About half the debate referenced a $20 million surplus that would be left in the Rainy Day Fund after next year. The other half claimed that if this budget passed, next year’s deficit would jump from $600 million to $800 million, at least.

So goes a political debate over budget estimates. In the end, the optimistic version won, and we won’t know until the receipts come in how realistic it is. Either way, Gov. Lynch praised the legislation and is expected to sign Special Session House Bill 1 into law.

The final bill contains a mix of borrowing, federal money, spending cuts and new revenues. It’s regarded even by supporters as a patchwork solution to the state’s structural deficit—an ongoing situation of never having enough money.

Expanded gambling is not part of the solution—yet. The new bill creates a special commission to study and recommend changes to gaming regulations, allowing for the possibility of video slots or casinos. Other special committees formed include a citizen’s task force on the state budget and a group to study business taxes.

What If

The biggest debate on budget revisions centered around whether or not the funds the budget is built on will actually come through.

Many lawmakers fear that the state won’t make as much as it’s counting on from various taxes and fees. This was also a theme of last year’s budget negotiations, and indeed this year’s monthly revenues continue to fall short of projections.

Another lightning rod in this budget bill is the sale or lease of state assets. The new budget creates a commission to identify what the state might be able to “monetize.” That might mean anything from selling real estate or the rights to the state’s tobacco settlement to restructuring the Liquor Commission, according to floor debates.

Both the wisdom of any of these potential sales and the likelihood that the state could actually turn them around in the current economy were questioned.

The budget also is built on $48 million in federal money to match Medicaid reimbursements, but this is not guaranteed income. FMAP, as it’s known, has always come through in the past, maintained budget supporters. But Sen. Jeb Bradley (R-Wolfeboro) cautioned that it may take a back seat this year to other federal programs.

(No) New Taxes

It’s a mixed bag for taxes under the current budget fix. Last year’s LLC Tax is now officially repealed (pending Gov. Lynch’s signature, as of press time). Lawmakers also shot down a proposed tax on electricity generation—that’s taxing those who create electricity rather than consumers.

New money will come from increases to some taxes, notably those on non-cigarette tobacco products, bringing them up to par with cigarette taxes.

A boost to the insurance premium tax undoes an incentive scheduled for this year. Instead of lowering taxes on insurance premiums from 1.25 to 1 percent, they will go back up to 2 percent. The idea had been to promote more insurance business with the lower tax rate, but that promise has not yet borne fruit, according to Rep. Majorie Smith (D-Durham).

“This might not be the ideal year in which to deliberately collect less money for the state,” she said.

Fees for vital records like birth certificates, marriage licenses and licenses for pet shops will also go up.

Spending Cuts

Spending cuts, on top of those already issued earlier this year, total $33.5 million that would normally flow from the General Fund to virtually every department and agency.

The Department of Health and Human Services absorbs millions of dollars in cuts from many angles. Administrative costs will be saved by consolidating contracts for social and medical services, and more savings will come from downsizing at the Youth Development Center and NH Hospital. Aid to hospitals is also being cut.

The legislative and judicial branches and the Department of Environmental Services each give up about $1 million, the Department of Information Technology $2.175 million.

There was little debate about spending cuts in general, but much attention paid to “dedicated” funds. They will be tapped (or “raided,” depending on who you talk to) for more than $8 million to help balance the General Fund.

Generally speaking, dedicated funds are created for specific purposes by user fees. The state’s motorcycle rider training program, for example, is paid for by collecting an extra $5 on every motorcycle license. A statewide public boat access fund operates similarly, along with a host of other dedicated funds, including the Regional Greenhouse Gas Initiative and the Land and Community Heritage Investment Program.

RGGI is a ten-state coordinated effort to reduce power plant emissions to address climate change. It will give up $3.1 million. LCHIP is a state program to preserve natural, historic and cultural resources. LCHIP will give up $1.5 million.

People who pay these fees expect the money to fund related programs, argued Sen. Letourneau, who also challenged that tapping the funds is not constitutional. Similar protests in the House were voted down, the majority sentiment being that everyone and every fund must contribute to the cause of balancing the state budget in the current recession.

Along with the Legislature, Front Door Politics will take a summer break from weekly reports. Stay tuned for more this fall!

House and Senate leaders Terie Norelli (D-Portsmouth) and Sylvia Larsen (D-Concord) think they have most of those bases covered. They’re scheduled to release a bill the afternoon of June 7 that will get a public hearing June 8 and go to the House and Senate for debate on June 9.

They didn’t start from scratch in writing this bill. It includes $270 million in budget cuts and adjustments that were already agreed to by a joint House-Senate conference committee in recent weeks.

That committee walked away from budget talks, however, over the remaining $30 million and the issue of expanded gambling.

Gambling

The majority of senators favor bringing video slots, and potentially casinos, into New Hampshire. Most representatives are in opposition to the idea. Gov. Lynch also is also resistant, for now.

“I’ve made clear to members of the House and Senate that I would not consider or support any bill that would issue gaming licenses before New Hampshire had developed an appropriate regulatory structure,” Lynch said in a press release. “My position is unchanged.”

Lynch’s position echoes that of the special Gaming Study Commission that he convened last year. In fact, his commission, whose report came out May 18, recommends not only changing regulations if gambling is expanded but also studying the current regulatory structure even if it’s not.

“Given the dollars and extent of gaming activity that already occurs across the state, mainly through Lottery and charitable gaming, such a review is needed to assure that the interests of the state and its citizens are being protected now,” commissioners wrote in their final report. “Structures must also be examined to determine their capacity to properly monitor and control expanded gaming.”

