On Wednesday, June 17, the Committee of Conference on the FY 2016-2017 budget wrapped up its fourth day of deliberations, largely completing its work on the state’s spending plan for the next two years. Among its key decisions to date, the committee has agreed to:
- Set General and Education Fund baseline revenue estimates at $4.61 billion for the FY16-17 biennium, a figure that is approximately $5 million higher than Governor Hassan’s original estimates, but $11 million below the sum on which the Senate’s budget was premised
- Carry $49 million in anticipated FY15 surplus forward into FY16-17, an increase of $15 million over the amount on which the Senate relied in crafting its budget
- Lower the rates of the business profits tax and the business enterprise tax over time, as well as increase the limit on the amount of the research and development tax credit paid out each year, choices that will reduce tax revenue by more than $20 million in FY16-17 and by more than $90 million each biennium once fully implemented
- Allow the New Hampshire Health Protection Program to expire, as scheduled under current law, on December 31, 2016, creating uncertainty not only for the 40,000 Granite Staters who rely upon the program for access to affordable health care but for private insurers and providers
- Appropriate General Funds of $86.3 million to the Community College System of New Hampshire and $162 million to the University System of New Hampshire over the next two years, figures that respectively are $5.2 million and $19 million less than the levels originally recommended by Governor Hassan
- Restore funding for ServiceLink, Meals on Wheels, and other services to the elderly, as well as for emergency homeless shelters, to the amounts backed by Governor Hassan
- Provide, in FY 2017, an additional $5 million in rooms and meals tax distributions (relative to current levels) to cities and towns
- Reduce General Fund support for the Bureau of Developmental Services by $7.4 million, when compared to Governor Hassan’s budget plan
- Exclude funding for the state employee contract agreed to in February of this year
In sum, the recommendations adopted by the conference committee appear to bear a strong resemblance to the budget approved by the Senate on June 4, with a particularly notable exception. That budget would have used $34 million in FY 2015 surplus, as well as other one-time sources of revenue, to bring the FY 2016-2017 budget into balance; that approach, in combination with the impact of backloaded business tax cuts, would have created a hole in the FY 2018-2019 budget of at least $80 million. Conferees’ decision to increase that FY15 carry forward to $49 million likely expands that gap to closer to $100 million.
Given both the short- and long-term consequences of the conference committee’s recommendations, Governor Hassan issued a statement following the close of the committee’s Wednesday meeting, indicating that she would veto the budget if it were approved by the House and the Senate in its present form. Though not routine, there is relatively recent precedent for a budget veto. In 2003, Governor Craig Benson vetoed the FY 2004-2005 budget on June 26, two days after its adoption by the legislature. According to the available legislative history, when the House and Senate met on June 30, they were unable to muster the votes to override that veto and, consequently, passed a continuing resolution, HJR 3, that same day in order to maintain government operations. That resolution authorized state agencies to make expenditures through September 30, 2003 (i.e. through the first quarter of FY 2004) at the FY 2004 levels included in the legislature’s version of HB 1, and, in so doing, allowed negotiations on the budget to continue. A final version of the FY 2004-2005 budget was ultimately introduced in the House and Senate on September 4 and was approved by both chambers and signed into law by the Governor later that day.
Rev. June 24, 2015