RECENT CARES UPDATES, ALERTS, and ACTION REQUESTS, Most Recent to Oldest

CARES UPDATE, June 22, 2009

The Budget has passed both the House and the Senate and the Governor has said he will sign it into law. Thanks to all your incredible work we were able to get over 70% of the CARES highest priority funding additions to the DHHS safety net programs into the final budget. This is quite an achievement in these times.

There are still serious holes especially in children's services, Medicaid, and mental health, so we need to keep working. Also, as we know all too well, there are significant revenues in the budget that are shaky. Some like the $110m from the Medical Malpractice Insurance Trust reserves are being challenged in the courts and many others (such as the Business Profits and Enterprise Taxes, liquor revenues, and real estate transfer tax) will not come in as high as projected if the economy does not turn around by the Spring of 2010. This means - like last year - there is the constant and ongoing threat of cuts to the safety net budget from the revenue side that we will have to monitor and be prepared to respond to very quickly.

LOOK for UPDATES and ALERTS

Because of these ongoing threats to the FY 2010-2011 budget, we will continue to closely monitor revenues and the areas where the safety net is most under funded, especially Medicaid health services. We will send out UPDATES and ALERTS if DHHS, the Fiscal Committee, and Governor propose harmful cuts and changes. As noted, we will need to work very quickly because we may only get 2-3 weeks notice of these cuts/changes from the time they surface to the time the Fiscal Committee votes on them. This gives us little time to assess the impacts and as needed, come up with creative alternatives and a way to show clearly how the safety net and our citizens will likely be harmed.

The FINAL BUDGET IS ONLINE

See NH General Court and the final chaptered versions of HB 1A and 2A.

CARES Add Back Request List for Committee of Conference Starting June 8th  

In the link below is a draft of the CARES Highest Priority ADD BACK REQUEST LIST for the Committee of Conference. This will be finalized at the CARES Meeting on June 5th (9 am at DD Council). 

This list totals $8.1m in additional General Funds for FY 2010-11 and is mostly getting the final budget back to the higher House position for these key items while retaining the Senate position in the rest - which is usually about the best you can do in a Committee of Conference. Barring a windfall or significant new information, the most you can usually increase is to the higher of the House or Senate funding level.

DRAFT CARES ADD BACK LIST for CONFERENCE COMMITTEE  

The list is based on the following CARES comparison of the key safety net programs we have been tracking. These details are in the spreadsheet in the link below, and as you can see, the highest priority items come from those safety net programs where the Senate cut the House budget the most. Especially troubling is the further Senate cut (over 20% total from FY 2009) in DCYF/DJJS Out-of-home Placements for some of our most troubled children and families in the state. This leaves the most vulnerable very vulnerable and we have yet to see a credible or solid plan to give these children the support, protection, and care they need to survive and succeed.  

CARES HOUSE v SENATE BUDGET COMPARISON  

Senate Budget Passes on June 3rd and Includes Gambling 

The Senate Budget that passed yesterday was unchanged (except for the delay of the repealing the BET offset to the BPT) from what the Senate Finance Committee recommended and CARES has been tracking. On the spending side, there were no cuts or adds to DHHS or other programs. On the revenue side, the Senate also approved by 16-8 the plan to raise a projected $205m from 13,000 video slot machines at five locations around the state while rejecting major House revenues such as the capital gains, estate, gambling winnings, and insurance taxes.

These large differences on how best to raise revenue will likely make it challenging for the Budget Committee of Conference to reach agreement quickly. This is because at this point, gambling seems to be a deal breaker and unacceptable for the House Democrats and capital gains a deal breaker for the Senate Democrats - and since there will be almost no Republican votes for the budget, there will have to be almost unanimous agreement on the revenue package by Democrats in both houses if it and the entire budget is to pass by June 30th. These deal breakers are the largest revenue sources for both and both seem firmly committed to each right now.

Committee of Conference Start Monday June 8th  

The Conference Committee’s First Meeting is Monday, June 8 at 9 AM in Rooms 210-211 of the LOB (Meetings are also tentatively scheduled for Tuesday June 9th and Thursday June 11th.) 

The Senate Conferees have not yet been officially named, and although we are pretty sure we know who they are, we will let you know as soon as it’s official. 

The House Conferees for HB 1 (the budget) and HB 2 (the budget trailer bill) are:

Reps. Margie Smith (d), Sharon Nordgren (d), Dan Eaton (d), Susan Almy (d), and Neal Kurk (r).  

Alternates for HB 1 are: Reps. Peter Leishman (d), Benjamin Baroody (d), and Doug Scamman (r).

Alternates for HB2 are: Reps. John DeJoie (d), William Hatch (d), and Norm Major (r).

Since Republicans seem committed to not voting for the budget, this means that in the end, Neal Kurk will likely be replaced by Mary Jane Wallner or another Democrat to get the unanimous vote needed by the Committee of Conference to pass the budget and send it back for a final up or down vote in both houses. 

