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While State Budget Stalls, N.H. Cities, Towns In 'Fiscal Limbo'

Dan Tuohy/NHPR

As state political leaders seek compromise on the stalled state budget, towns and cities are grappling with fiscal uncertainty that could have some long-term ramifications. 

Governor Chris Sununu vetoed the budget passed by Democrats in the legislature about three weeks ago.  It’s unclear when both sides will reach agreement.

Meanwhile, according to Barbara Reid, government financial advisor at the New Hampshire Municipal Association, most municipalities have already adopted budgets for this year, assuming certain levels of state aid.   


“There is $40 million in the budget for municipal aid, unrestricted -- to be used for any purpose municipalities want – they can use it for property-tax relief, they can use it for roads, bridges, whatever," Reid said on The Exchange.  "But without having the budget passed, that’s in limbo right now ”


(For the full conversation, including analysis of the budget by Phil Sletten of the New Hampshire Fiscal Policy Institute and Jacqueline Benson of Citizens Count, listen here.  )


Other funding sources in limbo, Reid said, include money for highway block grants and general funding from the meals and rooms tax revenue.  


Reid said she is also concerned about how the stalemate might affect property-tax rate setting -- a process that normally starts end of September, early October.  That's about when the current continuing resolution, which keeps government spending at current levels, ends.   


Despite the challenges and apparent impasse, Reid said she remains optimistic an agreement will be reached. 


After a recent meeting between Governor Sununu and municipal leaders, the Union Leader reported, some leaders appeared heartened by the discussion, while others remained concerned about their towns and cities; Governor Sununu meanwhile has expressed optimism and offered an open-door policy. 


David Juvet, Senior Vice President of Public Policy for the N.H. Business and Industry Association, said the BIA  strongly supports continuing the business tax reductions that Democrats suspended in their budget -- a decision that helped prompt Governor Sununu's veto.    


"Those are obviously going to continue to be a negotiating point between the legislature and the Governor," he said. 


But, Juvet said, there is plenty in the budget that would benefit businesses and the economy -- some in indirect ways. These include a new state-level housing appeals board, increased funding for the university and community college system, and an increase in Medicaid reimbursements, which could help avoid shifting health insurance costs to businesses.   


When it comes to the Governor's veto and his objection to suspending tax cuts, Juvet said: "We didn't request that the Governor veto the budget over this. This is a decision he came to on his own." 


For Peter Evers, CEO of Riverbend Community Mental Health and President of the N.H. Community Behavioral Health Association, the budget veto has been a major disappointment, in part because it stymies moving forward on elements of the state's new Ten-Year Mental Health Plan and on increasing Medicaid reimbursement. 


"I think the big point I want to make is that we're leaving federal money on the table by not getting these Medicaid increases, because the Feds are matching whatever we're paying in that raise, so that's another reason we should really get this resolved." 


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