Will Internet gambling be legalized at the federal level? Will bordering states expand their own gambling sites? How much will new gaming facilities displace existing economic activities?

These are among the questions the commission came across in their study. They did not, however, find clear answers. They recommend, therefore, a business model analysis that accounts for both the benefits and costs of more gambling in the Granite State. One consideration to that end is New Hampshire’s “brand.”

Tourism experts confirmed to the commission that the state’s brand would be affected by gambling. But whether that impact would be good or bad, they couldn’t say—another reason for a comprehensive study, commissioners agreed.

They also want to investigate the potential burden of problem gambling, noting that communities nearest gaming sites are most likely to bear those social costs.

“Once established, legalized gaming is highly unlikely to be repealed,” according to the report. “If anything, the dependence on revenues from gaming tends to make states (less able to) prevent proliferation once casino gaming is legalized.”

Common Ground

One item budget negotiators have agreed to is repealing the so-called “LLC tax,” according to a statement released by the House information office.

Not a new tax but rather an extension of the interest and dividends tax to Limited Liability Companies, the LLC tax caused quite a stir in the business community when it was passed late in last year’s budget compromise.

Several bills this year were written specifically to repeal it, but none passed. Now most Republicans and Democrats alike favor repeal. This budget omnibus is the last chance this session to move the repeal forward in this session—a task that many legislators seeking reelection are keen to complete. 

The committee of conference also agreed to close the Anna Philbrook center for mentally ill children.

The Dept. of Health and Human Services and mental health advocates agree that the facilities there are outdated. Moving the kids to the state’s psychiatric hospital as originally proposed, however, would have displaced up to 14 adults at a time. “That is more like 400 bed nights,” according to Mike Cohen, executive director of the New Hampshire chapter of National Alliance on Mental Illness.

The committee reportedly compromised with a plan to relocate those adults to a separate hospital unit and ultimately to community-based treatment programs.

A caviat to the original proposal to close Anna Philbrook also included the option of renovating the center for use as office space for the state. It is not clear as of press time whether this option has been kept in the latest version of the budget bill.

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Children would still be treated, but at the main wing of the New Hampshire Hospital, instead. Fourteen adult beds would be eliminated to make room for the kids. It is not clear at this point how the state’s obligation to educate the children would be met or who exactly would pick up that bill.

Closing Anna Philbrook

The Philbrook building (named for Granite State pioneering child psychiatrist Anna Philbrook, who directed the state’s Child Guidance Clinics from 1945 to 1966) is widely considered to be in a state of disrepair. Closing it and eliminating certain related staff are projected to save about $2.4 million.

“My concern is their focus is on saving real estate costs rather than underlying services,” says Rep. Liz Merry (D-Sanbornton). Even though the building is not in good shape, Merry says, at least the children at Philbrook are getting appropriate services for their needs.

Mike Cohen, executive director of the New Hampshire chapter of National Alliance on Mental Illness, agrees. He’s concerned about moving the children to a facility that is unfamiliar, not designed for children, not set up with an accredited school, and lacking the child-specific, expert staff the kids already know.

Cohen is also very concerned about the elimination of the 14 adult beds at New Hampshire Hospital. “That is more like 400 bed nights,” he estimates. “And at the time when the demand on the community is growing.”

Cohen says that although the budget accounted for a 1 percent increase in demand for mental health services, that demand is now looking more like a 12 to 13 percent spike.

The implications of reduced services ripple into communities in many ways, according to Cohen. It often starts with more psychiatric emergencies among adults going untreated. “But the ER is not necessarily the best place to get treated,” Cohen says. Law enforcement and local police are also implicated, responding to calls for loitering and other disturbances from mentally ill adults.

If children don’t get adequate services, demands on their pediatricians increase. And if mental illness is not treated in the primary care offices, it can fall to local school systems.

“Reducing in-patient services would work fine if you were bringing commensurate services to the community to deal with it,” Cohen says. “But you’re reducing them, too. It’s a recipe for disaster.”

Cohen is referring to proposed caps on services provided by the state’s 10 regional community mental health centers. They serve about 47,000 mentally ill adults every year. “They’re the most severe cases in terms of illness,” Cohen says, “and they’re not going to go away.”

Community mental health centers provide 24-hour emergency services, assessment and evaluation, individual and group therapy, case management, community-based rehabilitation services, psychiatric services, and community disaster mental health support. Cohen says, “We can’t afford as a state to have ‘the community mental health centers] collapse.”

Evaluating Success

But are the community mental health centers, or services at Anna Philbrook, for that matter, working? It’s a question that Cohen himself admits there’s little data to answer with.

“The mental health centers themselves more measure satisfaction than effectiveness,” he says. In other words, a patients may be asked how they liked the services provided. “That’s different from measuring the effectiveness,” Cohen says. “I think the whole system has to do a better job of measuring effectiveness.”

He thinks DHHS Commissioner Nicholas Toumpas has an eye on this. After all, Cohen says, “If you have scarce dollars, you want to pay for those things that have a body of research attached to them [that show] they work.”

But it’s not black-and-white for Cohen. “To do it well takes resources. And when it comes to closing beds at a hospital or measuring success, right now I’d rather keep the beds open,” he says.

Liquor Commission Update

New Hampshire has a new Interim Liquor Commissioner in Earl Sweeney, who’s taking a leave of absence from the Dept. of Safety to fill the position. Gov. Lynch appointed Sweeney and the Executive Council approved him for the job after Lynch fired Commissioner Richard Simard, who was charged with driving while intoxicated last month.