SENATE FACT SHEETS (Please keep referring to them and the talking points in the Senate Budget tab in talking to Legislators and the press)

The SENATE FACT SHEETS May 1, 2009 Package is done and available. Please call Christina at 203-6001 for a hard copy or get them with this link or under the Projects Tab to the left. You can print out all or part of the package as needed.  

As indicated on the electronic version, the hard copy given to the Senators is in two colors, yellow and blue indicating what the Senate needs to add (yellow) and what House funding additions and changes (blue) need to be protected.

CARES UPDATE, MAY 28, 2009

Some Good and Not So Good News on the Budget Passed by Senate Finance Today

The Senate Finance Committee finished work on its budget this afternoon (May 28th), after meeting until 2 am this morning.  There is considerable good news – especially compared to the first draft of the DHHS budget they approved earlier (5-27-09).

It is a little confusing because the funds the Senate Finance Committee added today were primarily to restore the Senate funding back or nearer to the House levels.  In fact, only 2 of the 15 programs that received additional funds in the Senate budget from Sen. Sgambati’s priority list were funded at a higher level than the House (the BDS waitlists), whereas 8 were brought back up to the House funding, and 5 received more funds but were still funded at less than in the House budget.  As noted below, 10 of the programs the Senate cut from the House level received no add backs, so the news is mixed here – better than it was before, but not as good as the House Budget.

On the other hand, in what is clearly a major improvement, last week the Senate added almost $60m in badly needed funds to shore up the core Medicaid and TANF programs in the face of rising unemployment and enrollments - although a gopod portion of that was apparently to balance the budget for this year (FY 2009) rather than add funds to cover enrollment growth in FY 2010-2011. Nonetheless, it appears some !6.2m or about 1% were added to help with enrollment growth in OMBP Mediciaid for FY 2010-2011 - a definite step towards strengthening the safety net.

The $33.2m in Add Backs to Earlier Senate Finance Cuts to the House Budget

Today (May 28th) the Senate added back $33m in General Funds (GF) to 15 DHHS safety net programs where they had cut funds from the House Budget.  For 10 other safety net programs that had been cut, they added back no funds. 

Here is the detailed spreadsheet showing the add backs by program and for the 25 key CARES programs how the Senate Finance Budget passed today compares with the House budget. The last column shows the programs (those with with "less") that we need to get the Budget Committee of Conference (which may start meeting as early as June 8th) to restore funds to the level passed by the House.

Senate Finance 5-28 Budget with Restores Compared to House Budget

     As this sheet shows, the total CARES request for add backs for the 25 programs cut by the Senate was $63.8 m in GF for FY 2010-2011 biennium.  We appreciate in these difficult times that the Senate came up with the revenue to add back this $33m.  This is almost 50% of the General Funds they had cut from the House Budget for these programs – but that means there is still 50% to go – and this is essential funding for essential safety net supports.

Significant Improvements with Senate Finance Adding $60m in General Funds to the House Budget for Enrollment Growth in the Core TANF and Medicaid Programs

Early on, Senate Division III realized that because of the rising NH unemployment, the caseload projections for Medicaid and TANF in the House Budget were unrealistically low.  Too often in the past, budget makers in both Houses have ignored this because these core programs are entitlements and adding realistic funding for growing caseloads is very expensive and not politically popular.  This time, Sen. Sgambati recognized the danger in doing business as usual (the ARRA Stimulus requirements also helped) and added a significant amount of funds to pay for more realistic enrollment growth in these programs.

Specifically, Senate Finance added $25m for Medicaid, $33m for TANF, and $3m for APTD in GF for FY 2010-11.

Next Steps

Budget Vote in Full Senate  -  It is not clear at this point if this budget will pass the Full Senate next week (June 3rd or 4th) because of the controversial business tax increases and new video gambling in it.  This is somewhat unexpected, and it means we may have to find a way to not lose this added DHHS funding and reversal of the Senate cuts we were able to hold on to.

The reality here is if any of the Senate’s revenues have to be taken out because there are not 13 Senate votes to pass them, then cuts to DHHS safety net programs are immediately back on the table.  With time short, this increases the risk of going back to the DHHS cuts we just got reversed or across-the-board or back-of-the budget cuts as ways to balance the budget quickly.  All we can be sure of now is that the situation will be changing daily as Senators and the public process what is in the Senate budget, and we will have to read the political leaves quickly and go from there with our basic CARES message.  In any case, the final numbers have not been finished or released yet, so the political and public reaction stage is just starting.

Committee of Conference  -  At the Same time, we need to start planning immediately for the HB 1 & HB 2 Committee of Conference.  I tmay start as early as June 8th, although sometimes it is deliberately delayed to increase the pressure to get it done. In the Budget Committee of Conference, the old maxim of  "the work expands to fill the time available" is the general rule, and it is not unusual that the most important decisions are made just before midnight on June 30th.

UPDATE for MAY 21, 2009

SENATE FINANCE SCHEDULE

In his opening remarks to the Senate Finance Committee today, Sen. D’Allesandro (Chair) outlined the process and timelines Senate Finance is going to follow in making its budget decisions.  They are starting with presentation from each of the Division subcommittees on their recommendations.

