It was slipped into the House budget proposal, but the N.H. Senate has stripped the controversy from its version of the budget. And now, a Senate committee has reshaped House Bill 580, which also included a collective bargaining provision that organized labor strongly opposed.

House Bill 580

When it passed the House last month, HB 580 was one of a handful of comprehensive proposals this session to reform New Hampshire’s public pension system. Daily Briefing took notice of one particular provision in the original text of HB 580. Bear with us here — the legalese is followed by regular English. It said when a collective bargaining agreement has lapsed, or during negotiations:

“the status quo shall be maintained as to the wages, hours, and conditions of employment of employees in good standing. Except where required by statute, the continuation, after the expiration of the agreement, of the provision of any medical, dental, and life insurance benefits, retirement or pension benefits, and any other fringe benefits, shall be subject to the exclusive authority of the public employer.”

In other words, while employees and their wages would not revert to “at will” status when a contract ends, their benefits would.

Another clause would have allowed public employees to opt out of all “medical, dental and retirement benefits in order to instead receive an increase in his or her base salary or wage.”

With that kind of change in law, collective bargaining negotiations and group insurance calculations would become a whole new ball game.

They’ll look into it

So, the Senate Executive Departments and Administration Committee acted in the time-honored legislative tradition of dealing with radioactive issues by creating a study committee.

Actually, they replaced everything in the bill with a provision to create this collective bargaining study committee. As amended, HB 580 would have three Senate members and four members of the House study the issue of public sector collective bargaining agreements.Their report would be due by December 1.

The measure passed the committee by a unanimous 5-0 vote. The bill now heads to a full Senate vote Wednesday.

It ain’t over till it’s over

But this may not be the end of the story. House Bill 580 — the one that got turned into a study committee — was sponsored by Rep. Neal Kurk (R-Weare). He’s the same representative who inserted the “at will” measure into the House budget bill, which the House passed by a sizable 228-139 vote.

Any changes the Senate makes to both the budget and HB 580 will have to be approved by the House. Stay tuned.

This Daily Briefing was written by Michael McCord.

Should they study collective bargaining, leave it alone, or change it now?

(If you haven’t commented before, check out our Comments Policy first, please.)

Our midstream progress report on the N.H. Legislature continues today, checking up on the status of some featured legislation we’ve covered so far this session.

For more background on each bill, click the links to the corresponding dispatches in the bolded heading.

Retirement System Fix

The latest Republican-backed proposal to overhaul the state retirement system has its first public hearing this Friday. Senate Bill 3, sponsored by Sen. Jeb Bradley (R-Wolfeboro), has started its legislative journey in the Senate Executive Departments and Administration Committee.

No Adequacy Change

A bill to redefine education adequacy was rejected by the House Education Committee. Rep. Ralph Boehm (R- Litchfield) proposed eliminating the current statewide requirements for education in the arts, world languages, health and technology. These are among the components of an adequate education that school districts must provide, according to a law passed in 2007 to meet state Supreme Court guidelines.

Boehm, vice-chair of the House Education Committee, had argued that local communities should have the right to determine the definition of an adequate education for their students. On Feb. 24, the House Education Committee voted 15-0 to recommend against Boehm’s bill. House Bill 39 is scheduled for a March 16 vote in the full House.

Members Only

A bill to restrict membership on House study committees to lawmakers is scheduled for a vote Tuesday by the House Legislative Administration Committee. Sponsored by Rep. Laurie Harding (D-Lebanon), House Bill 190 has received bipartisan support.

The measure follows a strong bipartisan House vote last year instituting a rule (not a formal law) that limits membership on House study committees to legislators. Previously, some study committees had invited members of the public, industry experts, or representatives from state agencies to serve.

RGGI Repeal Passes in House

Since December, we have followed a proposal to repeal a 2008 law and remove New Hampshire from the 10-state Regional Greenhouse Gas Initiative. House Bill 519 is sponsored by Rep. Richard Barry (R-Merrimack).

After a daylong hearing earlier this month, the bill was recommended for passage by a party line vote in the House Science, Energy and Technology Committee. It then passed the House Wednesday, 246 to 104. Before heading to the Senate, HB 519 will have a second trip in the House through the House Finance Committee.

Rethinking Renewables Gets Rethought

A few days after we wrote the headline “Renewable Energy Could Get a Whole Lot Bigger,” the bill at the heart of the dispatch (House Bill 302) died in its committee at the request of its own sponsor. Rep. Richard Barry (R-Merrimack) said he hadn’t planned on stirring up any controversy when he proposed making large-scale hydroelectric power part of New Hampshire’s renewable energy portfolio.

His proposal, however, drew out critics of the Northern Pass electric transmission line project in the northern part of the state. They were joined by supporters of solar energy development, which would have been impacted by a change in the law. The Renewable Portfolio Standards law also was already up for review later this year.

On Feb. 15, the full House agreed by voice vote with a unanimous House Science, Energy and Technology Committee recommendation to kill the legislation.