The appointment still leaves one vacancy in the three-member Liquor Commission. Mark Bodi is on paid leave while the N.H. Attorney General investigates his conduct in a Keene area enforcement action.

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Rep. Rip Holden (R-Goffstown) sponsored three bills this term to do just that. They didn’t make it far, but a fourth bill, sponsored by Sen. Lou D’Allesandro (D-Manchester) is close to becoming law.

And the three-member Liquor Commission has found itself in the spotlight again. In February, Mark Bodi, the commission’s chairman, was placed on a paid leave of absence while the Attorney General investigates whether he interfered in an enforcement action against the Railroad Tavern in Keene. Meanwhile, Gov. John Lynch fired commissioner Richard Simard on April 19, following news that he was arrested for drunk driving and refused to take a Breathalyzer test.

“There’s no immediate checks and balance, and there is no balance, to my knowledge, from any branch, in the commission itself,” Holden says.

Commission Oversight

Holden’s House Bills 421 and 1504 called for an oversight commission to monitor the Liquor Commission’s enforcement division. The House voted both down, handily. House Bill 1503 would establish a board to review decisions about the revocation or suspension of liquor licenses and to hear related appeals. This was referred for interim study and will be taken up again next year.

Yet the Liquor Commission may still get a closer look. Senate Bill 181 has been passed by the House and Senate and now awaits Finance Committee approval and Gov. Lynch’s signature. It will repeal a proposed transfer of the Liquor Commission’s enforcement division to the Department of Safety, and establish a committee to study how the commission operates.

The transfer—soon to be repealed—was meant to save money, but the commission convinced lawmakers it would cost more than it would save, due to personnel replacements.

The study committee would look at ensuring the commission’s appeals process is impartial and the enforcement division avoids an “overly broad interpretation of its function.” The committee also will look at the commission’s organizational structure, including whether the commission should have a single “executive director.”

Currently, three full-time commissioners are appointed by the governor and approved by the Executive Council to head the commission. Their work includes oversight of divisions for marketing and merchandising; enforcement and licensing; and administration. The commissioners also manage appeals.

“I feel if there’s one commissioner, it’s too much power to give to one person,” says Joseph Mollica. He’s currently the lone active member of the Commission until Gov. John Lynch appoints someone to fill Simard’s vacancy. Mollica, of Sunapee, joined the commission in December 2009. He has 25 years experience in the restaurant business and has owned restaurants in New Jersey, Massachusetts and New Hampshire.

“It’s a position that requires a certain amount of business expertise and political expertise. It’s a very unique business and I don’t know if you’d expect a business to be overseen by one person.”

While Holden says any sort of study of the commission’s workings is a “step in the right direction,” he’s skeptical that the study committee will take an in-depth look at the commission’s operations.

Liquor sales are big business in New Hampshire. In addition to managing over 6000 licenses and permits, the commission oversees 78 liquor stores. In the 2009 fiscal year, total liquor sales reached $493.5 million, with $122.5 million in net profit.

Because so much money and power is at stake, Holden believes an oversight committee is needed to ensure the commission deals fairly. A representative for 10 years, he also has worked in restaurants for 25 years, currently as a waiter in Boston.

Appealing Enforcement

Holden says license holders have approached him with concerns about the “overstepping” of the enforcement division and a lack of appeal options. He couldn’t offer specific examples, though, stating that the licensees were “so intimidated that they wouldn’t speak to me on the record.”

“I want (business owners) to feel comfortable going to somebody without fear of retaliation,” Holden says.

Licensees can appeal decisions by the commission, but those appeals must be filed with the commission itself. Holden says liquor license holders are reluctant to come forward with any grievances about the commission because “the commission holds their livelihood and they’re very intimidated.”

If the enforcement division finds a licensee has violated one of the state’s liquor laws, the first step in the hearing process is a sort of pre-trial hearing, in which the licensee will meet with the enforcement division to arrange a settlement. If a settlement agreement is reached, the settlement goes before the three liquor commissioners, who can either approve or deny it.

If an agreement is not reached, a full hearing with the commission is scheduled. The chief of the enforcement division acts as the prosecutor, and the licensee can provide evidence and witness testimony in his or her defense.

Licensees can ask for a re-hearing if they believe the commission violated its own rules during the hearing or overlooked important evidence. The commission then decides if a re-hearing should take place; if not, the licensee can appeal to the state Supreme Court.

“When you have a business or organization or agency of a state that is dealing with a (half-)billion dollars in revenue, it only lends itself to oversight,” Holden says. “For any one of the commissioners to say they don’t need oversight … and to have other branches of that commission say, ‘We don’t want oversight,’ why don’t you want oversight?” he asks.

Eddie Edwards, chief of the commission’s enforcement division, says that it’s natural for anyone to feel a certain level of intimidation when dealing with a regulatory body like the Liquor Commission. However, he says, the commission works closely with licensees to keep them in compliance—which, in turn, keeps them in business and keeps revenue coming into the state. Intimidating licensees would run counter to that mission.

Last year brought 29 cases in which licensees over-served a customer, according to Edwards— a relatively small number. “We can’t have this heavy-handed approach and be coming down on everybody … when you see the statistics don’t line up for that. If that was overwhelming energy in (the) alcohol industry … then you’d see more violations,” he says.

Edwards adds there are plenty of avenues for licensees to air grievances. “The enforcement division is overseen and regulated by the Police Academy, the Attorney General’s office, the Liquor Commission itself, and the Legislature,” he says. “With the commission, their boss is the governor and the Executive Council.”