DIVISION III of the BUDGET is scheduled to present its recommendations for the DHHS BUDGET  ALL DAY TOMORROW (Fri. May 22) STARTING at 9 AM

Then on TUESDAY, MAY 26th (starting at 9 am) Senate Finance is scheduled to START to PUT THE ENTIRE BUDGET TOGETHER including REVENUES and what Sen. D’Allesandro described as his REVENUE ENHANCEMENTS.

In his opening remarks, Sen. D’Allesandro stressed his and the Senate’s strong commitment to meeting the basic needs of all our citizens while balancing the budget and filling a $369m budget hole.

RESULTS FROM TODAY’S PRESENTATION of Division I’s RECOMMENDATIONS

General Funds Available were Increased –  Division I picked up about $28m in General Funds (GF) not including possible increases from the Liquor Commission.  These included $18m from an accounting change in how federal funds for retiree health benefits are treated, $4.5m in switching GF expenses to federal funds in Environmental Services and Justice, and $4m in added court revenues.

Also, the Division I agreed with the Governor and switched the Liquor Commission back to an enterprise fund together with an amendment giving them more flexibility in pricing and operations. Their hope here is that this will pick up as much as $20m more in General Fund (or more as surrounding states are increasing their liquor taxes) – although the final number will not be known until the revenue adjustments are presented on Tuesday.

Increase in General Fund Spending –  Senate Finance also added General Funds on the spending side to the House Budget.  These increases included about $2.5m in to the Dept. of Information Technology, $8m to Corrections, and $1.5m to the Judicial Council – and it was encouraging they were willing to add funds when a clear need was demonstrated even when it increased the deficit.

Net Result –  The net result was that Senate Finance added needed funds to programs while at the same time closing the GF gap by as much as $35m – a small start toward closing the gap without relying on large cuts and a step in the right direction.

Differences in BUDGET ADOPTION in the SENATE versus the HOUSE

Unlike the situation in the House - where the House Finance and Ways and Means Committees have to work hard to get the votes in the Full House to adopt the House Finance Budget –  in the Senate, the Senate Finance Committee’s Budget is almost automatically adopted.  This is because the Senate Leadership (including the President and Majority Leader) actually sit on the Senate Finance Committee plus there is considerable overlap between the Senate Finance and Ways and Means Committees.  This means that once this core group decides, it is largely decided – although like the House, we expect no Republican votes for the budget so any adjustments will be made within and by the Democratic caucus - likely in fairly consultation with the Governor.

For CARES, this means that once Senate Finance finishes its work, we need to turn immediately to working on the Budget Committee of Conference between the House and Senate.

CARES Letters to the Editor Project

I.  Letters to the Editor for Senators Needed Now

We need your help to write letters now with the general CARES message (see below for message and CARES 5/11 e-mail for more details).

To SIGN UP for CARES E-MAILS SEND YOUR E-MAIL & REQUEST TO:

nhcares@tds.net

The Senate has made no official decisions on the DHHS budget yet, so the message is still general - but it is very important that the Senators get the message now that in this perfect storm economy, the safety net is needed more than ever and we need a commitment from them to raise enough revenues to keep it together.

II. The Senate Will Decide on What is In and Out of the DHHS Budget

      in the Next TWO WEEKS

May 18th   - Division III is scheduled to finish its work

May 26th   - The full Senate Finance Committee votes on the whole budget

June 3rd     - The full Senate votes on the whole Senate Budget

Once we know more specifics on DHHS cuts and revenues adopted or not, the messages to the media and the Senators will be more specific  - so please look for CARES Alerts and Action Requests.

III.  DHHS Updated Building Blocks in Order of Program Priorities

These are the updated DHHS Building Blocks in priority order by area:

DHHS BUILDING BLOCKS BY FOUR AREAS 5-8-09

If your program is on the bottom of the list for the 4 categories of programs (Long Tern Care, Social Services and Institutions, Medicaid Medical Care excluding waivers, and Public Health), then it is at the greatest risk of being cut. 

And although things change quickly in the Senate (and they are still in the posturing stage on revenues), as things stand now, if key Senators carry the day with their very public rejections of the revenues added by the House (especially capital gains insurance, and estate) without realistic adds of their own, the Senate will have to make significant cuts ($150m range) to the House DHHS budget.

IV.  Good Primer on State Revenues, Trends, and the House

        Position on Them

Rep. Almy (Chair of House Ways & Means Committee) has provided the Senate with this excellent summary of the major revenues sources and issues. It is well worth reading and a good starting point for the Senate.

