Medicaid expansion, something the House wants. Whether the state ultimately enacts Medicaid expansion won’t change the coming two-year budget in theory, but it’s a black-and-white, yes-or-no issue the two bodies must figure out as part of budget negotiations.
“A lot of stuff flows from that,” Barrick said. “Whether or not they expand, it’s not a matter of a single policy. It has implications for other things in the budget, such as uncompensated care costs.”
He said that while expanding Medicaid carries no direct cost in the coming budget, uncompensated care costs for which the state reimburses hospitals a percentage would be reduced, since more people would have insurance under Medicaid.
“It’s a passionate issue for people on both sides,” Arlinghaus said. “For people who want it, it’s the most important thing they want to happen. For those that don’t want it, they think it’s a big mistake.”
Another issue is the $50 million back-of-the-budget cuts the Senate’s budget directs the governor to make. Of the $50 million, $20 million must come from the general fund in the areas of salary and benefits. The cuts would almost certainly lead to layoffs of recently hired state employees or benefit reductions as part of a contract, Arlinghaus said.
“That particular point is probably the single biggest area of contention,” Arlinghaus said.
“We’re not talking about huge gulfs in the dollar amounts,” Barrick said. “I think that’s why so much of the focus and the rhetoric has been on the back-of-the-budget cut.”
In that sense, the cut is sort of a blank slate, because it’s not explicitly tied to a particular program.
“It’s a big number, and it’s an unknown,” Barrick said.
Arlinghaus pointed out that in 2008, Gov. John Lynch asked for $25 million in directed cuts and Hassan, at the time the Senate majority leader, along with Speaker of the House Terie Norelli, agreed to go along with it. But Hassan has spoken out against the directed cuts, as have other Democrats.
“It gives the governor the authority to manage it any way she wants,” Arlinghaus said.
While Medicaid expansion may be the single biggest issue, it’s still a simple yes or no. There’s no compromise on that one, Arlinghaus said.
The Medicaid enhancement tax, specifically how much revenue the next budget projects the state will receive from that, is a different issue. The Senate, which used the latest information and projections, has estimates that are much lower than the House’s. Arlinghaus figured the Senate would win out on that issue, since it had access to the most up-to-date figures. Nevertheless, that’s an area to watch, he said.
Arlinghaus expects the biggest fight to be over the cigarette tax. The legislature reduced the cigarette tax by 10 cents in the last legislative session, with the stipulation that it would jump back 10 cents if lowering the tax didn’t result in more revenue. It didn’t, and so the tax will be restored by 10 cents, but the House also signed off on raising the tax an additional 20 cents. The Senate is not on board with that, Arlinghaus said.
In past budget battles, lawmakers have made many seemingly last-ditch attempts for new revenue during budget negotiations. So far, there hasn’t been a lot of that, perhaps largely due to the fact the Senate has made it clear it’s not going to accept tax increases.
“There doesn’t seem to be a lot of stuff bubbling up,” Barrick said. “There seems to be a recognition by both parties that the economy is still pretty fragile, even if we are on an upward trajectory.”
If the end of June comes along and the House and Senate haven’t agreed, it’s possible the legislature would need to adopt a continuing resolution, traditionally a one- or two-month budget based on the previous month’s budget.
“In my mind, we’re so close that we shouldn’t get there,” Arlinghaus said. “But the political rhetoric is super-charged. They are as close as they’ve ever been, but the rhetoric sounds as though they’re further apart than they’ve ever been. I’d say it’s a 50-50 chance they don’t agree.”