While “oversight is always a good thing,” Mollica says, an oversight committee would slow down the commission’s ability to do business and bring in revenue for the state. He added that the commission’s operations are “very transparent” and pointed out the commission’s meetings are open to the public and its financial records readily available.

“I don’t feel the commission has anything to hide as a business. We are a public entity working for the good of the people of New Hampshire,” he says, adding that the appeals process is fair and the oversight of the enforcement division is “very good and very thorough.”

Holden, meanwhile, expects that, in light of Bodi’s leave of absence and Simard’s arrest, other legislators will come around to his point of view. “We’re down to one commissioner who was just recently appointed,” Holden says. “I don’t understand how anybody could say, ‘Oh, things are fine.’”

Other News

Any hopes that gambling might expand or small amounts of marijuana might be decriminalized were dashed last week by the House and Senate, respectively. Gov. Lynch indicated he would have vetoed both bills if they made it to his desk.

The House voted to kill Senate Bill 489, which would have opened the door for casinos and video slot machines in the state, with a 212-158 vote. The Senate had passed the bill in March 14-10.

Meanwhile, the Senate killed House Bill 1653, which would have reduced possession of a quarter-ounce of marijuana to a violation.

© 2008-2010 Niles Media “Front Door Politics” all rights reserved.

One of three bills is making headway in a move to hold the status quo on education funding. As crafted in 2008, the state’s formula for education aid to cities and towns is scheduled to change beginning July 1, 2011: Some cities would receive more money under the new funding formula, while others would get less.

Senate Bill 465, sponsored by Sen. Molly Kelly (D-Keene) would extend the current transitional funding formula by one extra year. The “collar,” as it’s known, was meant to be temporary to help towns prepare for upcoming changes.

Many in cities such as Manchester, which is poised to get more money without the collar, are anxious for it to come off. Not so in Derry, for example, where town officials this spring predicted a $3.80 spike in property taxes to make up for what they’ll lose.

Under the collar, no town could be granted more than 15 percent above or 50 percent below what it received in state aid in 2009. Two similar bills to extend the collar were already killed in the House and Senate this year. Senate Bill 462 (Sen. Robert Letourneau, R-Derry) would have kept the collar on through 2014. House Bill 1677 (Rep. Kenneth Gould, R-Derry) would have kept it through 2013.

The difference in the bills, and possibly in the fate of SB 465, comes in its amendment. Originally seeking a two-year extension of the collar through 2012, lawmakers compromised with one extra year. They also added a clause that established a committee to study how sustainable existing plans are for state funding of K-12 education, including adequate education grants, fiscal capacity disparity aid and catastrophic aid.

(Newly proposed budget fixes for the current state budget shortfall would reduce catastrophic aid by $7.8 million over the next two years.)

The N.H. Supreme Court voted in 2008 to allow the Legislature to settle the state’s ongoing debate over public school funding. But, their ruling left the door open for future court intervention if the Legislature fails to finance its own plans.

The House, having killed HB 1677 with a 203-131 roll call vote (meaning each legislator’s vote is recorded by name), will now have to reconsider the issue. As Rep. Steve Vaillancourt (R-Manchester) points out, it’s an interesting one because it falls more along town boundaries than party lines. Representatives whose districts stand to lose or gain money without the collar take fairly predictable positions, but those whose districts cover both sides of the fiscal disparity coin have a tougher vote to make.

The House Finance Committee held a public hearing on SB 465 April 13; a full committee work session is scheduled for April 22 and an executive session, when the committee will likely make its recommendation for the full House, is scheduled for April 27. All committee meetings are open to the public.

Budget Update

Last week, the Joint Legislative Fiscal Committee approved Gov. John Lynch’s executive order to cut more than $25 million in General Fund spending. The reduction covers 32 state offices, and represents just a portion of the budget fixes that must be found by June 30, the end of the current fiscal year.

The rest of Gov. Lynch’s proposed remedy comes in the form of a lengthy amendment to Senate Bill 450. Sponsored by Sen. Kathleen Sgambati (D-Tilton), SB 450 makes several changes to the Dept. of Health and Human Services. Its amendment embodies Gov. Lynch’s proposed budget cuts, and was submitted “as a courtesy to him” by Rep. Marjorie Smith (D-Durham), who chairs the House Finance Committee.

One pattern among the proposals is a consolidation of authority under the DHHS Commissioner, a role currently served by Nicholas Toumpas. N.H. refugee resettlement and DWI offender intervention are two programs whose administration would be moved to the Commissioner’s office, for example.

More fundamental than that, however, is a clause in SB 450 that gives the commissioner “very significant” and “very broad” authority to transfer funds within and among various DHHS line items, according to Smith.

“I have tremendous confidence in the current commissioner, who I believe is committed to carrying out the policy set by the Legislature,” Smith says. However, although legislative oversight of DHHS would certainly continue, Smith fears SB 450 is written so strongly that it “would almost make legislative oversight meaningless.”

Senate Bill 450 and its proposed amendments continue a rigorous schedule of public hearings and committee work sessions, including a full day on April 20 in conjunction with the departments of Health & Human Services, Environmental Services, Corrections and the Judicial Branch. Two public hearings on SB 450 as it relates to the Public Works & Highways and the Ways & Means committees are also scheduled for April 20.

April 22 brings a full committee work session on SB 450, coordinated with the Dept. of Administrative Services, the State Treasurer, the Dept. of Resources and Economic Development, the Office of Energy and Planning, the Dept. of Education, and the Office of Information Technology.

Two additional work sessions are scheduled for April 27 and 29.