HOUSE SUMMARY of STATE GF REVENUE SOURCES & ISSUES

USEFUL CARES RESOURCES for SENATE

CARES UPDATE -  MAY 19, 2009

SENATE FINANCE SCHEDULE, May 19-28, 2009

TUESDAY, MAY 19, 2009

FINANCE, Room 102, LOB

Sen. Sgambati (C), Sen. Odell

2:00 p.m. DIVISION III WORK SESSION

WAYS AND MEANS, Room 100, SH

Sen. Odell (C), Sen. D'Allesandro (VC), Sen. Janeway, Sen. Reynolds, Sen. Gilmour,

Sen. Downing, Sen. Bradley

10:15 a.m. CONTINUED REVENUE HEARINGS

THURSDAY, MAY 21, 2009

FINANCE, Room 100, SH

Sen. D'Allesandro (C), Sen. Janeway (VC), Sen. Larsen, Sen. Hassan, Sen. Sgambati, Sen. Gallus, Sen. Odell

10:30 a.m. HB 429-FN, relative to cider.

EXECUTIVE SESSION FOLLOWED BY ALL-DAY WORK SESSION

FRIDAY, MAY 22, 2009

FINANCE, Room 100, SH

9:00 a.m. ALL DAY WORK SESSION

SATURDAY, MAY 23, 2009

FINANCE, Room 100, SH

9:00 a.m. ALL DAY WORK SESSION

TUESDAY, MAY 26, 2009

FINANCE, Room 100, SH

9:00 a.m. EXECUTIVE SESSION ON PENDING LEGISLATION

THURSDAY, MAY 28, 2009

FINANCE, Room 100, SH

10:30 a.m. EXECUTIVE SESSION ON PENDING LEGISLATION

MAY 5th UPDATES

I.  DIVISION III MEETINGS & HOW LIKELY SENATE CUTS WILL be MADE

Division III Presentations by DHHS Wrap Up Friday  -  The DHHS Presentations will wrap up on Friday May 8th, with BDAS added to the schedule for 1 PM on Friday and Tobey School at 2 PM.  These have been moving quickly with good information, and Sen. Odell has been able to join Sen. Sgambati for most this week.

DHHS Budget Building Blocks Will be Used by Senate to Make Likely First Round DHHS Cuts  -  Sen. Sgambati has made it clear that while she has not yet received from Senate Leadership the “bottom line” amount of General Funds DHHS will have available for FY 2010-2011, at this stage it is almost certain to be significantly below what is in the House Budget (see revenue problems below).  These significant revenue shortfalls will require match significant cuts to the House DHHS budget.

Further, Sen. Sgambati has made it clear that the DHHS cuts will be made using the priorities in the DHHS Building Block Budgets.  Right now, it looks like the cuts will be made from the lowest building blocks by division, although this may change when DHHS submits its master building blocks covering all programs from all divisions.  Sen. Sgambati has indicated that any cuts made will start with the lowest building block program or cost center in the DHHS building blocks and work up until the gap is eliminated.

This is the classic NH “fit the budget to the available revenues” budgeting approach NH CARES has long opposed.  This contrasts with the CARES needs-based approach the House began with that starts with determining what it costs to provide citizens with minimum basic needs (rather than with available revenue) and then finding the revenue to pay for these.

All the DHHS Building Blocks Are Being Revised by Friday and Will Give Us the List of the Services Most Likely to be Cut  -  It has become clear in the presentations that most building block budgets submitted by the divisions do not reflect actual priorities.  Further, many were not detailed enough to provide a basis for making cuts and avoiding unnecessary harm.  As a result, DHHS is revising all their Building Block Budget and resubmitting them by Friday May 8th.  These will identify the specific services that are at the top of the cut list and are most likely to be cut in this first stage of the Senate Budget.  We will get you a summary of these to you as soon as we get them and get the actual building blocks up on the Web. 

II.  Mostly Discouraging REVENUE DEVELOPMENTS

Senate Opposition to the Capital Gains Tax - We are hearing widespread lack of support and even sharp criticism of the capital gains tax including the two top members of the Senate Ways and Means Committee (Sen. Odell, Chair and Sen. D’Allesandro, Vice-Chair) who have publicly come out against it.  If the Senate does not go along with the House’s capital gains tax, this creates a $75m hole in the House budget.  It also deprives the safety net of a much-needed source of revenue for the future (estimated $150m/year in normal times).  In addition, we have not heard and are not expecting support from the Governor’s office for the capital gains tax.

Opposition from business leaders to capital gains taxes has historically been very strong.  This is because special capital gains tax treatment (taxed lower than most wage income) as an engine of economic growth (and especially job creation) has long been a core part of the business leaders ethic.  This remains unwavering in spite of strong evidence that highly-leverage speculation – all in pursuit of capital gains – in the financial, housing, and other markets not only did not create many jobs (probably fueling outsourcing) in recent years, but also played a key role in the worldwide economic meltdown.  Unfortunately, there is no differentiation between capital gains that result from job-producing investments versus those from speculative investments, so both get favored tax treatments strongly supported by business leaders and investors.

No Senate Support but No Formal Opposition Yet to the Estate Tax  -  The Estate Tax is also not being received enthusiastically by most Senators, but we are hearing much less criticism of it, so it may survive if the House holds firm - and it will be likely that CARES will be needed to help the House hold firm on its new revenues like the Estate Tax.

