All Sections

Home | State House Dome

Garry Rayno's State House Dome: When good news isn't really so good

State House Bureau

April 28. 2013 12:13AM

Last week, Gov. Maggie Hassan and Attorney General Michael Delaney announced the state would receive $15 million in unexpected money from a settlement with tobacco companies.

Tobacco companies claimed states did not "diligently enforce" the 1998 master agreement that has netted New Hampshire between $42 million and nearly $50 million a year and sued while withholding about $4 million of its annual payment to the state beginning in 2006.

States were supposed to require non-settling tobacco companies to pay into an escrow account to protect the settling companies' market share, but few did.

So last week, the state recouped a little more than half of the money tobacco companies withheld.

You would think the extra money would be good news for budget writers working on the state's upcoming $11 billion biennial budget, but it is not.

The state received the money last week and so it will be banked in the current 2013 fiscal year. That will help balance this year's budget, which has a projected deficit - due to revenue shortfalls, unbudgeted expenditures and unrealized savings - of from $14 million to $20 million.

"These dollars will be key to addressing the projected fiscal year 2013 deficit and could help eliminate the need for alternative plans under consideration," Hassan said.

The House-passed budget gave Hassan authority to sweep, or as some say raid, dedicated funds such as the renewable energy fund for money to balance this year's budget.

The problem is House budget writers believed the tobacco money would arrive during the 2014 fiscal year and included $21.6 million as that year's revenue and an additional $2.5 million for 2015, totaling $24.1 million for the next biennium

With the money credited to 2013, the budget the House has sent to the Senate is short $24.1 million in revenue.

Senate budget writers were already concerned about what Senate Finance Committee Chairman Chuck Morse, R-Salem, said are overinflated House estimates for the Medicaid Enhancement Tax on hospitals and a 20 cent increase in the tobacco tax the House passed as part of its budget.

Having the tobacco money come now creates another money hole the Senate will have to fill through spending cuts or new revenue - i.e. taxes or fees - which is highly unlikely.

Morse and other finance members have expressed support for more money for uncompensated care for the state's hospitals and money for charter schools and school building aid, all cut by the House.

The $24 million is almost the same amount - $28 million - Hassan and the House added to the budget to improve the state's mental health system. Mental health patients and the federal government are suing the state over what they say are inadequate services.

The House cut $12 million in state aid to the University System of New Hampshire from Hassan's proposal as she restored about 75 percent of what was cut two years ago.

However, the new budget hole may actually serve Hassan and the Senate. They both want the House to pass SB 152 to establish one "high-end, highly regulated" casino along the state's southern border.

Hassan counts $80 million in casino licensing fees in her budget. The House budget does not.

The latest revenue shortfall could put additional casino pressure on the House, although the odds do not look good right now.

The House is currently reviewing the bill through three subcommittees and is not expected to act on the bill until May 29.

The Senate has not said when it will act on its proposed budget. The deadline is June 6.

Chances are the Senate will wait to see what the House does before it decides whether to include the $80 million in licensing fees from the gambling bill, which it passed on a 16-8 vote.

- - - - - - -

April Revenues: For the next few days, Senate budget writers may have one eye on the first-place Red Sox, but the other will be on April tax revenues.

March and April are the two biggest revenue months, mainly because of business tax and interest and dividends tax returns.

March is by far the biggest, and last month was a jackpot for the state. It reaped a $26.6 million windfall that went a long way toward closing what looked like a $40 million shortfall for the year.

The good news followed several months of plummeting numbers. A good April would go a long way to close the deficit for 2013 and cause revenue estimators in the Legislature and Hassan administration to celebrate.

As of Friday, revenues were close to the month's target of $256.7 million. However, the figure includes the $15 million from the tobacco tax and could include some significant money from the Medicaid Enhancement Tax, as several hospitals that had outstanding liabilities were given a deadline of Friday to pay up.

Currently the Medicaid Enhancement Tax is $34 million less than budget writers estimated.

The hospitals could ask for an extension, and that could change the picture, but in general, April revenues look like they will be good.

- - - - - - -

So Long: The relations between the House and Senate to date have been fairly cordial, but that is about to change.

Some of the House's hard-fought bills near and dear to many representatives' hearts are about to be upended by the Senate.

Decriminalizing the possession of less than a quarter-ounce of marijuana, which the House passed after lengthy debate, is slated to be killed when the Senate meets Thursday. The Senate Judiciary Committee voted, 5-0, to kill it.

The same committee is recommending on a 4-1 vote to study the bill that would allow industrial hemp to be grown as an agricultural crop. House Bill 153 would remove industrial hemp from the controlled-drug statutes.

The Senate Health, Education and Human Services Committee has not yet made a recommendation on House Bill 573, which would legalize medical marijuana, though the public hearing was nearly a month ago.

The Senate Finance Committee voted, 5-1, to kill House Bill 443, which would have forbidden the state to use private prisons or to turn over management of the system to a private company, and the Executive Departments and Administration Committee voted, 3-2, to kill House Bill 316, which would allow chemical cremations or alkaline hydrolysis.

The Senate will also be asked to kill House Bill 362, which would ban ethanol as a gas additive, and to study the Good Samaritan E-911 bill, which would grant criminal immunity for drug or alcohol overdose calls.

The Senate meets Thursday, and after that session, things may be a little chillier between the two chambers.

- - - - - - -

Environmental Caucus: A bipartisan group of lawmakers has organized an environmental caucus, saying a healthy environment is a cornerstone of New Hampshire's economy, heritage and attractiveness.

About 35 House members have signed on to the new caucus representing many House committees.

"Given the contentious state of our political affairs, it's worth recalling that the first Earth Day was a bipartisan initiative," said Rep. David Hess, R-Hooksett. "It was co-chaired by a Democratic senator from Wisconsin and a Republican from California. The original Clean Water and Clean Air legislation, both under a Republican President, were outgrowths of the original Earth Day in 1972."

The caucus was announced on Earth Day last week.

"New Hampshire has a well-earned reputation for respecting its forests, mountains, lakes and rivers," said Rep. Rebecca Brown, D-Sugar Hill. "Our state's appeal to tourists and new business investors, as well as our cherished lifestyle, are rooted in our scenic, healthy environment."

- - - - - - -

Chair at Caucus: GOP state party Chairman Jennifer Horn spoke at the House Republican caucus Wednesday along with former Speaker and current Rep. William O'Brien, R-Mont Vernon, who several weeks ago led a walkout during the caucus before the House session.

The message was party unity, said one Republican there. Several incidents have caused friction in the ranks, including a petition to remove the 189 members of the House who voted to repeal the "stand-your-ground" self-defense law passed in 2011.

Rep. Dan Itse, R-Fremont, said last week he would attempt to introduce the petition through the rules committee, as would be the normal process, but has yet to ask it be placed on the agenda of the committee's next meeting.

State House Dome

More Headlines