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Governor, Legislature Prepare To Hammer Out Budget

Emily Corwin

With a new governor, a divided statehouse, and continued uncertainty over federal spending, New Hampshire lawmakers are preparing to hammer out a budget.  It’s never a particularly easy process.  But hopes are high at the statehouse that this session, the inevitable fiscal fights will be more muted.

In her inaugural address earlier this month, Democratic governor Maggie Hassan struck a bipartisan tone about the state’s finances.

“And as we build our next budget, though we have much to address, we must acknowledge that we will not be able to do everything all at once," Hassan said to light applause. 

"To those on the other side, I ask you to recognize that there are some things that government must do, not only to help our most vulnerable citizens, but also to provide the platform for economic growth." 

This line spurred more enthusiastic response from the new governor's audience.

The balance Hassan needs to strike for the 2014 and 2015 budget will be a challenge.  Steve Norton of the New Hampshire Center for Public Policy Studies says lots of organizations have been lining up for more funding.

“The mental health system said that they needed $38 million dollars to make their system hold, the university system is requesting some additional financing to replace the $50 million dollars that was removed from the budget last session, and the hospitals, who lost approximately $120 million, are also requesting something," Norton says.

Add to it the uncertainty of the lawsuits the state is facing over the retirement system, mental health, hospitals and the Department of Corrections.

We know that, at a minimum, the state needs to come up with about$10 billion just to keep running over the next two years.  Governor Hassan ran on promising to revisit cuts Republicans made to the current budget.  She promised to reverse cuts she considered wrong-headed.  Getting her way in the Democratic-controlled House may be possible.  But Republicans, who still control the Senate, will also need to be persuaded.  As Senate President Peter Bragdon explained earlier this month on The Exchange, they are skeptical.

“Without a large growth in revenue, I just don’t see how it’s going to be mathematically possible to restore funds to all the different places that were brought up in the campaign, and I think the university system was the largest of those," Bragdon said.

Republicans in the Senate have signaled a willingness to let the ten-cent cigarette tax cut expire.  Though it’s likely to expire anyway, since it hasn’t met its revenue targets.  Beyond that, Senate Republicans haven’t indicated they’re open to talking about other taxes.  But Finance Committee Chair Chuck Morse is clear on one point.

“I don’t believe in taxing and spending our way out of this budget.  I think that would be a mistake,” he says.

The Public Policy Center’s Steve Norton says while the Democratic-controlled House and the GOP Senate will have different approaches to the budget, he expects the status quo.  “I’d be surprised if there are any big changes in the revenue structure, or conversations thereof, except for the question about gambling."

It’s gambling that may be this budget’s wildcard. 

While it’s seen some staunch resistance in the past, Governor Hassan campaigned on allowing one—highly regulated—casino near the Massachusetts border.  But in the context of a$10 billion two-year budget, would it make a big difference? 

Norton says gaming would be a small slice of revenue, not a silver bullet. 

He also predicts the state will see half its traditional yearly revenue growth.  At that same time, though, he says the challenge this year may not be as steep as with the current budget.

“If last year, and a $240 million budgetary reduction was a ten on the budget difficulty scale, this is probably a six," Norton says. "It’s not going to be easy, but it’s not facing the same precipitous decline in revenues that we experienced in the last budget biennium.”

Governor Hassan has until mid-February to submit her budget to lawmakers.  Then, the House and Senate get their turn.  The deadline to finalize the budget is the end of June.  

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