$48m+ Loss in Revenue from the House Budget -  Other revenue problems also surfaced at the Ways & Means Hearing on May 5th.  These include:

(1)  $14m less in Medicaid enhancement revenues (Mediscam) than projected by the Governor and the House.

(2)  The possibility that at least some of the Governor’s higher revenue projections would stand (especially for business taxes based on an upswing in FY 2011) was eliminated as the Governor's Office released new revenue estimates that were essentialluy the same as the lower estimates in the House Budget.  The exception was talk of possible higher estimates for tobacco taxes and liquor revenues (see below).

(3)  The Senate is aware that the House budget includes $18-25m more than we can now expect from the ARRA enhanced Medicaid match (FMAP) to contribute to the General Fund.  The higher House projection was based on the General Fund receiving all the increased Medicaid for BEAS nursing services.  We now know that the counties will receive most of this since they provide most of the Medicaid match.  Further, although we are still hopeful, it is not certain at this point that we will get all the increased Medicaid match above the 6.2% base that DHHS projected because from rising NH unemployment rates and is in the House Budget.  This could push the FMAP hole above $25m.

(4)  All or part of the $16m increase in DHHS drug rebates the House added are uncertain.

April Revenues Bad but at Least Not Much Worse than Projected  -  The April revenues (usually our biggest revenue month) were again significantly below the adjusted FY 09 revenue plan (by 16.3%) and below last year (13.5% below, even with the increase in cigarette taxes and liquor).  Nonetheless, the April decline was not more than projected, so the DRA is now expecting (barring another economic shock) to make it through June 30, 2009 without further cuts.  This can be interpreted as good news in that the projections made 3 months back seem to be holding.  Unfortunately, no one is yet willing to predict the bottom and turnaround month that could give us a credible basis for raising some FY 2011 estimates.

Potential Good News on Tobacco and Possibly Liquor Revenues  -  There was some good news.  Tobacco sales did not decline as much as expected with the large increase in the federal tax in April, so there seems to be agreement that tobacco tax estimates can be raised significantly - and further, that there may be room for more of a state tax increase than the Governor and House included.  Finally, the Liquor Commission came in with an amendment to HB 429 that they say may raise at least $30m more than the House projected.  There are no firm numbers yet and it is unclear what added expenses from the House budget this will require, but the proposal seems doable and realistic on its face.

Net Estimated Senate GF Hole in Biennial House Budget Now in the $38m-$206m Range  - The estimate of the budget hole changes almost daily (either way), and we expect it to change continually right up through the end of the Budget Committee of Conference in June.  To its credit, the Senate Ways and Means Committee wants to work quickly to nail down the revenues and plans to make a decision on their revenue estimates by May 7th.  We are hopeful that the $48m revenue hole described above could be filled by a $48m increase in the Tobacco and Liquor revenue estimates.  (Hopefully, this is not wishful thinking, and in any case, we should know the estimated increase as soon as this week.)

If this were to happen, and the Senate approves all the House revenue (like freezing rather than lowering the insurance tax rate) and revenue-equivalent balance sheet savings (like increasing all State employees retirement contributions, increasing health insurance contributions from retirees, etc.) then that leaves a potential budget hole (not including new required spending that has surfaced) consisting of:

(a)   The $38m hole from the 1.25% House across-the-board cut

(b)   Potential $75m hole if the Senate rejects the House’s Capital Gains Tax

(c)    Potential $10m hole if Senate rejects the House’s Estate Tax

(d)   The $83m school construction aid hole which the Senate is talking a lot about as irresponsible, but like the House - does not seem to be following the Governor's Budget plan of bonding it as was done in FY 08-09 to save General Funds.

These total to a worse case $206m.  This means that worse case (not including funds that the Senate feels need to be added), the Senate would have to find $206m in new revenues or equivalent balance sheet savings just to keep the GF spending levels in the House budget.  This means the Senate would have to cut $1 from the House budget for every $1 of the $206m gap the Senate did not make up with revenues and cost savings (not including cuts) of its own.  And while we expect the Senate to come up with some innovative revenue plans, this is a formidable task.

CARES UPDATE, Thursday, April 30, 2009

CARES will meet this Friday May 1st from 9-10:15 am at the DD Council to review the presentations from last week, prepare for the DHHS presentations coming up next week, and continue work on the Senate Briefings and revised Fact Sheets.

The Senate Division III Schedule as of April 29

Day      Date    Time                Division   Place

Tues**     4/28    2-4 PM              OMBP       LOB 103

**See "DHHS & Other Budget Info" for key OMBP Handout

Thurs    4/30    8:30-10 AM          BDS        LOB 101

Mon      5/4     9-10:30 AM          DCYF       LOB 101

Mon      5/4     10:30 AM-noon       DJJS       LOB 101

Tues     5/5     2-3 PM              BBH        LOB 102

Tues     5/5     3-4:30 PM           BEAS       LOB 102

Thurs    5/7     8:30-10 AM          DPHS       LOB 101

Fri      5/8     9:00-10:30 AM       DFA        LOB 102

Fri      5/8     10:30-11:15 AM      DCSS       LOB 102

Fri      5/8     11:15 AM-noon       NHH        LOB 102

Fri      5/8     1-4 PM              All        LOB 101

Tues     5/12    10 AM-noon          All        TBD           Tues     5/12    2-4 PM              All        LOB 102

These are not all in the Senate Calendar and may change, so please regularly check the latest Senate Calendar for the latest times and locations. Sen. Odell is likely unable to come to many of these sessions because of his wife's illness (our best wishes and prayers for her recovery), so Sen. Sgambati will likely be doing these sessions largely by herself. 