Hemp Not

The latest attempt to legalize the growing of industrial hemp was rejected by lawmakers. As we reported in early February, Rep. Derek Owen (D-Hopkinton) has sponsored at least seven similar bills since 1998. This year’s effort met the same fate as previous attempts. House Bill 101 was rejected by an 11-7 vote in the Environment and Agriculture Committee, in part because federal law prohibits the growing of industrial hemp. By a 304-51 roll call vote, the full House voted down HB 101 on Feb. 15.

Sex Registry Study Committee Measure Rejected

A bipartisan proposal to study the effectiveness of the state’s sex offender registry did not get much support in committee or in the full House. House Bill 122 was sponsored by Rep. James MacKay (D-Concord) and Sen. Sharon Carson (R-Londonderry). The House Criminal Justice and Public Safety Committee recommended House Bill 122 be killed, and the full House concurred in a voice vote on Feb. 15.

House Votes to Defund NHPTV

The House Finance Committee is again considering a proposal to prohibit any state funds from being sent to New Hampshire Public Television. House Bill 113, sponsored by Rep. Steve Vaillancourt (R-Manchester), already passed the same committee and the full House by a 262-102 vote on Feb. 15.

All bills dealing with spending that pass full chamber votes are sent to the Finance Committee for second consideration — even bills that started there. If, as expected, it passes again through the same bodies, HB 113 will move to Senate.

This Daily Dispatch was written by Michael McCord.

“We need to get people off the dime,” Bradley told Front Door Politics shortly after he released details of his retirement system overhaul proposal late last week. “The problems are immense and the longer we wait, the worse it becomes.”

Sen. Jeb Bradley (R-Wolfeboro) will soon release his plan for a major overhaul of the NH Retirement System.

The measure will be known as Senate Bill 3. Bradley says it will be introduced within the next two weeks and it will require a detailed financial actuarial analysis by the NHRS. Bradley says it the bill is designed to stabilize and build up a retirement fund that is currently underfunded by an estimated $4.75 billion.

The SB 3 proposals, which would mostly target new hires and those employees who have not* reached 10 years of “vesting” service (meaning they’re eligible for retirement benefits), include:

• Increasing employee contribution rates for Group I (teachers) to 7 percent from 5 percent and for Group II (police and firefighters) to 11 percent from 9.3 percent. The proposal would apply only to new hires after the effective date of the legislation.
• Changing the retirement eligibility age and time of service to 50 years of age and 25 years of service for police and firefighters. Currently, eligibility for those employees is 45 years of age and 20 years of service.
• Change the membership of the NHRS board to have equal representation between employees and employers — one each from all four member classifications. The board is currently mandated to include only one employer seat and eight employee seats. The state treasurer, a senator, a representative, and two non-member trustees appointed by the governor and executive council will remain on the board.**
• Change the “earnable compensation” formula from the highest three years of compensation to an average over the employee’s five highest years of compensation.***

Bradley says that reforms must maintain the goals of the system “with pensions that are reasonable to beneficiaries, affordable to taxpayers, and a system that is stable and viable and that does not put, as it does today, all of the risk and all of the cost of this unfunded liability on the taxpayer.”

While Bradley said at a press conference announcing the proposals that the reforms could eventually include increased employer contributions, employee union leaders such as David Lang of the Professional Firefighters of New Hampshire says the initial proposals focus solely on employees.

“Senator Bradley said this is a day of reckoning for the pension systems. It’s really a day of reallocation. And that reallocation is, they’re trying to shift the cost from the employers’ obligation over to the employees, which we think is unconstitutional on its face and it’s patently unfair,” Lang told New Hampshire Public Radio.

A group of labor organizations representing employees and retirees, the New Hampshire Retirement Security Coalition, said it will soon release its own pension reform proposals.

The NHRS was established by the N.H. Legislature in 1967. It covers more than 76,000 active and retired teachers, firefighters, police officers and state and local government workers. In addition to investments, the system is funded by a combination of state/employer and employee contributions. The system has been underfunded in part because for more than a decade, employer contributions were too low. The financial meltdown of 2008 also devastated investment returns.

>> The New Hampshire Retirement System will be holding three public “NHRS 101” sessions explaining the retirement system. This is the same presentation that has been given to House and Senate members in recent weeks. All sessions listed will be held at the NHRS office, 54 Regional Drive, in Concord. Visit their website for more information and registration.

Tuesday, Feb. 1, 4:30 to 6:00 p.m.

Monday, Feb. 7, 10:00 to 11:30 a.m.

Wednesday, Feb. 9, 2:30 to 4:00 p.m.

This Daily Dispatch was written by Michael McCord.

Editor’s Notes:

* The original Daily Dispatch mistakenly reported that Sen. Bradley’s proposed changes would affect vested employees. In fact, it affects primarily new hires and those current employees who will not have reached 10 years of vesting service by the time the legislation takes effect.

** The original Daily Dispatch mistakenly reported that the board is weighed with two employees for every employer member.

*** The original Daily Dispatch indicated that final compensation would be determined according to an average of the employee’s final five years of compensation. Technically, the bill proposes final compensation be determined according to the five highest years, not necessarily the final years.

