2020-2021 state budget bill.
The upcoming budget cycle covers spending for fiscal years 2020 and 2021, which starts on July 1, 2019 and runs until June 30, 2021. The state budget is broken out into two parts: the operational budget and the capital budget.
The NH capital budget for 2020-2021
Gov. Christopher Sununu started the next two-year budget cycle on June 21, 2018 with the first of a series of hearings to decide priorities for spending in the capital budget. The capital budget includes long-term investments into large-scale projects, usually associated with new construction or upgrades. The new state prison for women, which opened in March 2018 at an approximate cost of $48 million, is an example of a capital budget expenditure. The capital budget for 2020-2021 is contained in HB 25. This year’s capital budget includes a host of renovations at the Statehouse, HVAC repairs at the New Hampshire State Hospital campus, new boilers at the Coos County Courthouse, dredging at Hampton Harbor and Rye Harbor, replacing a backhoe at the Veteran’s Cemetery, and more.
The NH operational budget for 2020-2021
The operational budget includes the day-to-day spending, based on revenue from taxes and fees, for state agencies and departments.
Government agencies and departments began working on submitting their requests for funding during the summer of 2018, with a deadline of October 1 of that year. The first draft of the operational budget, known as the “governor’s budget”, was released in February of 2019.
The governor’s budget proposal
On Valentine’s day of 2019, Governor Sununu laid out his two-year budget proposal in front of the Legislature. Overall spending would rise by $1.3 billion thanks in part to larger-than-expected business tax revenue.
Key elements of the governor’s budget include:
- Business tax cuts: The governor wants to continue with plans to steadily continue business tax cuts.
- Rainy Day Fund: Sununu proposed sending $27 million of the state’s surplus to the Rainy Day Fund.
- Education: The governor’s plan includes funding for certain job training programs and a student loan assistance program in the university system, but overall keeps UNH at the same funding level as the last four years. As for public schools, Sununu’s proposal funds specific initiatives but does not make any major changes to the per-pupil school funding formula.
- Mental health: The governor proposed building a new state forensic hospital to replace the Secure Psychiatric Unit at the Concord prison. His budget also provides funding for executing the state’s Ten Year Mental Health Plan.
- Family and medical leave: The plan also includes language to implement Sununu’s version of family and medical leave. It is an opt-in plan that differs from the Democrats proposal in several key ways. See how.
Changes made by the House
The House reworked the Governor’s initial proposal, passing their own version in April along party lines with no Republicans voting in favor of it. It includes $500 million more in state spending than Sununu proposed.
The budget passed by the House includes:
- Mandatory family and medical leave: This program would be funded by a premium on employees’ wages (rather than the opt-in version favored by Sununu).
- Business tax cut freeze: Business taxes would remain at 2018 levels rather than continue to decrease as planned.
- Infrastructure project cuts: The House eliminated most of the infrastructure projects proposed by Sununu as a way of using up surplus money – these were called “pet projects” and “pork” by Democrats in the House, who see other uses for the extra funds.
- Capital gains tax: The House budget institutes a capital gains tax to help relieve property tax burdens and fund education.
- Kindergarten funding: Under the House budget, full day kindergarten funding is no longer tied to keno revenue and would be funded from the education trust fund the same as grades 1 through 12.
- State forensic hospital: House members scaled back Sununu’s proposed $26 million psychiatric hospital construction project back to a $1.2 million planning phase.
The Senate budget
The Senate passed its version of the budget in June, which totals around $13 billion. While there was bipartisan support for some elements of that budget, such as increasing staffing at the Department of Children, Youth and Families, others divided along party lines. New elements of that plan include:
- Giving $40 million back to cities and towns, no strings attached.
- Increasing the rates health providers are paid for services to Medicaid patients by 6.2%, a change that is estimated to cost around $60 million
- Changing funding for Medicaid expansion to allow state funds to fill in the gap if contributions from hospitals and insurance fees don't cover the tab
- Creating 77 new positions at DCYF
- $17.5 million to build a new secure psychiatric facility
- More funding for UNH, which will allos the school to freeze tuition prices
The Senate budget also kept some key elements of the House version, including a mandatory paid family and medical leave plan and eliminating planned cuts to business taxes. The Senate budget increases funding for schools, restoring stablization grants to their original levels and providing extra aid to towns with low property values. However, that $95 million is less than the $160 million the House planned to spend, which would have been paid for with a new tax on capital gains.
The House and Senate will now have to agree on a compromise budget by June 27th. That's bound to be tricky, with House leaders hinting that they'll be going to bat for more money for schools, especially in light of a recent lawsuit that ruled the state wasn't fulfulling its obligations when it comes to education funding. Meanwhile, Gov. Sununu has said he'll veto any budget that raises taxes. He's specifically mentioned the paid family and medical leave program as well as the planned freeze on business tax cuts.
If Sununu vetoes the budget, a temporary spending plan that allows government departments to keep operating at their current budget levels will likely kick in after July 1, giving legislators more time to negotiate a compromise.
Last year's budget numbers
The current capital budget for fiscal years 2018 and 2019 is $262 million. The current operating budget approved by the state Legislature is $11.7 billion.
Information about past and current budgets can be found at the state Department of Administrative Services.
What should NH prioritize in the 2020-2021 state budget?
The Senate approved its version of the budget, which includes several substantial differences from the House version. The Senate cut out a capital gains tax the House wanted to levy in order to pay for more education funding. It also reinstated funding for building a new secure psychiatric hospital, though a smaller facility with a smaller price tag than what Gov. Sununu originally proposed.
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