Significant Differences between State House and Senate Budgets

On Thursday June 6, the New Hampshire State Senate passed a $10.7 billion budget for the two fiscal years (FY) beginning July 1, 2013 and ending on June 30, 2015 (FY 2014 and FY 2015).   

 The Senate voted 13-11 along party lines for their budget package; with all thirteen Republican state senators (including Senators Nancy Stiles from Hampton and Russell Prescott from Kingston) voting in favor of the budget and all eleven Democratic state senators (including Senator Martha Fuller Clark from Portsmouth) voting against it.

 When the senate began to put their budget together the Republican leadership set an arbitrary target of $10.7 billion in total spending for the next two years.   That is approximately $220 million lower than a comparable budget that the New Hampshire House of Representatives passed on April 3.  However that difference is deceiving.  

 The largest part of the difference is in the form of what are called payments for “uncompensated care” to hospitals.  These are payments that the state makes to hospitals for care that they deliver to people who do not have health care coverage and who receive most of their healthcare in the emergency room of the state’s hospitals.   The state funds these payments by levying a tax on hospital revenues, collecting a federal match on those funds and then reimbursing a portion of those total revenue receipts back to the hospitals.   

 Because actual reported hospital revenues are lower now then when the House prepared their budget in February and March, the senate reflected the resulting lower revenues from the tax on hospitals, which also reduced the amount of federal matching funds and payments to hospitals.    That accounts for almost $130 million in revenues and spending in the house’s budget that realistically is no longer there for the state to count on.   It does not represent a “hard fought for savings” that the senate identified and if you hear otherwise you should be concerned.

 To reach their arbitrary target of $10.7 billion the senate removed an additional $90 million of federally funded programs from the budget.  These are expenditures that the house included in its budget and that the senate is not saying will not or should not occur.   The senate does not disagree that this money will be spent but  rather than include these expenditures in the state’s operating budge as the house chose to do, the senate has decided to treat them as “unexpected” (surprise – my word) receipts when the state receives them. 

 So, taking both of these two large “ticket items” into consideration I would argue that the true “apples-to-apples comparison” size of the proposed budget for both the house and senate is $ 10.751 billion.  For the house that is equal to the $10.881 billion approved by the house of April 3 less $130 million in lower uncompensated care payments.   For the Senate it is the $10.661 billion actually approved by the senate plus $90 million in “unexpected/surprise federal funding.” 

There are differences in how those total funds are collected and allocated and I am confident that most of those differences can be resolved when the house and senate committee of conference meets next week to come up with a budget that both bodies can support and the governor can sign. 

There are, however, several differences between the house and senate budgets that ARE significant and you – and I – need to monitor closely.  They include:

Medicaid Expansion

 The Affordable Care Act (“Obamacare”) which became the law of the land in March 2010 allows each state to decide whether or not they want to permit all adults in their state between the ages of 19 and 65, who are not currently eligible for Medicaid and whose incomes are up to 138% of the Federal Poverty Level: $15,400 a year for a single person and $32,000 for a family of four to become eligible for Medicaid on January 1, 2014.   Approximately 58,000 of our family, friends and neighbors across the state will be eligible to participate in this program.  Most of the people who will be eligible are hard working, lower-income individuals with a job who do not now have access to quality affordable health insurance coverage.

If New Hampshire does elect to participate in the program, the federal government will pay 100% of the coverage cost of the Medicaid expansion for the first 3 years beginning in 2014, ratcheting down to 90% of the coverage cost in the 7^th year (2020) and thereafter.  Although the State of NH will incur some administrative expense and, after the first 3 years, will be responsible for a state matching fund payment, the size of the state’s obligation will never exceed 10% of the total cost of the coverage.

The Medicaid expansion will pump a staggering $2.5 billion worth of federal funds into NH’s economy over the first 7 years.  That represents additional salaries, purchases of goods and services; jobs for New Hampshire residents and businesses. NH’s contribution to the expansion would be a net cost of $18.4 million over the first 7 years (less than three-quarters of 1% of the overall cost of the expansion). However, expansion also enables the state to make progress implementing other Medicaid cost containment measures, which if fully implemented may actually save the state money over the course of the entire 7 year period.

