By John Toole
---- — Disagreement between the New Hampshire House and Senate over how to pay for state services is setting up contentious budget deliberations and likely will yield painful program cuts next month, legislators and Statehouse watchers agree.
The Democratic-controlled House this week voted to kill a casino plan aimed both at bringing in new dollars and protecting lottery and hospitality tax revenues from emerging gaming competition with Massachusetts.
The Republican-controlled Senate yesterday rejected House-passed gas tax increase to pay for roads and bridges, as well as a cigarette tax increase.
The Senate also is rejecting a plan to accept $2.5 billion in federal dollars to expand Medicaid due to concerns about long-term costs.
The consequences of those decisions already are producing political conflict and fears over what will become of highway funding, social services and higher education.
“I don’t think anybody will be happy,” Granite State Taxpayers chairman Jim Adams said. “The finger pointing will start and they will make as many political points as they can. It will be a painful 18 months.”
Lawmakers acknowledged as much yesterday.
“There are going to be severe cuts in Health and Human Services,” House Finance Committee member Bob Elliott, R-Salem, predicted.
HHS makes up nearly 40 percent of the state budget, he said.
“The Senate already has made clear they are going to make severe cuts because there is not enough revenue,” Elliott said.
Rep. Charles McMahon, a member of the House Health, Human Services and Elderly Affairs Committee, agreed with Elliott that program cuts are on the way.
“The state does not have the revenue growth to support the needs of its citizens,” McMahon said.
The state will not be able to live up to all it has promised those in need, he said.
“The prioritization is the debate now,” McMahon said. “This is no longer about the money.”
He characterized the House decision on the casino as a shame and lost opportunity.
“We should have had success this time around,” he said.
The consequences will become apparent in the weeks to come, in McMahon’s view.
“The bill is now due and the federal government is not smiling on New Hampshire with funds coming in our direction,” he said.
Elliott said there will be a battle between House and Senate.
“In the month of June, the fighting will take place,” he said.
What will happen is as big a guess as the House decision on the casino, Elliott said.
Gov. Maggie Hassan has made mental health services a priority, but Elliott isn’t optimistic about funding.
“There’s always hope,” he said. “I don’t know what the last chapter will be, but mental health may be in jeopardy.”
It’s not just health funding at risk.
“Anytime the Legislature is in session dealing with the budget, the higher education community is concerned and interested,” New Hampshire College and University Council president and CEO Thomas Horgan said.
The consortium of 22 colleges and universities is eager to see the Legislature restore funding to the university system and community colleges, as well as scholarship aid trimmed last session.
“We are hoping the Legislature and governor come to a consensus on those two priorities,” Horgan said. “How they get there is obviously the big question.”
If the state doesn’t help, that means higher tuition and more debt for students and their families, he said.
Horgan sees higher education at a tipping point in New Hampshire. A majority of New Hampshire students are now leaving the state to get their college degrees, he said.
“More than 50 percent of our students are leaving the state,” Horgan said.
It is cheaper for a student from Salem to cross the border and pursue a degree at Northern Essex Community College than get a degree at home from a New Hampshire community college, he said.
Highway funding also is a worry. McMahon is troubled by what happens with the Interstate 93 widening.
Hassan and the Senate wanted a casino to help finish the project. State officials said another $250 million is needed and federal aid is no certainty.
“That whole project needs to be completed,” McMahon said.
Adams said there is only one option for lawmakers as they try to reach agreement on a projected $11 billion two-year budget.
“They need to find more places to cut spending,” said Adams of Granite State Taxpayers.
He said he would like to see the state look for savings by eliminating high level, redundant, administrative posts, though he suggests the politicians are reluctant to rock the bureaucratic boat.
A retired U.S. Postal Service administrator, Adams remembers when the federal agency took that approach to realize $1.4 billion in savings.
Adams admits the state isn’t as large as the federal government, but is confident there would be results.
“You’ll get some savings,” he said.
It could make a difference for mental health services, he said.
“You’ve got to go into agencies and find people who can be easily replaced,” he said, “and try to funnel those funds into the mental health arena.”
Adams also questions the need for so many highly paid employees in the university system, including professors, and sees that as an area for savings.
University of New Hampshire hockey coach Dick Umile’s salary, more than $250,000 annually, is a sore spot with Adams.
“He’s a wonderful guy, but that’s ridiculous,” Adams said. “It’s a lot of money.”
Elliott, who opposes one, now sees the state on a path to an income tax, without a revenue alternative.
“I see that as inevitable,” he said.
But comprehensive spending reviews and new tax policies won’t happen overnight.
In the meantime, legislators are left difficult choices on program funding and services.
“I have a bias,” McMahon said. “People come before trees and shrubs.”
Adams is hoping lawmakers keep people in mind. In particular, he uses the example of a couple with a combined income of $65,000 trying to raise a couple of kids and take them to a movie or out to eat once in a while.
“Someone needs to take up their cause,” he said.