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Garry Rayno's State House Dome: Rainy day blues

July 19. 2014 9:11PM

Much was made this session about the state's Rainy Day Fund and the $15 million surplus from fiscal year 2013.

The surplus would bring the total for the fund - otherwise known as a "revenue stabilization fund,'' used to offset state revenue losses - to about $25 million.

The Senate, controlled by Republicans, wanted the $15 million surplus to go into the state's Rainy Day Fund, while Gov. Maggie Hassan and the House, controlled by Democratics, wanted to use more than half of the surplus to reduce across-the-board budget cuts in the Department of Health and Human Services.

All sides agreed, however, that whatever went into the Rainy Day Fund would do little to raise its total to what bond-rating agencies would like it to be and maintain the state's AA designation. Those agencies like stabilization funds to have an amount equal to at least 5 percent of a state's operating revenues, which for New Hampshire would be $140 million. At $25 million, the state fund is at about 1.8 percent of operating revenue.

A national report released last week by The Pew Charitable Trusts debunks the 5 percent rule. Whatever type of rainy day fund states have, the report said, all 50 were inadequate for the economic freefall that began in 2008. The revenue shortfall for all states was more than double what they held in reserve.

New Hampshire, like most states, ties its reserve account to budget surpluses, which Pew says does not address potential shortfalls. Instead, the report suggests states link their stabilization accounts to how much revenue collection fluctuates, or revenue volatility.

States should make deposits into the reserve accounts part of their operating budgets, the report suggests. It also recommends states target the levies most apt to fluctuate because of economic activity or unusual growth.

Massachusetts is one of 12 states that tie deposits into its reserve account to a volatile revenue source, capital gains, while Texas sets aside oil and gas revenue above a certain level.

In robust economic times, capital gain revenues will be far higher than during depressed periods. That increases the money going into the stabilization accounts when state revenues are strong and decreases the deposits when the economy is weak.

The other suggestion in the report is to do away with rainy day fund caps.

"In many instances, caps on the size of rainy day funds have prevented states from saving enough to substantially offset revenue losses," the report says. "Although most states recognize the importance of having a fund to smooth the booms and busts of the revenue cycle, few base the size of their rainy day fund on their own typical revenue fluctuations."

Before the Great Recession, 37 states had caps tied to a percentage of appropriations, or revenue, although some have since eliminated them.

New Hampshire's Rainy Day Fund is not capped.

Where does New Hampshire sit with the other 50 states? New Hampshire's revenue stream has very low volatility, at 4 percent, which ranks it 43 in volatility.

Alaska has the most revenue volatility, at almost 35 percent, and Massachusetts is also among the top 10 in volatility, at No. 7, with revenues fluctuating 7 percent.

The lowest fluctuation is found in South Dakota, at 2.6 percent.

Given the recent financial data on state revenues are basically on target or a little under, New Hampshire is not likely to be debating the issue of what to do with surpluses or revamping its reserve account anytime soon.

Medicaid Expansion

Medicaid expansion or the NH Health Protection Program has been controversial and the controversy continued last week when the Executive Council on a party-line 3-2 vote approved a $292.5 million contract with the two managed care companies - NH Healthy Families and Well Sense - that administer the state's Medicaid managed care program.

The additional money for the newly eligible low-income adults who will qualify for Medicaid services under the Affordable Care Act, is an amendment to the $710 million contract with the companies to run the "old Medicaid" program.

The agreement sets the rates the state pays to the administrators and the rates the managed care companies pay medical providers for the more than 50,000 people expected to be added to the rolls, but closer to what the government pays for Medicare patients. The federal government pays the cost of those eligible under expansion for the first three years.

The state currently pays about 50 cents on the dollars for services to Medicaid patients, while Medicare is about 100 percent of costs.

The new agreement, which Health and Human Services Commission Nicholas Toumpas called cornerstone that allows the program to move forward, was a late item on the Executive Council's agenda, which means it was not on the published agenda prior to the meeting.