© 2008-2010 Niles Media “Front Door Politics” all rights reserved.

Explaining the shortfall, Lynch acknowledged the $110 million impact of the N.H. Supreme Court’s ruling that the state could not tap into surplus funds of the Joint Underwriting Account. The malpractice insurance pool had glimmered as a partial solution to anticipated budget shortfalls last spring when the current budget was written. The medical practitioners who had funded the pool with their malpractice insurance premiums, however, won their lawsuit claiming that the state did not have a right to the money just because it helped set up the system.

Several lawmakers last spring, when the current budget was written, questioned the legality of the JUA funding option. Some also claimed that other revenue projections were inflated due to an overly optimistic vision for economic recovery, and predicted the budget would come up short.

In his Power Point presentation to an invitation-only group of reporters April 8, Gov. Lynch did cite the recession—lower tax revenues and increased demand for services—as part of the problem. He did not question how realistic the monetary projections had been on which the budget was founded.

Part 1—Reduce Spending

The spending cuts will start more slowly in FY 2010 (a Fiscal Year in New Hampshire runs July 1 to June 30) and ramp up the following year.

Hovering at about 2 percent reductions starting this summer for each of the 24 departments targeted, over $20 million would be saved. Agencies will mostly give up personnel costs—either in the form of delayed hiring, reduced reliance on part-time help and consultants, deferred pay raises, or transferring certain positions to be funded from other sources.

The Department of Health and Human Services accounts for nearly $14 million of the projected savings. About three-quarters of that savings is thanks to the American Recovery and Reinvestment Act of 2009, which granted states a temporary and partial reprieve in what they owe back to the federal government for Medicare prescription drug coverage.

Cuts for Fiscal Year 2011 will get more rigorous, totaling close to $70 million and affecting three extra departments—the Judicial and Legislative branches and the Retirement System. Reductions more often hit 8 percent of General Fund appropriations, with a 16 percent blow to Education outlined here:

• personnel reductions
• reduced in-state travel, organizational dues, employee training, current expenses, provider training, transcription services, subscriptions and maintenance
• catastrophic aid ($7.8 m)
• tuition and transportation aid ($602k)
• dropout prevention ($139k)
• statewide special education ($23k)
• local education improvement ($39k)
• career tech student organizations ($9k)
• court-ordered placements ($119k)
• state testing ($239k)
• school nutrition ($16k)
• adult education ($102k)
• eliminate funding for Parents as Teachers ($65k)

Part 2—Restructure Debt

Taking advantage of lower rates of borrowing, a large portion of Lynch’s plan involves issuing $45 million of debt restructuring bonds to decrease debt service by $39 million in FY 2011. The move would save an additional $3 million in FY 2010.

More debt service would be tweaked with a $25 million payment to the state from the University System of New Hampshire. The money would come from operating funds set aside for deferred maintenance. The state would use the money to help offset $38 million in debt service the General Fund currently holds for USNH.

Part 3—Raising Revenue

The recently passed national health care reform bill might be another source of funding for New Hampshire. Lynch is hoping so. The Legislature and state agencies are still sorting out exactly the impact it will have on the Granite State, but for now Lynch has placed the optimistic estimate of $8.3 million in savings for the state’s retiree health care savings into his plans.

A 20-cent increase in the tobacco tax is the only permanent and structural measure in Lynch’s plan that brings more money into state coffers. It’s projected to raise $2 million in FY 2010 and $10 million the following year.

Last year’s extension of the meals and rooms tax to campsites, which would have raised an additional $17.5 million next year, has been repealed by both the House and Senate, but is not yet signed into law. Lynch’s proposed budget changes take the repeal into account, in effect “paying for” the lack of revenue.

Another change last year that is now facing repeal is the extension of the Interest & Dividends Tax to Limited Liability Companies. Lynch’s plan also “pays for” for the reduced revenue the repeal would mean for the state.

The Senate easily passed this repeal at the end of March with Senate Bill 497, and the House Ways & Means Committee will hold a public hearing on it April 13.

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If Senate Bill 500 passes, nonviolent criminals would be released to community supervision after serving 120 percent of their minimum prison sentences. All prisoners would be paroled at least nine months before their maximum sentence expires. And parole violators would face 90 days back in jail in a special program designed to re-engage them in their parole plans.

Supporters say the shift in corrections could save the state money and help reduce recidivism at the same time. The Parole Board, however, fears for public safety if their authority is usurped.

Senate President Sylvia Larsen (D-Concord) sponsored the bill, along with eight other state senators and representatives from both parties. After passing the Senate last week, it received a public hearing in the House Criminal Justice and Public Safety Committee April 1 and is expected to get a vote in the House sometime this month.

Justice Reinvestment Initiative

SB 500 was developed with help from the Council of State Governments’ Justice Center (www.justicereinvestment.org). The CSG is a nonpartisan forum for all three branches of state-level government, and the Justice Center is a data-driven research and policy development program.

What that means, in this case, is that the state of New Hampshire assembled a Justice Reinvestment Leadership Team, including Attorney General Michael Delaney, Chief Justice John Broderick Jr., corrections officials and lawmakers. They’ve spent eight months working with the Justice Center to figure out how the state’s corrections costs could be lowered while keeping the public safe.

According to the team, New Hampshire’s crime rate has stayed low, but the prison population has grown by 31 percent and the corrections budget has nearly doubled in the last 10 years.

They say this is mainly because inmates released on parole or probation cycle back into prison for failure to get treatment for substance abuse or mental illness. As many as 59 percent of parolees who return to prison have committed no new offenses, Larsen says. They go back to prison simply for parole violations.