Sen. Sgambati's Focus on a Few Programs in Each Division   - So far Sen. Sgambati has been "cutting to the chase" by asking that the DHHS presentations to focus on the few areas she has identified where she feels there is the possibility of efficiencies and program eliminations that will save General Funds. It is clear that she has consulted with DHHS on most of these.  One promising approach Sen. Sgambati suggested was putting in "back of the budget" cuts tied to very specific changes in operations rather than the more traditional across-the-board footnote cut that is not tied to any specific change.  This provides an opportunity to make improvements as long as they show some cost savings at some point within FY 2010-2011.

The Importance of the DHHS Building Blocks in Making Cuts -  Sen. Sgambati also is asking for each division's "building block" budget.  These show each division's programs arranged from those that are highest priority for state funds (starting with those mandated by federal law) to the lowest (usually state options with no federal match).  Sen. Sgambati is very familiar with these building blocks from her long career as Deputy and Acting Commissioner of DHHS, and they will serve as a primary guide for cuts which look highly likely now if only to eliminate the 1.25% across-the board House cut they made at the last minute to technically balance their budget.

Specifically, in the next 3-4 weeks, once the Senate Leadership gives Sen. Sgambati the specific target amount of general funds DHHS will be allowed, most of any required cuts to meet that target will likely come from the "low priority" programs defined by the DHHS building blocks.  Unfortunately, even though DHHS may define these as "low priority" following their legal and funding criteria, these programs may be critical lifelines that are among the most important components of the safety net.

The Importance of the Senate Being Willing to Raise Revenue and be Innovative - As in the House, the amount of general funds for DHHS will be set by the Senate's own revenue projections and what House and their own new revenues they are willing to adopt.  This means the CARES core message (see below) of "raising enough revenue to support essential services" is THE critical decision for determining whether DHHS will be able to maintain essential services. 

Historically, the Senate has come up with "innovative" new revenue sources (or cost savings that do not hurt programs), but in this "perfect storm" year, without some trends in the next 4-5 weeks that provide a reasonable basis for identifying when the recovery will start, the Senate will have to keep all the House revenue adds plus be more innovative than ever before to avoid truly harmful and long-lasting cuts - so we need encourage the Senate at every opportunity to be innovative about their revenues (short and long term) and cost savings that do minimal harm. 

NH CARES UPDATE

April 10, 2009

THE INCREDIBLE WEEK THAT WAS:

THE HOUSE MAJORITY BUDGET PASSED UNSCATHED!  

HB 1 passed on April 8th and HB 2 (the "Budget Trailer" bill with all the new revenues) passed April 9th.    There is no question your calls made a big difference and helped the budget bills pass - especially when you consider several of the votes on revenues were very close with winning margins of only 4 votes.

(Note:  Once we tabulate the votes, we would request you give a "thank you" to those you called who voted as you requested. There were many votes, and we will provide a list of Reps who should be thanked and at what level of thankfulness.)

Most State House pundits felt that if the Budget vote had been taken a week ago - before your calls -  it would not have passed. 

Special THANKS for making these difficult calls.  This was not an easy bill to support enthusiastically and from all reports, all of you who called did a great job in explaining your conditional - but strong - support for HB1 and HB 2.

The Importance of the House Passing New Revenues

The addition of the two new revenues - the Estate and Capital Gains Taxes - in HB 2 is a significant accomplishment that should not be underestimated.  These are the first new and sizeable General Fund revenues that have been passed in a House budget for more than 15 years.  Further, they are fair taxes as measured by people's ability to pay them from available income and they have good growth potnetial.  If these two can be passed as part of the final budget in June, they will provide important new support for DHHS safety net services for years to come.

The immediate impact of these new revenues is that if they had not passed, the $45m in critical new funds for the DHHS safety net would not have been possible.  Instead, the House would have been forced to make cuts from the Governor's funding level of the DHHS Budget.

CARES URGENT ACTION REQUEST

Friday, April 3, 2009

Please Contact Your Democratic Rep Now to Urge Their Vote for Their Majority Budget on April 8th -

The House will vote on the budget on Wednesday April 8th, so we request that you CALL YOUR DEMOCRATIC REPRESENTATIVES in the list below starting TODAY- and urge them to VOTE for the FINANCE COMMITTEE'S MAJORITY BUDGET.  (We are not requesting that you call your Republican Representatives at this time simply because this year they are presenting a Republican minority budget on the 8th and have made it clear they will only be voting for it.)