The meeting was also held in Hanover, not Concord, and you can see why some people may be concerned about transparency.

Although Toumpas emailed the changes to the current contract to councilors over the weekend after the state received federal approval for the rates last Friday, they did not receive the actual paper contract until two hours before the meeting.

District 3 Executive Councilor Chris Sununu, R-Newfields, took umbrage to that.

"Our primary purpose in this state is to be a check and balance, and we rubber stamped this contract without reading it," Sununu said after the meeting. "I don't understand why (all the councilors were not) saying give us a couple of days."

But executive councilors Colin Van Ostern, D-Concord, and Chris Pappas, D-Manchester, noted more delay would mean longer waits for health insurance coverage for the state's working poor.

Two Republicans running for the council took Democrats to task for not reading the 200-page contract before voting on it, including Jim Adams, who is running for Pappas's seat.

"It is the council's job to fully vet every contract that comes across their desk. A 15-minute presentation and 20-minute discussion on a $300 million contract is not what it takes to properly represent the taxpayers of New Hampshire," Adams said. "The Pappas/Pelosi way of reading, approving items in order to find out what's in them, is not the transparency and accountability the voters of District 4 deserve."

Former Councilor David Wheeler echoed those comments.

"This is a perfect example of why our Granite Staters are losing faith in their elected officials," said Wheeler. "NH and the Executive Council has always taken pride in conducting the people's business in public, out in the open. Yet there has been a disturbing trend in the executive branch in Concord to keep the public in the dark regarding spending in excess of authorized appropriations."

Later, Pappas said those criticisms were off base.

"Today's vote means thousands of New Hampshire residents will have access to health care coverage and the economic security that comes with it," Pappas said. "These few amendments to the much larger Medicaid Managed Care contracts were anticipated and vetted and are essential in implementing the bipartisan health care expansion compromise. I read these amendments and participated in a question-and-answer session with Health and Human Services, and I know delaying (the) vote would have needlessly compromised health care coverage for thousands of individuals in our state."

Hassan clearly backed moving forward with the agreement, saying she could agree to a break so Sununu could make phone calls or future review the contract, but she wanted a vote that day.

The election season is in high gear.

SEA backs Feltes

The State Employees Association came out of the shout a little earlier than usual by endorsing a candidate in the Democratic primary for state Senate District 15 consisting of Concord, Hopkinton, Henniker and Warner, all communities with large populations of state workers.

The SEA Executive Board endorsed Dan Feltes, who is a legal assistance attorney and Concord resident. The other candidate, Kass Ardinger, is a Concord School Board member.

When longtime Sen. Sylvia Larsen announced her retirement this year, she said Ardinger was a capable replacement, but other Democrats had other ideas.

"Dan's passion and selfless dedication to helping others is demonstrated by his work with New Hampshire Legal Assistance," said Ken Roos, first vice president of the labor union and Political Education Committee chairman. "We appreciate his work ethic, and we are confident he will bring progressive ideas to ongoing challenges facing so many families across the state."

Moving On

The exodus of legislative staffers continues.

Tom Cronin, who served as Senate communications director, begins a new job Monday as public affairs manager for the University of New Hampshire.

Cronin said he will help coordinate UNH's government relations and advocacy efforts to increase the awareness and reputation of the university among state and federal elected officials and New Hampshire residents.

His counterpart in the House, Mario Piscatella, left his post last month to become managing editor of

On Cronin's last day on the job, he provided a little bipartisan help to a woman whose van got stuck in the Eagle Square Parking Garage.

The top of the carrier bin on top of the ban wedged under a carrying beam on the garage

Cronin and Senate Democratic Policy Director Matt Robison worked to free the van from the garage's clutches, and the woman was soon on her way.

A Break

Under the State House Dome will not appear July 27 or Aug. 3 because I am will be on vacation for the next two weeks. The Dome will resume on Aug. 10.

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