That’s a good thing, according to John Eckert, executive assistant to the Parole Board, who’s recently spoken out against SB 500 on behalf of board. He disputes claims that parolees are re-incarcerated for minor violations like showing up late to a meeting, and says they’re returned to prison as a last resort.

“Consider this,” Eckert says. “Maybe by bringing people back before they commit new crimes, we prevent crimes from being committed.” After all, he says, a heroin addict who refuses treatment time and again will likely turn to crime to support his habit.

“The lack of community treatment options is reflected in our excessive recidivism rate,” says Larsen. By releasing inmates before their maximum term is served, the state can save money on incarceration and in turn “reinvest” that into community-based treatment programs. The hope is that more supports and supervision for the transition back into society will help make that transition more successful.

But it’s not just about hope, according to Michael Thompson, director of the Justice Center. He says they’ve already found ways for states—including Texas, Connecticut, Vermont and Rhode Island—to save money and make communities safer. The only other option is to build more prisons to accommodate the growing prison populations, Thompson says.

Minimum Sentencing

“Corrections has become an anchor dragging the entire state down,” says Rep. Daniel Eaton (D-Stoddard). He is a former police chief and gun seller who is now vice-chair of the House Finance Committee (Division II). “Modeling on this has worked in Texas,” a state that’s known for its hard line on criminal offenders, he points out. “If they’re letting these people out in Texas, what the hell are we keeping them for?”

A move toward mandatory minimum sentencing is one reason. It was a nationwide trend in the 1980s (think “three strikes” laws), and one that Eaton got behind.

“Thirty years ago, judges were letting people out so early it made a mockery of the system,” he says. The mandatory minimum sentencing laws were intended to tighten up accountability, according to Eaton, but ended up swinging to an unintended extreme. He sees SB 500 as a way to restore balance and finally achieve what he and other lawmakers tried to accomplish years ago.

Further Study of Parole Board

A separate bill to study the parole board is also in the pipeline. Sponsored by Rep. Laura Pantelakos (D-Portsmouth), House Bill 1167 would establish a committee to compare the functioning of New Hampshire’s parole boards to those in other states. It passed the House, and a public hearing in the Senate is not yet scheduled.

“I’m not happy with the way the parole board works,” says Pantelakos. She says the volunteer members do an “excellent” job, but she wants to compare New Hampshire’s parole structure to that of other states to see what improvements can be made.

As for the board’s resistance to SB 500, she thinks it’s “sour grapes” about losing their authority.

So does Eaton. “I give no credibility to anything that comes out of the parole board,” he says. He calls their record “abysmal” and conjectures that any resistance to SB 500 stems from an unwillingness to give up their power.

© 2008-2010 Niles Media “Front Door Politics” all rights reserved.

Supporters hope the bill will end any confusion about state vs. local authority over the permitting and siting of large groundwater withdrawals. Senate Bill 411 maintains current law—that DES is the sole permitting entity—while also stressing that applicants still must comply with local zoning and site plan regulations.

In other words, says Rep. Judith Spang (D-Durham), chair of a special groundwater study commission, “The fact that they may have a permit does not guarantee them the ability to do the withdrawal if it doesn’t meet local ordinances.”

This tug-of-war has mired the permit process for several years, since the USA Springs bottled water controversy erupted in Nottingham. That project is on hold while the Pelham-based company’s 2008 bankruptcy filing is sorted out. USA Springs sought to pump close to 310,000 gallons of water per day from three wells, tapping a groundwater reserve beneath the towns of Nottingham and Barrington. The water would be bottled on-site and sold in Italy.

“Clearly, the issue is ripe here in the Southeast (of New Hampshire) because of the USA Springs debacle,” says Bill McCann of Dover. He was appointed by Gov. John Lynch to the groundwater commission, and he also sits on the board of Save Our Groundwater, a group that’s been fighting USA Springs for nearly a decade.

Many USA Springs opponents thought the DES “rode roughshod over locals,” McCann says. But he wondered, “Is it like this all over the state?” The commission held several public hearings to find out and repeatedly concluded the laws were not clear whether the state or municipalities had final say over large groundwater withdrawals.

state-town cooperation

Bills similar to SB 411 have passed the House before but failed in the Senate, McCann says. This time, they introduced the measure in the Senate and rallied support. He says all who testified at the Senate hearing were in favor.

“The bill has been criticized by some locals who thought we should take power away from DES,” McCann says. But he believes the state and towns must work together to protect the public interest. Besides, he reasons, the DES has better access to science.

And more science is next on McCann’s to-do list. Most towns can’t afford to contract their own scientific studies, he says, “and a lot of people aren’t happy with the way DES handles wetlands.”

One solution he’d like is to give municipalities more tools to conduct their own studies. McCann proposes towns be allowed to charge applicants for the cost of studying the impact of their proposed projects. It would empower towns to focus on concerns of particular interest to the site plan review, for example—an area not necessarily considered by DES. A bill to that effect was tabled last year.

Sarah Pillsbury, an administrator with DES, respectfully disagrees with the assessment that her agency doesn’t consider enough factors when deciding on permits. She maintains that localities have ample opportunity to express any concerns during the decision-making process, and still more chances to appeal any permits that are issued.

more on tap

The Commission to Study Issues Relative to Groundwater Withdrawals was formed in 2003 and, after two extensions, expires this November. Spang has found the commission productive and sees a lot more work that could happen, but she is reluctant to ask more time of its members or demand more resources from DES.