Don’t feel discouraged if the answers elude you. Even an avowed budget expert like Charlie Arlinghaus, president of the Josiah Bartlett Center for Public Policy, admits he needs refresher points to keep up with budget developments. In an effort to help everyone — lawmakers, policy makers, the general public and media organizations such as Front Door Politics — better understand the mysteries of the state budget, The Josiah Bartlett Center for Public Policy is holding its annual “Budget 101” seminar Thursday at the State House.

Set up primarily for lawmakers, Arlinghaus explains, the four-session, three-hour seminar is free and open to the public. He says the “in-depth tutorials” will focus on the complex and often misunderstood topics of state debt, the capital budget, the retirement system, and the Ten-Year Highway Plan.

“Our goal is to have 424 people (the Legislature) all interested in the budget and not just those in certain committees,” Arlinghaus tells Front Door Politics. He adds that while the Josiah Bartlett Center, a free-market think tank based in Concord, has offered similar seminars in the past at different times of the legislative calendar to smaller groups, this is the first time it has been offered at the beginning of the budget cycle.

“Most people have some sense of a small part of the budget but haven’t had the opportunity to see it as a whole,” he says. Arlinghaus believes it’s more important than ever this year because of the looming biennium budget deficit, which is estimated at between $400 million to $800 million.

He says Budget 101 will give both new and returning lawmakers a better understanding of the forces driving the state budget and give them a context for the tough choices that lawmakers face this session. “The problem is so large,” he says, “we need all hands on deck.”

>> Budget 101, hosted by the Josiah Bartlett Center for Public Policy, free and open to the public, will be presented in the State House chambers on Thursday, Jan. 27, 10 a.m. to 1 p.m.

Session 1: The New Hampshire Budget — The General Fund and Beyond (Charlie Arlinghaus, President, Josiah Bartlett Center for Public Policy)

Session 2: Mortgaging the Future — Borrowing, Debt Service, and Bond Ratings (Grant Bosse, Lead Investigator, Josiah Bartlett Center for Public Policy)

Session 3: Moving New Hampshire — Highways, Turnpikes, and The Ten Year Plan (Rep. David Campbell (D-Nashua), Public Works and Highways Committee)

Session 4: The Next Crisis — Reforming the New Hampshire Retirement System (Rep. Ken Hawkins (R-Bedford), Special Committee on Public Employee Pensions Reform)

This Daily Dispatch was written by Michael McCord.

When the recession hit, the state’s public employee pension system was already battered from a decade of chronic underfunding. Now, lawmakers are looking for ways to deal with more than $3 billion in unfunded liabilities for future retirees. The pension system serves over 75,000 active and retired teachers, fire fighters, police officers and public employees from more than 450 New Hampshire municipalities.

Following suit on the stated priority of pension reform in the new Republican-dominated Legislature, House Speaker William O’Brien (R-Mont Vernon) last week created a 16-member Special Committee on Public Employee Pensions Reform. Chaired by Rep. John Reagan (R-Deerfield), the committee holds its first meeting today. It is charged with all things pension—including funding, eligibility, benefits and “alternatives to public employee plans and programs.” It will be the first stop for all pension-related bills, of which 18 have been filed but none had been designated for committee action as of Jan. 20.

A defined retirement benefit plan is currently in place, and recent legislative actions to shore up the system (such as House Bill 1645 from 2008) have included:

• a different formula that reduced the state budget’s burden by bumping up required contributions from employers (i.e. cities and towns) and employees,
• increased contributions from new employees,
• and an investment committee to oversee long-term investment plans.

According to the most recent 2010 NHRS annual report, the pension system’s assets increased by $437 million to $4.9 billion, but they remain far below the 2007 asset level of $6 billion. The system is funded at 58.5 percent, up slightly from 58.3 percent in 2009. A rule of thumb is that pension plans should be at least 80 percent funded to be considered strong.

David Lang, president of the Professional Fire Fighters of New Hampshire, tells Front Door Politics he is closely watching the actions of the new special committee.

“We understand that House leadership wants to take a look at the retirement system,” says Lang, whose union represents more than 2,100 active and retired members throughout the state. “They have some beliefs about the system that I don’t share, but they told us they will be open and transparent and that we will have a place at the table.”

Lang is particularly concerned that reforms to shore up the system in 2006 and 2008 are not lost and “we don’t return to the 1990s,” he says. At that time, municipalities used actuarial formulas that counted on high rates of investment return, thereby deflating employer contributions. This produced “a long-term pension (payment) holiday for employers,” Lang says, which pushed the funding problem down the road. That road has reached a dead end today.

New Hampshire is not alone in its pension funding shortfall. In a report released last year, the nonpartisan Pew Center on the States conservatively estimated a $1 trillion funding gap nationally — and that was using figures from 2008, before the full brunt of the recession took its toll on investment portfolios. Pew said more than half the states had fully funded plans in 2000 (New Hampshire was one of those) but only four states have them now. Pew also put New Hampshire in the “serious concern” category.

>> The House Special Committee on Public Employee Pensions Reform holds its initial meeting in the Legislative Office Building, Room 205, today, Friday, Jan. 21, at 1 p.m.

This Daily Dispatch was written by Michael McCord.

