Legislative Update May 26, 2017
A Big Piece of the Pie
The Senate Finance Committee served up a key piece of the 2018-2019 Biennial Budget on Thursday, voting 4-2 along party lines to approve an $11.8 billion spending plan for the next two years. The Senate Finance budget is a bit smaller than Governor Chris Sununu’s original $12.1 billion proposed budget, and $1 million tighter than the proposed House budget, which failed to pass. The two Democrats on Senate Finance voted against the budget, saying it underestimates revenues and thus underfunds the university system and key human service programs. The Republican majority said the budget is a responsible one that increases funding for many top priority social service programs, including millions more for additional mental health beds, funding to address problems at the Division of Child and Family Services and more money for substance misuse treatment. The budget heads to the Senate floor next week, where it looks to be approved by majority Republicans.
Senate Finance members also included additional business tax reductions in the budget. The Business Profits Tax and Business Enterprise Tax will both be lowered in phases over the next four years. By 2021, the BPT will be lowered to 7.5% while the BET will fall to 0.5%. Democrats criticized the cuts as not addressing workforce and energy cost issues, while Republicans said the business tax reductions that are ongoing have already produced economic growth and higher revenues, and the new cuts will continue that trend.
Despite the lack of an approved budget as a bargaining position, the House this week took steps to give itself some leverage in upcoming negotiations. House Finance Committee members voted unanimously to attach a Keno provision to a Senate bill that provides for full-day kindergarten, using Keno to fund the program. The Senate has already voted to send the House’s original Keno bill to study, and has never passed Keno over the years. Full-day kindergarten is a priority for Governor Sununu. His original targeted plan called for $9 million in annual spending. The Senate endorsed the figure, but the House expanded on it, giving preliminary approval to a $14.5 million annual plan that offered full-day kindergarten to any town that approved it. Governor Sununu expressed support for the House action, but Senate leadership was critical of the higher cost. Now it gets interesting, as the new House kindergarten plan is closer to the Senate and the Governor’s numbers, but is also tied to Keno.
Ready for Health Care Changes…Maybe
With major changes to the federal Affordable Care Act possibly on the horizon, the Senate Health and Human Services Committee took action this week to allow the state to react quickly and provide stability in the health insurance market, if needed. The committee unanimously supported an amendment that establishes a contingency plan in case there is a need to address major changes in the availability or affordability of health care in the state. In such a case, it would allow the state Insurance Department to consider all options, including reinsurance, risk adjustment programs or reopening the state’s high-risk pool.
When You Come To A Fork in the Road, Take It!
What next for the budget? There are numerous possible roads ahead, some with curves lawmakers will have to negotiate carefully. In the coming month, House and Senate leaders and the Governor’s Office will sit down and attempt to resolve their differences. All eyes are on the House.The House budget failed in April at the hands of a coalition of strange bedfellows made up of strict conservative Republicans, who thought the House’s budget was too big, and almost all the House Democrats, who thought it was too small. It is possible that the business tax cuts added by the Senate will be enough to help House leadership bring back the more conservative Republicans and pass the budget – possibly even as soon as next week. But if those conservatives stay on the outside, what level of budget cuts will it take to secure their votes? If House leaders instead try to appease enough House Democrats to win a budget vote, how far would Democrats want to go and what kind of additional spending would it take to win over a sufficient number of them? As of now, the only certainty is that more work needs to be done before we have a budget.
The House will meet in session on Thursday, June 1st. The Senate will meet in session on Wednesday, May 31st, and Thursday, June 1st. There are no hearings scheduled the week of May 29, 2017.