April 8, 2015
As originally published in the New Hampshire Union Leader
The state budget seems chaotic after a draft passed the House but the details of the budget and the few large items subject to debate are now relatively clear. The next two months will see significant compromise on revenues and on human service spending with little or no drama about a final House and Senate approved draft and the almost certain though reluctant approval of the governor.
This period of the budget is chaos. As a Republican House drafts something different from what a Democratic governor proposes, numbers are reported comparing budgets to themselves, to the governor’s draft, to last year, to actual spending, to what was proposed but then changed two years ago. The observer is confused, often on purpose.
At this point in time, we should compare the budget to what was spent in the last budget (the two year budget closing on June 30) and identifies the likely decision points as the Senate takes the House draft and turns it into something close to the final product (the Senate and House will still meet in late June to iron out differences but easy agreement is likely).
The portion of the budget spending regular state taxes (as opposed to dedicated fees like the gas tax or federal funds) is the general fund and pseudo-separate education fund. They total about half the budget and the amount spent is guided partially by policy decisions but controlled by the amount of money lawmakers estimate the state taxes will raise.
The governor’s estimates for existing taxes were about $102 million higher than the House Ways and Means committee came up with. In addition, the House decided not to raise any taxes (which seems sensible in this economy).
The governor’s team projected average annual revenue growth of a modest 2.3%. The House foresaw 1.15%. Expect the Senate, with more data available, to have revenue estimates lower than the Governor but $60-$80 million higher than the House had.
Although the House budget makes significant increases to total Health and Human Services spending, two areas have emerged as the most talked about and the most likely to change. The first is “meals on wheels,” the popular in-home support designed to keep seniors out of more expensive nursing homes. Reductions to the budget area that includes meals and wheels funding could lead to significant reductions in that program even if administrators give the program high priority.
Look for the Senate to increase funding but dedicate it specifically to that program while eliminating the department’s current level of budget flexibility. This change will cost about $4 million.
The larger change will be made to the state’s programs for adults with developmental disabilities. The House increases funding by $22 million over what was actually spent in FY14. However, this modest increase (with a second year decline) would not fund existing demand and is $54 million less than the governor proposed.
The areas of developmental disabilities and mental health disorders have long been the highest priority of spending for every legislator of every philosophy. House legislators regarding their budget as a rough draft fully expect this area to claim additional dollars in a final draft. Watch for an increase of about $30 million over two years with a general fund cost of closer to $15 million.
The biggest debate that won’t be a debate right now is over the state’s Medicaid expansion. A decision last year to enact the Medicaid expansion called for in the federal Obamacare law expires at the end of 2016. The governor would like to pass the same law with no changes. The House did not include it in their budget.
The Senate, authors of the expiring plan, will likely negotiate changes perhaps acceptable to the House to at least partially continue the program. However, the decision needn’t be made today and the differences between the House and Senate are too great to include in the budget. This is an argument that can’t be settled in short order and will occur next year.
The House is often unfairly criticized for the seeming chaos of their budget. But completing a different rough draft from the governor in just six weeks is a task bordering on the Herculean. The relatively few areas of change expected and the likelihood of those changes being easily accepted suggests a healthy dose of order behind the chaos.