Gay marriage was the only clear winner among these debates, as the Legislature’s spring vote to legalize same-sex marriage took effect Jan. 1. The death penalty was nearly outlawed and remains under scrutiny by a special study commission. And Granite State legislators narrowly approved a statewide medical marijuana program—only to have it vetoed by Gov. John Lynch.

But these scores are far from settled, as evidenced in the new round of bills up for debate in Concord’s 2010 legislative session, which officially kicks off on Wednesday, Jan. 6. Both the House and Senate will meet every Wednesday until June, and they’ll be busy. So far, 819 bills have been proposed to create, repeal or otherwise change New Hampshire’s laws.

gay marriage

Last June, New Hampshire became the sixth state to legalize same-sex marriage, and about 200 gay couples were already registered to marry before the new law took effect on Jan. 1.

That’s the same date that House Bill 1590 would retroactively take effect if it’s approved. Sponsored by Rep. Alfred Baldasaro (R-Londonderry), the legislation would repeal the legalization of gay marriage, effectively nullifying the vows taken while the bill is debated.

When gay marriage was legalized in New Hampshire, the civil unions created for same-sex couples just two years earlier were incorporated into the new law. As it stands, current civil unions will automatically become legal marriages on Jan. 1, 2011, and there will be no such thing as “civil unions” after that.

In repealing the same-sex marriage statute, HB 1590 would also effectively reinstate civil unions, according to Rep. Jordan Ulery (R-Hudson). He stresses that, for his part at least, the legislation has nothing to do with discrimination against same-sex couples.

“I don’t care what you do in your bedroom, it’s none of my business,” he says. Ulery takes issue with use of the word “marriage,” which he believes lays the foundation of society by encouraging heterosexual couples to create families, “literally,” he says.

Ulery concedes that same-sex couples can form families in other ways, such as through adoption, artificial insemination or surrogate birth parents. “Certainly they can care for and love a child,” he says, “but there are certain times in your life when someone had to say, ‘You’re feeling this way because.’” If two men are raising a little girl, he says, “A guy has never felt that way, regardless of what his sexual orientation is.”

voters’ veto

In both California and Maine, voter referendums have reversed lawmakers’ actions and undone gay marriage. New Hampshire has no such mechanism, however. The state’s Constitution allows only the Legislature to “suspend,” or veto, a law.

Rep. Laurie Boyce (R-Alton) would like to change that with Constitutional Amendment Concurrent Resolution 25. It would allow citizens to veto specific laws through statewide votes, provided sufficient signatures are gathered in support of a veto ballot question. If passed, CACR 25 itself would require a statewide ballot vote, as does any constitutional amendment.

Boyce could not be reached for comment, and it’s unclear whether her legislation was motivated by a desire to veto gay marriage. But gay marriage opponents would almost certainly start gathering signatures if the measure is approved.  Any law on the books would be subject to the voters’ referendum. The N.H. Legislature has historically resisted similar initiatives.

marijuana

Before a bill becomes a law, it’s the governor who holds veto power. Back in July, Gov. John Lynch used that power to stop HB 648, which would have legalized the use of medical marijuana through a regulated statewide program. Sponsored by Rep. Evalyn Merrick (D-Lancaster), the bill enjoyed solid support in the House, but the Senate remained two votes short of the two-thirds majority needed to override the governor’s veto. No medical marijuana bills are proposed in 2010.

Instead, Rep. Calvin Pratt (R-Goffstown) has sponsored House Bill 1652 to legalize one ounce or less of marijuana for people over age 21. He argues that since the 1937 Marijuana Tax Act, pot has been wrongly classified in the same group as drugs like heroin and has been denied legitimate agricultural, industrial or recreational uses.

Today, cannabis remains a Schedule I drug along with LSD, PCP and ecstasy, according to the U.S. Drug Enforcement Administration. Pratt believes marijuana should receive legal treatment on par with alcohol.

“We need to … point out the failure of our current policy,” Pratt says. The bill itself claims that decades of law enforcement have failed to prevent people from using the drug. “We keep doing the same thing and expect a different outcome,” Pratt says, “and that’s how you measure insanity.”

By legalizing marijuana use for the majority of the population, he surmises, the energy and resources of police, courts and penal systems can be spent more effectively enforcing the ban for minors.

Money is also a factor. “Rather than spending millions of taxpayer dollars arresting marijuana users, the state of New Hampshire should instead generate millions of dollars by taxing and regulating marijuana,” the bill states. Part of this revenue could then be earmarked “to prevent and treat the abuse of marijuana, tobacco, alcohol and other drugs.”

Given that Gov. Lynch vetoed a medical marijuana bill only months ago, it’s not likely that a bill legalizing pot will make it past his desk. Pratt admits that it actually has a “less than 50-50” chance at succeeding.

But, the legislative process teases out people’s legitimate concerns and builds clarity on how to address potential problems, Pratt says. For now, he’s happy just to keep the conversation going.

death penalty

The death penalty is another ongoing conversation. Of five related bills considered in 2009, House Bill 520, sponsored by Rep. Jim Splaine (D-Portsmouth), was the only one to pass. It created a special commission to study the death penalty in New Hampshire.