Governor Hassan supports expanding Medicaid and the budget passed by the house (that I voted for) ensures that every person in New Hampshire who is eligible for Medicaid is able to enroll in the program effective January 1, 2014.   We also included $7.3 million in funding to provide efforts to communicate the program but enroll eligible people as well. 

The senate not only eliminated those funds, but also added language that would instead establish a commission to study whether or not the state should implement Medicaid, an obvious attempt to delay implementation.   And in the ultimate of ironies, the senate included an additional $ 20 million in its budget to compensate hospitals for uncompensated care;  medical services that are provided to people who do not have access to quality affordable health care, exactly the same people who would be covered by Medicaid expansion!

Expanding Medicaid is not only the RIGHT thing to do; it is the SMART thing to do.  The senate needs to stop trying to re-fight the battles of 2009 and 2010, recognize that Obamacare is now the law of the land and provide all of our citizens with the rights that they are entitled to under it.

$50 million in “Back-of –the-Budget -Cuts”

The budgets passed by the house and senate each make critical and much needed investments in areas such as higher education, mental health funding, other human services and economic development.  Unfortunately, what the senate did is also include a mandatory – and arbitrary - $50 million cut in personnel related costs at the “back” of the budget.  That is the equivalent of cutting between 400 and 700 full time state employees.

In effect, what the senate did is take credit for adding funding for programs such as community health centers, the Children in Need of Services (CHINS) program and family planning and then tell departments like the Department of Health and Human Services that before they can spend that money or deliver those services they must first cut their staff by a total of 400 to 700 employees!    Not only does this make it more difficult to deliver needed services, it increases the number of people who now will need to collect unemployment and decrease taxes collected by the state.

$40 million in Lost Cigarette Taxes

Both budgets passed by the house and the senate assume that cigarette taxes will go up by 10 cents per pack in FY 2014.  The budget that we passed in the house included an additional 20 cents a pack tax on cigarettes.  This would increase the tax per a packet of cigarette to $1.98., which would still be lower than what it is in neighboring states.

Not only will these additional 20 cents per pack raise provide the state with much needed revenues of $40 million over the next two years  (which – interestingly – would be nearly enough save the 400 to 700 jobs that the senate wants to cut), but it would help to prevent youth smoking and ultimately lower health care costs in our state. New Hampshire has the highest youth smoking rate in the Northeast, with 19.8 percent of high school students who smoke cigarettes.  Cigarette taxes nationwide have proven to be one of the most effective ways to prevent youth smoking.

$ 1 Million Cut in Programs to Encourage Job Growth

The house included a little more than $1 million in total funds to continue funding the “Green Launching Pad” and establish an “Office of Innovation and Efficiency”, both of which initiatives to encourage new are job development and growth in New Hampshire.    The senate eliminated funding for these programs from its budgets.   This seems to me to be a case of “penny-wise and pound-foolish”.  Everyone says that we need to grow our economy and attract new, good-paying jobs to New Hampshire.  To do so will certainly require some investment.  $ 1 million seems like a small price to pay.

A house and senate committee of conference has been appointed to resolve differences between the two bills that make up the “budget” (HB 1 and HB 2).  They will be meeting this week and must come to an agreement by Thursday June 20, so that both houses of the legislature can vote on the final budget by June 30.  To follow the progress of the committee Click Here. Senate members of the conference committee are Republican State Senators Chuck Morse, Jeanie Forrester and Bob Odell and Democratic State Senator Lou D'Allesandro.

I believe that the senate should adopt the house’s position in each of four areas I discussed above.   If you agree, please contact your state senator to encourage him or her to contact their colleagues on the conference committee to let them know important these issues are to you.     Contact information for all state senators is available by Clicking Here. 

If you have any additional questions or concerns please do not hesitate to contact me at chris.muns@leg.state.nh.us.   I also will be holding “office hours” on Saturday June 22 between 10:00 AM and Noon in the Lane Room of the Hampton Lane Library.  Please do not hesitate to stop by, have a cup of coffee and a donut and I will do my best to answer your questions

Thanks very much.