February 10. 2013 12:45AM

Garry Rayno's State House Dome: Hassan to initiate state budget battle

New Hampshire Union Leader

This week, the real work of the 2013 Legislature begins when Gov. Maggie Hassan unveils her proposed 2014-15 state budget.

Hassan will give her budget address to a joint meeting of the House and Senate at 10 a.m. Thursday in Representatives Hall.

The challenges Hassan and lawmakers face are well-known: little money and growing demands on those resources, and that means difficult choices ahead.

While the challenges are no secret, there are many unknowns: Will the state end the current fiscal year in the red? Will Medicaid expansion be in the budget? Will revenues from expanded gambling or a gas tax and auto registration increases be included?

There are smaller questions, as well. How much additional money will go to the University and Community College systems and to uncompensated care for the state's largest hospitals, and will the Children in Needs of Services (CHINS) program be restored?

Will the Medicaid managed care program finally begin after hitting a road block when hospitals, mental health and other care providers balked at accepting the payment plans proposed by the three companies administering the program?

Several settlements with federal regulators over past Medicaid practices will also have to be addressed in Hassan's budget.

Several lawsuits are outstanding and could have a huge effect on the budget concerning hospital Medicaid payments and mental health services, but those will not be included in the proposed budget because they are not settled.

Unless there is a quick settlement with the State Employees Association on a new master contract, which is unlikely, that also will not be included in the budget Hassan proposes, although governors in the past have hidden money in such things as debt service to cover the cost.

The only likely tax increase included as new revenue would be the tobacco tax, which will automatically increase 10 cents next summer because it will not attain the revenue goals established when it was reduced two years ago.

One area to watch in the budget address will be the assumption about this year's budget and whether there is a surplus or deficit.

With January's revenues taking a nose drive - particularly in business tax returns, though it is a small-revenue month - and with $14 million in refunds for business and interest and dividend taxes pending, the state currently faces a nearly $50 million shortfall at the end of this fiscal year.

Some legislative budget writers have been urging Hassan to address the potential shortfall through an executive order to reduce spending.

Also being eyed as a potential source of money is the state's Greenhouse Gas Emissions Reduction Fund, which has about $15 million and is expected to see an additional $15 million soon when the latest carbon allowance auction is held.

The money is supposed to be used for energy efficiency projects, but has undergone some changes from the last legislative session.

Having a pot of money around is always dangerous at budget time, just ask the physicians and providers in the malpractice insurance fund begun by the state several decades ago. Former Gov. John Lynch tried to tap the fund several budgets ago for additional money for his budget plan.

When Hassan gives her address, there will be disappointment for many of the constituencies that supported her in the last election.

That should not be too much of a surprise, however. Since before she became governor, Hassan has been sounding the alarm about the state's financial situation, so her budget is likely to be lean by most standards.

In many ways, it is unfair for a new governor to have so little time to craft a budget proposal, but all first-term governors have to do it.

Hassan will have the spotlight Thursday, and her address will set the tone for the next two years.


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THE DAY: The governor's budget address may be the opening round, but those who want to see what the budget battle really looks like need to be at the State House on Tuesday, Feb. 19.

On this day, Hassan will present her budget to a joint meeting of the House and Senate finance committees at 10 a.m.

This is often a condensed version of the earlier budget address, but budget writers will be able to ask specific questions and raise concerns.

One hour earlier, Sens. Lou D'Allesandro, D-Manchester, and Chuck Morse, R-Salem, will present their expanded gambling plan, Senate Bill 152, to the Senate Ways and Means Committee.

And House Public Works and Highways Committee Chairman David Campbell, D-Nashua, will present House Bill 617 at 10:30 a.m.

Campbell's bill would increase the gas tax from 18 cents to 26 cents a gallon over a three-year period in increments of 3 cents, and increase vehicle registrations by $15 over a three-year period in increments of $5.

The money from Campbell's proposal would be used to pay for the completion of the Interstate 93 widening from Manchester to the Massachusetts border and to fund repairs to the state's crumbling roads and bridges.

The Senate gambling bill would establish one high-end casino along the Massachusetts border, which Hassan has said she would support.

According to the bill, the license holder must invest at least $425 million in the facility.

Although the state is not likely to see any revenues from gambling itself over the next two years, application fees are $500,000, and the license holder would have to pay $80 million. That money would go into the state's coffers during the next two years.

The state would receive 25 percent of the money not paid out in winnings, with the funds used to fix roads and bridges, for higher education aid and for North Country development.

The casino's host community would receive 3 percent, and 1 percent would go to Health and Human Service to establish a program to help problem gamblers.

The battle lines are drawn: gas tax and registration versus expanded gambling. And the budget is the battleground.

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GAMING, TOO: The other gambling-expansion bill, House Bill 665, will have a public hearing the same week on Feb. 21 at 1 p.m. before the House Ways and Means Committee.

The bill's prime sponsor, Rep. Edmond Gionet, R-Lincoln, would have two casinos in the state, one along the Massachusetts border and one in the North Country.

He's wondering why two prominent North Country politicians are not backing his bill and instead are backing the Senate proposal.

Sen. Jeff Woodburn, R-Dalton, is a sponsor of the senate bill which allocates an estimated $5 million annually to North Country economic development.

Executive Councilor Raymond Burton, R-Bath, is also supporting the Senate bill.

Gionet said while the Senate bill provides about $5 million for the North Country his bill would have a casino in the North Country which will create jobs and new businesses while the revenue will go for road and bridge projects.

"This dedicated money will provide construction industry employment opportunities on a statewide basis, including projects on unnumbered state roads, of where there are many in our area towns," Gionet said