A public hearing was held on Dec. 4 to compare the cost of prosecution for life sentences versus execution. Several more points remain to be addressed, including whether the death penalty is “consistent with evolving societal standards of decency”; if prosecution for capital punishment cases is discriminatory in any way; if the crimes that make convicted perpetrators eligible for the death penalty should be maintained, expanded or narrowed; and whether alternatives to the death penalty would sufficiently address both penal interests and the desires of victims’ families.

More information on the commission can be found at www.gencourt.state.nh.us/statstudcomm/committees/2009. The commission’s final report is due by Dec. 1, 2010, and the next public hearing is scheduled for Feb. 5 at the State House in Concord.

budget

If social issues continue to be big news in 2010, they’ll likely pale in comparison to headlines about the state budget and its shortfalls.

New Hampshire operates on a two-year budget cycle, meaning that plans for how to raise and spend all of the state’s money must be approved every two years—the same cycle on which representatives and senators are elected. We’re entering the second year of this two-year term, and the $11.6 billion budget that narrowly passed last June is facing several challenges from the recession, lawmakers and, possibly, the courts.

According to Rep. Steve Vaillancourt (R-Manchester), who sits on the House Local and Regulated Revenues Committee, six-month revenues (July through December) will be about $50 million below projections. About half of that shortfall comes from lower than expected business taxes.

This gap could more than double in the second half of the fiscal year, Vaillancourt says, since the first half of the year typically only accounts for 42 to 43 percent of overall funding. If that holds true, it could put the state up to $118 million in the red by June.

That figure is almost matched by the contested surplus funds of the NH Medical Malpractice Joint Underwriting Association. The JUA is a private, statewide insurance pool created with the help of the N.H. Insurance Department in 1978 for doctors, hospitals and other healthcare providers.

Last year, faced with a major budget deficit in the midst of the national economic crisis, the N.H. Legislature laid claim to $110 million of the JUA’s surplus funds. Policyholders sued, saying that the funds, collected from their premium payments, were not the state’s to claim. A Superior Court judge sided with the plaintiffs and froze the money. The state has appealed the case to the Supreme Court, which is still in deliberation.

In the meantime, $110 million is missing from the state’s operating budget, and State Treasurer Cathy Provencher doesn’t know if she’ll get it back.

New Hampshire could be left with three choices, Provencher told the Josiah Bartlett Center for Public Policy in a December interview. “It’s the same thing in our homes,” she said of budget shortfalls. “You have to cut. You have to … get more income. Or you have to borrow,” she said. “And I don’t think borrowing is going to be a viable option.”

Part of the income solution last spring was to broaden or increase a handful of taxes and fees. In all, more than 30 new sources of revenue were created. The three most hotly contested at the time will face formal legislative challenges this year: applying the meals and rooms tax to campsites, bumping that tax from 8 to 9 percent, and subjecting Limited Liability Companies to the 5 percent interest and dividends tax that other businesses pay.

Several bills sponsored by Herbert Richardson (R-Lancaster), Sen. Jeb Bradley (R-Wolfeboro), Sen. Lou D’Allesandro (D-Manchester), and Rep. David Hess (R-Hooksett) will attempt to undo those charges in a variety of ways.

The so-called LLC tax drew a particular outcry, and a series of public hearings on the matter is being held throughout the state by the Dept. of Revenue Administration. The next public sessions are scheduled for Tuesday, Jan. 5 at 1 p.m. at White Mountain Community College in Berlin; Thursday, Jan. 7 at 6 p.m. at Plymouth State University’s Hyde Hall; and Saturday, Jan. 9 at 10 a.m. at Kennett High School Auditorium in Conway. More information on the hearings and proposed rules can be found at www.nh.gov/revenue/laws/proposed.htm.

gambling

Another controversial option for raising revenue is expanded gambling—an initiative that hasn’t yet succeeded in the Legislature, but which may have gained some traction in the governor’s office.

In July, Gov. Lynch established a gaming study commission by executive order, which will continue to meet monthly until delivering its final report in May 2010. An interim report was released in December, focusing in part on the financial and social cost-benefit ratio of new gaming ventures, from full-fledged casino resorts to video slot machines.

The report also explores the implications of potential “first-mover” status if New Hampshire were to lead its neighbors in expanding casino gambling. It may enjoy a temporary boost in revenue, but the move could also trigger a sort of casino boom in New England. Increased social costs along with potential market saturation could both reduce revenue and raise social costs in the long-term.

“No matter what the Legislature decides,” the report states, “revenues from expanded gaming alone will not eliminate long-term fiscal challenges facing the state.”

More information on the commission, including minutes from past meetings, can be found at www.nh.gov/gsc. The commission’s Web site states that UNH’s Carsey Institute will develop and implement a plan for public dialogue sessions about the issue in January, February and March.

retirement system

Part of the state’s structural deficit, as identified by the N.H. Center for Public Policy Studies, is funding of the state’s retirement system. And that system is facing some budget problems of its own, largely due to loss of investment income with the current recession.

A handful of bills approved last year—such as one that temporarily lowers the state’s match of employer contributions—helped balance the state’s books. But the decreased state match simply passed costs down to towns whose budgets are also in peril.