House Members to Contact by District

PLEASE USE the FOLLOWING SIMPLE MESSAGE in YOUR ASK for YOUR REPS VOTE for the MAJORITY BUDGET on the 8th:

1. We’re asking you to vote in support of the majority budget on

    Wednesday.

2. We understand it’s not an ideal budget, but it’s the best option we

     have right now.

3. This is the second act in a four-act play. You’ll have another

     opportunity to vote on it after it comes back from committee of

     conference.

4. We need to pass it now and work with the Senate to address the

    problems. We’re not done yet.

5. Not supporting the majority budget on Wednesday will only make

    things worse.

For more information on who your representatives by city or town see:

www.gencourt.state.nh.us/house/members/wml.aspx

Here are the Main Adds to the DHHS Budget we are tring to protect:

CARES UPDATE. APRIL 2, 2009

THE MAJORITY BUDGET HOUSE FINANCE PASSED on APRIL 1, 2009 and the $222m CUT MINORITY HOUSE BUDGET

THE BUDGET that HOUSE FINANCE APPROVED

Expenditures -  Yesterday House Finance approved the House Budget to be voted on by the full House on April 8th.  Positively on the spending side, House Finance made no changes to the DHHS budget from what Division III recommended, so the $25m additions in state funds to the Governor’s Budget stayed in.  On the negative, House Finance ran out of time and in order to balance the budget and send it on, they included a 1.25% across-the-board cut in General Funds for all departments (including DHHS) where these funds are not required to maintain federal or other match.  This 1.25% blanket cut totals $37.8m in state funds for the FY 2010-2011 or $16-18mm for DHHS.  (For comparison, see below for the $197m across-the-board cut in state funds for DHHS in the Republican Budget also to be voted on next week.)

Revenues  -  On the revenue side, the biggest change yesterday was the addition of the Estate and Capital Gains Tax.  In doing this, House Finance did not take the easy way out and made powerful commitment to maintaining basic services by raising new revenue.  Without these new taxes, $95 million more in cuts would have had to be made.  Without these  -  and because of declining revenues from the time the Governor submitted his budget  -  instead of Division III adding funds to avoid the most damaging cuts in key safety net services, they would have had to cut funds from the Governor’s DHHS Budget.

(1)   New Estate Tax -  The Committee’s Budget included a new 8% tax on estates greater than $2m ($4m for a couple).  This would bring in at least $10m in FY 2011 from an estimated 100 large estates per year.  There are exclusions for surviving spouses and other deductions from the taxable base and the NH tax is deductible from the base used for the Federal Estate Tax.  The result of the initial $2m deduction and these other provisions is the actual amount of the tax paid is less than 8% of the total value of the estate.  For example, the net NH tax for a $10m estate for a married couple would be 2.5%.

In a way, this is not a new tax, but a fairer version of an old tax.  NH had a Legacy and Successions Tax for many years until it was repealed several years ago.  This was an 18% tax with no deductions on estates for people with no lineal heirs.  It was repealed in large part because it taxed only one kind of estate at a fairly high rate with had no deductions. 

(2)   New Capital Gains Tax  -  The Budget included adding a 5% tax on capital gains of more than $5,000 per person or $10,000 per year for a couple.  Exemptions include the primary residence up to $500,000 for a couple.  This was added to the existing 5% tax on Interest and Dividends and significantly, as part of this change, the exemption for the Interest and Dividends Tax was raised from $2,400 per person and $4,800 per couple to the $5,000 per person and $10,000 per couple exemption in the capital gains tax.  This significantly reduces the number of people now paying the interest and dividends tax.  This means that even though capital gains was added to the Interest and Dividends tax, because of the exemption levels were doubled, fewer NH residents will be paying it than p[ay it now.

The capital gains tax will raise about $75m over the biennium.  It is estimated that 92% will be paid by people earning over $200,000 per year and 1% will be paid by people earning less than $100,000 per year.

ONLY DEMOCRATS VOTED for the FINAL BUDGET and the REPUBLICANS OFFERED a “NO NEW TAX” BUDGET which ONLY REPUBLICANS VOTED FOR 

The House Finance Budget passed on a strict party line vote.  No Republicans voted for it, even though the majority of Republicans voted for most of the recommendations making it up coming from the Division subcommittees.  In addition, the Republicans on the House Finance Committee led by Reps. Neal Kurk, Fran Wendelboe, and Doug Scamman offered a Republican Budget that cut spending far below the House and Governor’s Budget.  No provisions of this Republican “R3 Scenario” budget passed.

For the final vote next week, we can expect the same united opposition by House Republicans to the House Finance budget.  This will include a minority report that is likely to be very critical especially of the new estate and capital gains taxes in it under the general theme that “tax and spenders are ruining the NH Advantage.”  We can also expect a presentation and vote on the Republican Budget from the House Finance Republicans.

