NH CARES
Network for Responsible Budgeting
CARES UPDATE & RECOMMENDED ACTION - May 15, 2008
House Passes SB 321 with Much of the Governor’s New Revenue & Cost Savings Removed
The Governor’s Revenue bill – contained in SB 321 – passed the House yesterday (May 14) with several of the GOVERNOR’S LARGEST ADDITIONAL REVENUE and COST SAVINGS REMOVED FROM IT.
It is not totally over yet because SB 321 will now likely go to a Committee of Conference of House and Senate conferees to negotiate the difference between the House and Senate versions. But because the Senate version of the bill did not have the Governor’s proposals in it, it will be harder (although not impossible) to revive them. The best chance here may be for the Governor’s proposal to bond the State’s share of school construction (his largest deficit closer at almost $80m for FY08-09 - and not a tax) because the House included a provision to study this plan in their version. This technically keeps the bonding idea alive - although House Finance opposition to it was strong.
2009 Deficit Remains with More Pressure for Cuts on May 29th
The bottom line here is that while estimates vary, THIS LEAVES a SUBSTANTIAL BUDGET DEFICIT for the 2009 FISCAL YEAR (which starts in six weeks!). The GOVERNOR is scheduled to present his PLAN to ELIMINATE the FY 2009 DEFICIT to the FISCAL COMMITTEE on MAY 29th. Clearly, the failure of the House to pass many of the SB 321 revenues and cost reductions puts MORE PRESSURE on the Governor to USE BUDGET CUTS to ELIMINATE the FY 2009 DEFICIT.
RECOMMENDED ACTION
The next critical point is the Governor’s Proposal to the Fiscal Committee to eliminate the FY 2009 deficit. This is scheduled for Thursday May 29th at 9 AM.
CARES recommends you continue to CONTACT FISCAL COMMITTEE MEMBERS and URGE THEM to NOT APPROVE any PLAN to eliminate the FY 09 deficit that REDUCES ELIGIBILITY or RATES for DHHS SAFETY NET SERVICES. Several Fiscal Committee Members have indicated they support this, and hopefully they have a plan for other savings and revenues that will make up for the ones the House rejected in SB 321.
Governor’s Revenues Passed in SB 321 in Amended Form
(a) The decrease in the discount for wine from the Liquor Commission for stores (which increases revenue) was passed, but wine sellers selling less than $350,000 per year were exempted. This will reduce the Governor’s projected revenues, but not by a large percent.
(b) The $.25 increase in the cigarette tax was delayed for three months based on testimony from cigarette retailers that the projected $1 per pack increase in Massachusetts will raise more revenue than the $.25 increase - if the NH tax stays the same. However, if this increase does not actually occur in the July-September period, the House put in a provision to implement the $.25 per pack increase in October. According to Revenue Administration, it is likely this will reduce the Governor’s revenues for the first three months of FY 2009, although it is unknown by how much. (The House provision here was an innovative way to test claims and implement a rate increase.)
Note: The House rejected the Governor’s proposal to take funds designated in the budget and by SB 721 for nursing home rate increases and transfer them to the General Fund to reduce the deficit. This was a positive step in keeping with the CARES policy of not taking funds from safety net service rate increases to balance the FY 08-09 budget.
Some Good News on Revenues and Use of Surplus Funds
April revenues came in stronger than expected ($6.3m above the plan) which reduced the year-to-date revenue shortfall at the end of April to $40.8m (there also expenditure problems). This is a positive trend, and no one knows if it will continue – and even if it did, it would not erase the deficit. Nonetheless, it reduces the deficit projections from a month ago, takes some pressure off making immediate large cuts, and calls into question some of the very high deficit projections that have been in the press from the Bartlett Center and others.
Another positive development is there has been almost no talk from the Governor and legislative leaders of late about being against using surplus funds to address the deficit. In particular, there seems to be little resistance to using $33m of the surplus from FY 2007 that was above projections and therefore not put in the Rainy Day Fund.