Several bills this year aim to limit benefits the $5 billion retirement trust fund pays out to state employees. House Bill 1576 (Rep. John DeJoie, D-Concord) would no longer allow active employees to receive their retirement allowance while they’re working. House Bill 1530 (Rep. Neal Kurk, R-Weare) redefines “earnable compensation” as only base pay. Holiday, vacation or sick pay, overtime and military differential pay, among other sources of income, would no longer help workers accrue retirement compensation.

On the other hand, House Bill 1512 (Rep. Janet Wall, D+R-Madbury) increases the annual amount of the supplemental allowance that judicial retirees may receive, doubling it from $50,000 to $100,000. Still other legislation (Rep. Charles Weed, D-Keene) would open the retirement umbrella to cover educational support personnel. House Bill 1428 (Rep. Patricia McMahon, D-North Sutton) would extend benefits for a surviving spouse, even when that person remarries.

health care

This year also brings an abundance of attempts to reform, revise and otherwise re-write the statewide health care system and health insurance policies.

They range from Sen. Bradley’s bill to allow the purchase of health insurance policies from out-of-state companies to Rep. William O’Brien’s (R-Mont Vernon) House Bill 1585, allowing health insurance policies to be sold without mandated coverage. Prohibiting the denial of coverage for preexisting conditions is also on the table with House Bill 1597 (Rep. David Hess, R-Hooksett).

Of course, it’s still unclear how any national health care reform, if passed, will affect New Hampshire.

weekly updates resume

Front Door Politics is thrilled to resume weekly reporting with this extended Year Ahead preview. Our weekly updates will explore issues like child support, transportation, broadband infrastructure, consumer protections and more.

Got your eye on a particular topic, or have a lead you’d like us to follow? Drop us a line. We love hearing from readers, and we’re here to find out what you want to know.

With demand for services up and revenue down, legislators faced a $500 million projected shortfall in the General Fund, which comprises about one-third of the state’s $11.6 billion biennial budget. The other two-thirds come from federal funding, dedicated funds, and a host of one-time monies like the federal stimulus package. Use of short-term dollars is not new in the budget balancing act, but neither is criticism of the technique. Detractors say that it fails to address a “structural deficit” that leaves budget writers with problems time after time.

In its final debates, the budget’s passage was attributed mostly for what it doesn’t do: No casinos will break ground next year, gasoline won’t come with a 15-cent-per-gallon fee, and a capital gains tax has been dodged for now. Echoing the sentiments of many colleagues, Sen. Jacalyn Cilley (D-Barrington) said she voted for both bills only because “the most onerous taxes and fees” had been cleared from the table.

Patchwork

Instead of implementing any major revenue sources, 33 different, smaller taxes and fees are expected to bring in $203 million in the next biennium. Among them are a new 10 percent tax on gambling winnings over $600, a 45-cent tax hike on cigarettes, doubling car and boat registration costs, and a new licensing fee for saltwater fishing. The Rooms and Meals Tax, bumped from 8 to 9 percent, has also been expanded to include campgrounds.

“It sounds like we’re trying to raise revenue from the people we’re trying to help,” said Rep. John Hikel (R-Goffstown). He and others, including those who voted for the bills, predicted that these “nickels and dimes” would add up to dire consequences for many New Hampshire residents.

Others took exception to that charge, nonetheless lamenting that program such as the state’s cancer plan are delayed and funding is weak for the Land and Community Heritage Investment Program. “We’re trying to help the people who are truly needy,” said Rep. Neal Kurk (R-Weare). By and large, he and others maintained, the budget continues to serve the people who need it most, and its burdens do not fall on the bulk of the population.

The Dept. of Revenue Administration expects to collect $15 million annually by closing what it calls a loophole giving LLC owners an unfair exemption from the interest and dividends tax. Assured by the DRA that the 5 percent tax would be instituted fairly, the NH Business and Industry Association reversed its position and came out in support of the budget the day before the vote.

Sen. Jeb Bradley (R-Wolfeboro), however, took little comfort in the BIA’s change of heart. He argued that especially considering the current economy, the budget’s burden should also not fall on business. “When we’re in a recession, it’s small business that leads our nation out,” he said.

Downsizing, Downshifting

The state-employed workforce already faces a 5 percent downsize, and the new budget directs Gov. Lynch to negotiate $25 million in additional cuts with the State Employees Union. Most rhetoric on the matter from the governor and Democratic leadership has revolved around furloughs, not more layoffs.

More savings comes from the state’s reduced contribution to municipal employee retirement accounts, from 35 to 25 percent over two years. The estimated $27 million saved by the state will shift to towns. Communities also will receive less money from the state for catastrophic aid, tuition and transportation cost sharing, and dropout prevention.

“Who here would vote to increase the statewide property tax by 16 percent?” asked Sen. Theodore Gatsas (R-Manchester). He predicted that will be the result of “downshifting” these costs to communities.

Sen. Margaret Hassan (D-Exeter) challenged claims that deeper spending cuts could have avoided such repercussions. Any services cut by the state also would have to be picked up by cities and towns, she said.

Hassan also pointed to the state’s full funding of an adequate education and school building aid. She defended the choice to use federal and bonded money to achieve these goals.

