May 13. 2018 9:03PM

Surplus spending bill makes its return, with 'Christmas tree' modifications

State House Bureau

CONCORD ­— It started as a routine bill to create the position of state demographer, but has turned into what some are calling “the Christmas tree,” an omnibus spending bill that doles out nearly $100 million in surplus revenues from a flush state budget.

Among the baubles hung on HB 1817 in a late-night session of the Senate on May 3: nearly $13 million for state employee pay raises; $20 million for red-listed bridges; $44 million to settle a dispute with hospitals over uncompensated care; and another $10 million for the state’s Rainy Day Fund.

The House, with a combination of skepticism and good humor, voted 283-61 Thursday to request a conference with the Senate to reach a compromise on the bill.

“This is the latest Christmas Tree ... coming from the Senate,” said Finance Committee Chair Neal Kurk, R-Weare. “It does contain some important things, which if we don’t go to conference can’t happen.”

Those include the state employee pay raise and the settlement with the hospitals.

But there are other amendments that call for spending the House has already rejected, including two of Gov. Chris Sununu’s pet projects — the Recovery Friendly Workplace tax credit, and a reduction in the real estate transfer tax for first-time home buyers.

“There are many other provisions the Senate tacked on that the House has already rejected or sent to interim study, and these will be dealt with appropriately by House conferees,” said Kurk.

No hearings, no roll call

The Senate amendments to the demographer bill were attached in a series of voice votes, with no prior public hearings and no paper trail for voters to follow.

“It’s tragic how the process broke down, to have a supplemental budget that was created without any public input whatsoever,” says Greg Moore, state director for the conservative policy group Americans for Prosperity.

“It shows a complete disregard for the transparency we expect from Concord, but is what we’ve come to expect from Washington, where members of Congress are handed 125-page bills and told to vote on them in 24 hours.”

The bulk of off-budget spending is contained in amendments to the demographer bill, but that’s not all of it.

According to data compiled by the Legislative Budget Assistant, there are at least seven other bills that call for off-budget expenditures, with a total impact of nearly $114 million in unbudgeted spending.

“Anyone who votes for $114 million in new, off-budget spending without looking at ways to return some of that money back to the taxpayers has forfeited the ability to call themselves fiscally responsible,” says Moore, whose organization last week launched a targeted digital ad campaign.

The ad directs Granite Staters to a digital tool that allows them to contact their senator to voice their opposition to the spending proposal. It has generated 9,000 signatures so far on a petition calling on lawmakers to give at least some of the money back to taxpayers, according to Moore.

“It just shows the public doesn’t believe the state should be going on a spending spree with their money,” he said.

Variety of factors

The surplus is due to a variety of factors, but the one most frequently cited is federal tax reform, which has boosted business profits and therefore business taxes paid the state — New Hampshire’s chief source of revenue.

Receipts from the Business Profits Tax and Business Enterprise Tax are running 17 percent ahead of the budget year to date, and 20 percent ahead of last year.

An overall increase in business activity in a thriving economy, along with amnesty programs for businesses that have not paid their taxes in the past and the return of capital from overseas have also contributed.

The state is fortunate to have so much black ink in the budget, because the negotiated settlements with state employees and the 26 hospitals did not occur in time to be accommodated in the two-year budget that took effect last July 1.

Those two issues alone amount to nearly $58 million of the Christmas tree spending, and even critics of the process acknowledge they are necessary.

But things like another $20 million for bridges; $10 million to the Rainy Day Fund; and $5 million for the Housing Finance Authority are the kind of expenditures traditionally handled through the regular budget process.

Other spending add-ons

The Senate also took a House Bill that started as a death benefit for school employees killed in the line of duty (HB 1415) and attached $10 million in new spending on public school buildings. That bill goes to conference on Wednesday.

House Bill 1743, which started as a bill increasing the percentage of money from liquor sales distributed to the alcohol abuse prevention and treatment fund, ended up with a Senate amendment granting a $3.6 million supplemental appropriation to the Sununu Youth Services Center. That conference committee meets on Tuesday.

One supplemental spending bill that both chambers agreed on is HB 1756, taking $4 million from the surplus to send a one-time $500 check to retirees in the state retirement system.

Senate Majority Leader Jeb Bradley, R-Wolfeboro, says the supplemental expenditures address critical needs of the state at a time when it can afford to do so, and that lawmakers have significantly cut business taxes in recent years.

“That’s one of the reasons our economy is so strong and revenue is actually increasing,” he said.

The House is not particularly fond of seeing bills it has already defeated come back as Senate amendments, but much of the spending is expected to move forward.

“We’re not Coca-Cola. Our job here is not to make a profit to pay our execs more or to give our stockholders a bigger dividend,” says Rep. Lynn Ober, R-Hudson, vice chair of House Finance. “Our objective is to provide services in the state, so if we do have extra money and we do have needs, it’s reasonable to look at those needs and figure out where best to put some of those dollars.”