Nonetheless she is downright giddy about some forthcoming ideas—especially a model that would encourage towns to make land use decisions based on scientific assessments of current and future water supplies. Spang says it’s not clear whether or not towns currently have the right to set up such standards.

One development that could come from the model is a municipal permitting process for small groundwater withdrawals. It would not likely be applied to single residential wells, for example, but it could affect individual wells that serve several households.

other news

Much to Gov. Lynch’s dismay, the Senate approved a bill on March 24 to expand legal gambling in six locations around the state. With a vote of 14-10, Senate Bill 489 has moved on to the House, where it will receive a public hearing March 30. The House has killed Senate-approved gaming bills in the past, but many wonder if the current recession and ongoing budget shortfalls may nudge some representatives into support for gambling.

It may not matter. Gov. Lynch has indicated he would probably veto such legislation.

Lynch is still waiting for his Gaming Study Commission to finish the work it started last September. That group will hold two public hearings in Conway and Manchester on April 6 from 6 to 8 p.m. More information is available online at www.nh.gov/gsc or by phone at 603-271-3556 ext. 314.

© 2008-2010 Niles Media “Front Door Politics” all rights reserved.

In his 14 years as a New Hampshire legislator, Rep. David Bickford (R-New Durham) has seen efforts to re-calculate child support come and go. Many—about a dozen each year—make their way through the House or the Senate, but few succeed.

“We’re just Johnny-come-lately to make a change,” Bickford says. “We hire people, they work like dogs and come out with good reports, and the legislators say, ‘It’s over my head. We’ll study it and then get back to it maybe,’ and then we don’t. I see more interest in making changes. I’ve just never seen anything move so slow.”

Bickford, a member of the House Child and Family Law Committee, sponsored six of the 11 bills relating to child support this year, including House Bill 1474, which passed the House March 17. It would create a commission to move child support guidelines toward an “income shares” model.

States use one of three models to calculate child support payments. On paper, New Hampshire adopted the “income shares” model in 1988 to comply with federal child support regulations issued that year. It determines child support payments based on both parents’ incomes.

However, the actual formula used is closer to the “percentage of income model,” which sets child support as a flat percentage of the paying parent’s income, regardless of income level. (A sample child support calculator is online at http://www4.egov.nh.gov/DHHS_calculator/calc_form.asp).

“We should’ve been income shares,” Bickford says. “That’s what we said we were doing.” According to Bickford, that 1988 committee picked the wrong guideline.

Correcting that mistake has proven difficult. Legislative committees and outside studies—including a 2009 study conducted by the University of New Hampshire that advised a complete move to the income shares model—have recommended changes, but lawmakers have been slow to respond.

The most likely culprit, according to Bickford, is that child support is an issue many lawmakers just don’t understand. The subject is dense, and with hundreds of other bills to consider, legislators simply don’t have the time to devote to an issue that mixes heavy emotions with complicated formulas and legal minutiae. New Hampshire is one of the few states in which the Legislature is responsible for changes to child support guidelines; usually, it’s left to the courts or state agencies.

“They don’t get time to try and understand it, and that may have a lot to do with it,” Bickford says. “A number of people on the committee didn’t even know we were required to have guidelines by federal law.”

The commission established by HB 1474 would also look at the Melson Formula—a method developed by Delaware Judge Elwood Melson in 1989 that takes into account each parent’s income, establishes a “self-support allowance” for the parents, and factors in medical and child care expenses, plus standards of living.

A commission like that may be able to sway the overall formula eventually. In the meantime, even when change does come, Bickford says, it comes slowly.

On March 3, the House passed House Bill 1491, which revises the child support formula in cases where divorced parents have equal time with a child. Vermont adopted this provision in 1988 and other states have long had it on the books.

“Other states are so forward on these things,” Bickford says.

Multiple Support Orders

Bickford also sponsored House Bill 1420, which adjusts child support according to the number of children involved. For example, if a support order covers three children, the rate currently might be set at 40 percent of the paying parent’s income. When one of those children turns 18 and “ages out” of the support order, the rate remains the same. Parents must go to court to request changes—something they can do once every three years.

House Bill 1420 would allow judges to write future changes into the original child support order. Judges could specify, for example, that when one child ages out, the support rate drops to 30 percent, and so on. Texas uses similar regulations, on which Bickford based HB 1420. It passed the House March 17.

“[It] keeps people from having to go to court as much and takes some of the burden off the courts,” Bickford says.

Records Access

The Senate Commerce, Labor and Consumer Protection Committee currently is looking at House Bill 1165, which would add records from cell phones, Internet service and satellite TV providers to what the Dept. of Health and Human Services uses to locate people who aren’t paying child support. Sponsored by Rep. Edward Moran (R-Nashua), the bill was requested by DHHS, according to Timothy Frazier, the department’s legislative liaison.

While some lawmakers have expressed concerns about privacy, Frazier said the records are limited to a person’s name, address and employer.

Updating the law to include contemporary utilities is a “necessary part of what the child support office does,” Frazier says. “Without being able to locate responsible parents, we can’t do our jobs at all.”

Other News

The House Resources, Recreation and Development Committee will once again take up the issue of groundwater withdrawals in public hearings Tuesday, April 6. Senate Bill 56 adds considerations of financial responsibility to the purview of the legislative commission that looks at groundwater withdrawal issues. Senate Bill 411 would allow only the Department of Environmental Services to issue permits for large groundwater withdrawals.

One effort to repeal the “LLC tax” failed last week when House members voted 190-150 to instead study the tax further. The Senate is working on its own bill to repeal it, and Gov. John Lynch has indicated repeal is part of his soon-to-be-released deficit reduction plan.