Lingering Threads

Getting the budget balanced and passed is one thing, but keeping it balanced may be quite another, according to Rep. Kris Roberts (D-Keene).

Two years ago, he questioned the budget projections but took reassurances and voted for it anyway. He won’t be wrong again, he said. Roberts doesn’t trust that revenues will reach their estimations, and he speculates that urgent cuts will be left to the DRA Commissioner. In that case, he said, “the people won’t have a say.”

Some people are already speaking up through a lawsuit. The budget relies on $110 million of surplus funds from the N.H. Medical Malpractice Joint Underwriting Association. Policyholders who created that surplus with premium payments, however, say the insurance money is not the state’s to take, and they’ve brought their case to the courts.

“If anyone is pleased, I haven’t heard it,” said Sen. Harold Janeway (D-Webster). “It really wasn’t meant to please. It was the best we could do under the circumstances,” he said.

Sen. Bob Odell (R-Lempster) does not deny its systemic faults. “The next budget is going to be a tremendous challenge and problem. But we won’t do anything to avoid that if we don’t pass this today,” he said. Voting in favor of HB 1 and 2, Odell broke ranks with his fellow Republicans, passing the budget 13-11 in the Senate. They passed the House with a 19- and 18-vote margin, respectively.

Gov. Lynch is expected to sign House Bills 1 and 2 into law in time for them to take effect July 1.

How’d they do? What should be the state’s spending priorities? Is gambling the answer to shortfalls? Income tax? Share your thoughts below.

And remember, our online learning center and a complete list of proposed laws for 2009 is available here at Front Door Politics: from the State House to your house.

A Committee of Conference has pieced together a compromise $3.2 billion general fund plan for the next two years, starting July 1.  These select members of the House and Senate reached the required unanimous approval for their report, but nothing guarantees their colleagues will go along with it. The full House and Senate are scheduled to vote on the budget—and dozens of other Committee of Conference reports—on Wednesday, June 24.

Meanwhile, a new lawsuit filed on the final day of budget negotiations seeks an injunction that would keep the Legislature’s hands off a critical $110 million it has claimed.  Gov. John Lynch and legislators plan to tap surplus funds from the NH Medical Malpractice Joint Underwriting Association. But over 200 JUA policyholders (healthcare providers and facilities) say the insurance money is rightfully theirs.

If the Belknap County Superior Court were to grant the injunction before the budget passes, the lost funding would send budget writers back to the drawing board.  That’s also where they could end up if either the House or Senate vote down the Committee of Conference report next week.

Shaping Up

More contentious than how to spend money in this debate has been how to raise it.  The Senate’s casino-style video slot machines were shot down by the House, which in turn lost its bet on the “gas tax,” and new levies on capital gains and estates.  A new tax on refinanced mortgages was also killed late in the game, and proposed suspension of the Business Enterprise Tax credit was defeated.  The NH Business and Industry Association claims a notch on its scorecard for the latter.

But the BIA is still licking a wound from a “mystery” amendment that it says amounts to double taxation.  This development, which was not revealed to the public in advance, passed the committee easily and is expected to bring in at least $15 million in new taxes from the state’s Limited Liability Companies.  According to Dept. of Revenue Administration Commissioner Kevin Clougherty, it merely closes a loophole that lets LLC owners off the hook for a 5 percent interest and dividends tax paid by other businesses.

Major spending cuts also helped close the $190 million budget shortfall. Some of what fell was a surprise to the NH Hospital Association.  Funding was lowered for medical education, which, coupled with the resulting loss of matching federal funds, will result in a $5.4 million hit for four teaching hospitals.  Another $6 million came from limiting Medicaid caseload growth to 1 percent.

More cuts will come from state employees.  The Legislature is not empowered to issue furloughs on its own, so Gov. Lynch will have to do that work, instead.  In addition to the 200 layoffs already approved, Lynch is now directed to negotiate layoffs and/or furloughs totaling $25 million with the State Employees Association and other unions.

The state will also scale back its contributions to municipal employee retirement accounts, from 35 to 25 percent in two years.  Those workers won’t lose money, but the contribution responsibility will shift to towns.

The Rooms and Meals Tax has also been bumped up from 8 to 9 percent, affecting customer tabs at restaurants, hotels, and now campgrounds. A similar style tax was proposed for all entertainment purchases, such as concerts, but that measure failed.  A new 10 percent tax on gambling winnings did make it through, along with a 45-cent tax increase on cigarettes.  Car and boat registration fees will double under the new plan, but toll increases stalled.  The committee also approved the sale of liquor at eight grocery stores in the state.

It wasn’t nickels and dimes that really balanced this budget, however.  A last-minute revision to expected tax revenue eliminated no less than $75 million in the budget shortfall.  And a move to bond $87 million in school funding took that much out of the operating budget, for a cost of $14 million in debt service per year.

Shaking Down

All in all, the $3.2 billion general fund is only about a third of the overall state budget.  With money from the federal government, education trust fund, highway fund and other sources, New Hampshire’s tab will come to about $11.6 billion in the next two years, combined.  Since those other sources are mostly dedicated funds for pre-determined spending, it’s the General Fund that gets the most attention.