THE REPUBLICAN BUDGET to BE VOTED on APRIL 8th and its $222m CUTS to DHHS

The Republican budget is simple and straightforward.  It is based on limiting State spending to existing revenues and not using any one-time revenues to make up for declining state revenues except for the ARRA federal stimulus funds.  This means that the level of State spending for safety net and other essential needs in this budget is determined by what is raised with “no new taxes” - regardless of whether this is enough revenue to meet the need for essential state services. 

To meet this goal, the Republican budget first eliminated all increased, one-time, and new taxes and fees in both the Governor’s and House Budgets.  Then to make it match this significantly lower level of revenue, they simply reduced the spending level through across-the-board cuts to most departments.  The Republican Budget also eliminated all the increases the House made to the Governor’s budget including the $44m in total funds added to DHHS.

Republican Budget Cuts at Least $222m in State Funds from the DHHS House Finance Budget  

Because of declining State revenues with the recession, the Republican Budget cuts 12.9% in state funds or $92.4m from the Governor’s DHHS budget for FY 2010 and 13.9% or $104.7m from the FY 2011 budget.  ($185m in total funds for FY 2010 and $208m for FY 2011.)

Republican Budget Risk DHHS Stimulus Payments  -  Further, notwithstanding the Republican comments to the contrary, there is no practical way DHHS could make such large cuts without reducing eligibility for services.  This would result in DHHS becoming ineligible for $171m the enhanced Medicaid (FMAP) match from the ARRA Stimulus for FY 2010-2011 resulting in further cuts of up to another 11% in state funds from DHHS if the higher FMAP was removed from the DHHS budget.  It would also make DHHS ineligible for ARRA funds going to specific programs such as child development, early intervention, and community health.

CARES ACTION REQUEST - MARCH 30, 2009

ONCE WE SEND YOU the CARES ACTION REQUEST LATER THIS WEEK (with Talking Points and Lists) WE WILL NEED YOU to CONTACT YOUR DEMOCRATIC LEGISLATORS to SUPPORT the HOUSE FINANCE BUDGET with their Vote on APRIL 8th.

This is one of those critical points where your contacts (calls, e-mails, letters, visits) make the difference between success and failure.  It is also one of only a few times during the session we need you to act (sorry, it’s always on short notice), so please help when you get the next ACTION REQUEST.  Thanks.

*** NEXT STEP = THIS WEEK We Will Send YOU CONTACT LISTS and TALKING POINTS for Your Calls as Soon as HOUSE FINANCE FINALIZES ITS BUDGET

We will have less than a week to act.  If we do not and the House Finance Budget fails, we could be back to the Governor’s Budget  - with cuts from it.  Once you get this Action Request, please call if you need more information or have questions.

THE CURRENT SITUATION and TIMELINES Requiring Quick Action

*** CARES SUPPORTS the HOUSE BUDGET as a SIGNIFICANT IMPROVEMENT to MAINTAINING ESSENTIAL SERVICES and an IMPORTANT FIRST STEP to ELIMINATING the MOST HARMFUL CUTS to DHHS in the GOVERNOR’S BUDGET

All at the CARES Meeting on Friday expressed great appreciation to Division III and Rep. Nordgren for adding needed funds to avoid devastating cuts to programs on the CARES priority list for funds.  As noted in our March 26th Update, this is all the more remarkable because the Finance Committee was willing to take the risk of adding new revenues (so far we do not know what exactly these will be) to add over $26m to fill damaging holes in the safety net.

At the same time, there are still a number of very harmful reductions from the Governor’s Budget still in the House Budget.  These need to be fixed in the Senate.  (Look for a list of these after the April 8th House vote.)  This is why CARES is strongly supporting the Finance Committee’s House Budget as an essential FIRST STEP - but not the FINAL STEP in the budget process.

*** THE HOUSE BUDGET is LIKELY to RECEIVE ALMOST NO SUPPORT from REPUBLICAN REPS so ALMOST 100% DEMOCRATIC SUPPORT WILL BE NEEDED TO PASS IT

Unfortunately, because the House Budget will have added revenues in it from both the Governor and House, it is likely the Republicans will vote as a bloc.  This is similar to what happened with President Obama’s ARRA Stimulus Bill, which received NO VOTES from Republicans in the US House.

*** WE ONLY HAVE A FEW DAYS FROM SOMETIME THIS WEEK (earliest on Tuesday the 31st, latest on Thursday April 2nd) to TUESDAY APRIL 7th to CONTACT KEY HOUSE DEMOCRATS WHO MAY BE UNDECIDED

Because of the tight schedule, this means that IMMEDIATELY after House Finance approves the Final House Budget THIS WEEK, we will have to START CONTACTING our DEMOCRATIC HOUSE REPS to ENCOURAGE THEM to VOTE with their Leadership to PASS the HOUSE FINANCE BUDGET on Wednesday April 8th.

It will be important to focus on the Democratic House Members in your districts who have so far not expressed support for the House Budget.  This may not be easy with some because of the added revenues in the budget, so it will be up to us to point out how these new revenues are absolutely necessary to get through this economic “perfect storm” and to avoid the most harmful cuts in DHHS supports and services to their most vulnerable constituents.