The Senate will vote March 24 on Senate Bill 489 to expand gaming in up to six locations across the state. A successful amendment to that bill by Sen. Kathleen Sgambati (D-Tilton) would direct the first $50 million in revenue to public services recently cut from DHHS. The Senate Finance Committee voted 5-2 on March 18 to recommend the bill should pass.

© 2008-2010 Niles Media “Front Door Politics” all rights reserved.

Bills must pass the chamber in which they’re introduced before “crossing over” to the opposite chamber. Legislation that’s still alive after Crossover receives a second public hearing and potential floor debate before the second deadline in mid-May.

And some notable legislation is either still up for its first vote, or on its way to the other side.

Insurance

Senate Bill 408, sponsored by Sen. Kathleen Sgambati (D-Tilton), would lower health insurance costs for small businesses by allowing them to form “purchasing alliances.” Consolidated buying power and shared administrative responsibilities, say sponsors, would “increase the affordability, efficiency, and fairness of health insurance coverage for employers.”

New Hampshire HealthFirst is a different attempt to lower health insurance costs. It requires large insurance providers to offer a low-cost alternative for small businesses, and it’s getting a second look this year after low enrollment in the program, which came onto the market last fall.

Two HealthFirst bills have already passed their first floor votes: Senate Bill 455 (sponsored by Sgambati) and House Bill 1488 (Rep. Edward Butler, D-Harts Location). Nearly identical, they would introduce a second, “basic” plan that would be more affordable than the current “standard” plan turned out to be.

The Senate has yet to schedule (as of press time) a floor vote on Senate Bill 340 (Sen. Jacalyn Cilley, D-Barrington), which would eliminate credit ratings as a factor in setting insurance rates for auto and homeowner policies. A similar measure failed the the House last year, as did an attempt to eliminate education level as a rate-setting factor.

Budget

The state’s two-year budget cycle started on a rough note last June, and it hasn’t gotten any easier. So far, revenues are about $53 million below projections.

Additionally, the N.H. Supreme Court this winter denied the state’s right to claim $110 million in surplus funds from the Joint Underwriting Account. The JUA is a private medical malpractice insurance pool created with the help of the Insurance Department in 1978. It’s funded by premium payments from the doctors, hospitals and other health care providers it serves, and last year the state tried to tap into that money to balance the budget.

Policyholders sued and won. That means the money the state borrowed from the Rainy Day Fund to cover costs while the case was being heard will not be replaced anytime soon.

State revenues are down and resources limited for the same reason that demand is up for public aid and social services: recession. Many legislators are locking horns over how to respond, as evidenced by the debate over House Bill 1335, which is still up for a vote on the House floor.

Late Property Tax Payments

Cities and towns would be able to set their own interest rates for late property tax payments under HB 1335, sponsored by Rep. Steve Vaillancourt (R-Manchester). Last year the Senate voted down a similar measure, House Bill 351, but the bill’s advocates think they’ve struck a viable compromise.

House Bill 1335 “allows the people to decide if they want their governing body to change these rates,” writes Rep. Eric Stohl (R+D, Colebrook). The rates are currently set by the state and are the same in every city and town: 12 percent on late payments as of the final tax bill’s due date, 90 days after which a lien is placed on the property and the rate increases to 18 percent.

Local governments could lower those to 6 and 9 percent on late payments and lien rates, respectively, under the proposed legislation. The House Local and Regulated Revenue Committee is closely split on the matter, the minority saying that it’ “well-intentioned but ill-conceived.”

“Instead of establishing a uniform and consistent rate across the state,” writes Rep. David Kidder (R-New London), “it will Balkanize that process, resulting in an irrational patchwork of different rates among our small political subdivisions.”

The minority fears a “race to the bottom” that could ensue from year to year if one town sets its rate lower than a neighboring community. They also caution that “large commercial and retail property owners will most likely benefit the most from low delinquent interest rates,” since homeowners already have other means of redress with their towns for late payments.

This conversation comes after 352 foreclosure deeds were recorded in January. That’s a record second only to October 2009 for the number of foreclosures in one month, according to the NH Housing Finance Authority. For comparison’s sake, 20 foreclosures were recorded in Janaury 2005.

Betting and Taxes

Last year’s uproar in the business community over the “LLC Tax” seems to have gained traction in the Senate, where some Democrats are now joining a largely Republican initiative to repeal it.

The LLC tax would have owners of Limited Liability Companies pay the same Interest & Dividends Tax on their earnings that investors make on their profits. Sen. Cilley released a joint statement with Sen. Deborah Reynolds (D-Plymouth) last week advocating its repeal.

“When this change to the LLC tax law was presented to us last year in the final days of the conference committee on the budget,” she said, “we were told that the change would simply close a loophole in the tax laws which treated some business entities more favorably than others. As we now know, the change did much more than that.”

Last year’s application of the meals and rooms tax on campsites is also up for repeal with House Bill 1445, which passed the House on March 11.

Lawmakers are also split over whether to expand legalized gaming in New Hampshire as an antidote to ongoing budget shortfalls. Advocates think that the more the recession is felt, the better chance expanded gambling has.

Few are stronger advocates of gaming than Sen. Lou D’Allesandro (D-Manchester), who has sponsored Senate Bill 489 to expand or create six gaming ventures across the state. Its first floor vote is still not scheduled as of press time. A report from the Governor’s Gaming Study Commission is due in May, but the Legislature is free to vote on gambling legislation before then.

© 2008-2010 Niles Media “Front Door Politics” all rights reserved.