The lion’s share of General Fund spending—nearly half—goes through the Dept. of Health and Human Services. General government costs follow at about one-fifth, with education and justice expenditures not far behind. The committee’s compromise budget includes a change that allows the Dept. of Corrections to implement a program designed to reduce criminal recidivism, thereby lowering inmate numbers and reducing personnel needs. Plans are already underway to close the state prison in Laconia.

A proposed 850-student cap on public charter schools has also been repealed, thanks to restoration of $6.6 million in aid to those schools.  The two-year moratorium on approving new charter schools remains in place, and state officials have been directed to investigate how future cuts in state aid to charter schools may affect New Hampshire’s standing with the American Recovery and Reinvestment Act.

New Hampshire’s Constitution requires a balanced budget. There’s no law, however, against using old numbers if you can’t figure out new ones.  If the conference committee’s budget fails, the Legislature would work off of the current (2008-09) biennial budget until a new compromise is reached.

The Senate will vote first on Wednesday, but opposition there remains strong among Republicans. This numbers game could last into summer.

Should the state lower spending, or start bringing in new money to balance the budget?
Share your thoughts below.

And remember, our online learning center and a complete list of proposed laws for 2009 is available here at Front Door Politics: from the State House to your house.

The committees are made, bills introduced and seats assigned. The NH House and Senate took their formal start for 2009 on Wednesday, Jan. 7, one day before Gov. Lynch’s inauguration.

And there’s no time to waste, as public hearings start next week on the nearly 1000 bills up for debate this session.

But, there’s some orienting to be done before all the work can get started. A slew of organizational and informational meetings started up last week, many of which involved the state agencies within each committee’s sector. Many, but not all.

better, but worse first

The Senate Finance and Ways & Means committees met Wednesday for a budget presentation by the Center for Public Policy Studies, a Concord, NH-based private sector think tank. The short version of the Center’s message: things are going to get better, but they’re going to get worse first.

Center director Steve Norton’s presentation related the state’s thin wallet to unemployment, a high rate of property foreclosures, and the low value of housing, among many other factors. The predicted $500 million shortfall for the 2010-11 budget cycle will follow a budget that’s already trimmed close to the bone. That means “significant program impact” will probably be unavoidable, according to the report, and it’s going to take big policy changes to get back in the black.

That could mean reinstituting time off for good behavior in the state prison system, limiting who is eligible for Medicaid, or lowering the state’s contribution to retirement savings for non-state employees (such as teachers, police and fire personnel). But, as the Center’s deputy director Denis Delay put it, “Saying that you can change rules that will save money is not the end of it. The cities and towns will have something to say … possibly in courts.”

And that is why, Norton stresses, if the Legislature wants to control spending in the next biennium, they’ll need to start planning now.

Gov. Lynch will present his proposed budget to the Legislature in February.

public hearings next week:

House committees are scheduled to hear a total of 55 bills next week, while the Senate is looking at 12. Following is a short selection of bill titles with their prime sponsors, hearing dates, assigned committees and brief analyses. More complete information is available at www.frontdoorpolitics.com.

HB 171 “establishing a commission to evaluate mental health courts and establish standards for the operation of mental health courts,” Cindy Rosenwald (D-Nashua)

Tuesday, Jan. 13, House Judiciary Committee

Mental health courts were established in NH in 2005 as a pilot program in Keene, and have since grown to operate in Nashua, Rochester and Portsmouth. A prime goal of the courts is to improve access to community-based mental health treatment programs for nonviolent criminal offenders, with the hope of reducing recidivism rates and improving public safety.

The 10-person commission established by this bill would consist of two House members, one Senator, a designee from the Department of Health and Human Services, a district court judge, a prosecutor from a county attorney’s office, an attorney from the Office of the Public Defender, a representative of the Disabilities Rights Center, the chief executive of a community mental health center and a representative of the NH division of the National Alliance on Mental Illness.

The act would become effective upon passage, requiring an interim report from the commission by Nov. 1, 2009, and a final report one year later.

HB71 “relative to increasing the dollar limit for requiring public hearings on issuance of local bonds,” Betsey L Patten (R-Moultonborough)

Wednesday, Jan. 14, House Municipal and County Government Committee

This bill raises by ten times (from $100,000 to $1,000,000) the dollar value of proposed municipal bonds or notes that require a public hearing.

Current rules require that public hearings on any such proposal be held 15-60 days before the matter is voted on; notice of the time, place and subject of the public hearing must be published at least one week in advance. These specifics would remain in place.

This bill would change only the dollar amount that triggers the public hearing requirement.

This act would take effect 60 days after its passage.

HB62 “requiring young women under 15 years of age to provide proof of counseling prior to obtaining an abortion,” Anthony R DiFruscia (R-Windham)

Thursday, Jan. 15, House Judiciary Committee

According to the text of this bill, proof of counseling would be a document signed and dated by the young woman and her counselor that would then be sealed or notarized at least 48 hours before being submitted. The counselor in question could be a parent, adult sibling, adult aunt or uncle, grandparent, or certified religious counselor; a person associated with a licensed abortion provider would not be eligible.

If is is passed, the requirement would take effect within 60 days.