CONCORD — Gov. Chris Sununu unveiled a $13 billion two-year state budget proposal before the state Legislature on Thursday, with millions of dollars in one-time investments for mental health, school building and social services.

The revenue and spending plan for fiscal years 2020 and 2021 includes $40 million for a new 60-bed forensic unit on the grounds of the state psychiatric hospital; $2 million for hospitals to build more psychiatric beds; $64 million in one-time money for targeted school building aid and a 31 percent increase in funding for services to victims of domestic and sexual violence.

The budget does not contain any increase in the Medicaid rates paid to care providers, nor does it increase the base adequacy of $3,360 per pupil that the state pays in education aid. The Democratic majority in the state Legislature is pushing for significant increases in both of those areas, so the stage is set for a contentious budget season.

The governor’s budget also includes enabling legislation to launch Sununu’s two-state initiative with Vermont on paid medical family leave, which is also at odds with the Democrats’ signature policy proposal in that area.

Sununu’s presentation is basically the first pass at the budget, which will be followed by House and Senate versions. Those two versions will be reconciled by a conference committee of the two branches in June, before a final budget is presented to Sununu for his signature.

Governors in the past have signed the budget, let it become law without their signatures (as Gov. John Lynch did in 2011), or on rare occasions veto the Legislature’s budget, as Gov. Maggie Hassan did in 2015, forcing another round of negotiations.

Robust Rainy Day Fund

Revenue from business taxes, the state’s main source of income, far exceeded the estimates upon which the current two-year budget was based, leaving Sununu with significant funds to make one-time investments and deposits to the Rainy Day Fund.

“The budget does not spend every available dollar to ensure that if an unexpected event occurs, taxpayers are not left to carry the burden,” said Sununu.

The budget commits $15 million from existing surplus to the Rainy Day Fund and estimates that another $12.3 million will be available at the end of the next two-year cycle. If that happens, the rainy day fund will reach an all-time high of $137.3 million, strengthening the state’s bond rating, lowering the cost of borrowing and giving the state some wiggle room in the next recession.

The budget address focused largely on proposed investments in education, justice and health care.

“Today’s students are tomorrow’s future and this budget makes meaningful investments into New Hampshire’s primary education system,” said Sununu. “For the first time in 10 years, funding for special education aid has increased to $26.5 million, the highest level since 2012.”

New initiatives

In some categories, the state is returning to spending levels not seen since drastic budget cuts in the wake of the Great Recession.

In other areas, Sununu is proposing entirely new initiatives, like a $16 million-a-year program, on an ongoing basis, to provide qualified college graduates with student debt assistance.

He announced plans to introduce legislation to legalize sports betting in New Hampshire, with an estimate of $10 million in annual revenue for education beginning in fiscal year 2021.

His budget anticipates $250 million in additional spending from New Hampshire revenue sources, with no new taxes or fees. It continues the existing round of scheduled business tax cuts and warned Democrats against efforts to repeal any of those cuts.

“It’s irresponsible governance for the Legislature to ping-pong on tax policy every two years,” he said.

In the area of criminal justice and public safety, the budget authorizes 62 new positions at the Division for Children, Youth and Families, and funding for body cameras for correctional officers.

A new cold case attorney is proposed for the Department of Justice, and funding for the Coalition Against Domestic and Sexual Violence would be increased by $2.4 million, or 31 percent, if the governor’s budget is approved.

The budget also proposes $61 million a year in services for adults with developmental disabilities, promising to eliminate the wait list for such services over the two-year period.

Winners, losers

Officials from the state university system applauded a $24 million one-time investment in the Durham, Keene and Plymouth campuses to expand nursing and health care education, and $10 million for the first phase of a Biological Sciences Initiative at UNH.

A big loser in Sununu’s proposal is the New Hampshire Legal Assistance program, which helps low-income families on legal matters. The governor proposes reducing state funding for the organization from its current level of $1.2 million a year to $650,000 a year.

“This staggering reduction would directly impact the civil legal services NHLA provides, leaving too many Granite Staters to go it alone in a complex legal system that is stacked against them,” said NHLA Executive Director Sarah Mattson Dustin.

Sununu ended his presentation with a shot at the legislative priorities of Democrats, including their family medical leave proposal funded by payroll deduction, a doubling of Medicaid reimbursement rates for certain services and increases in the per-pupil grant for state aid to education.

“There are a lot of bills that are extremely concerning. In total we have billions of dollars in new spending that is being proposed in the legislature right now, being rushed along outside the budget process with no sustainable way to pay for it,” said Sununu

“I’m equally concerned about all the tax bills being proposed … Are you going to spend money and bloat government or stand with taxpayers?”

Democrats respond

Democratic leaders in the House and Senate, who will control the budget process in the Legislature, said they were disappointed by what they called a divisive presentation with no outreach to the legislative majority.

Lawmakers clustered themselves in the House chamber by party, and during many parts of Sununu’s speech, only the Republican caucus was applauding or standing to applaud.

“For a speech that was billed by him as above partisanship, it was one of the most highly partisan budget speeches I’ve heard,” said House Majority Leader Doug Ley, D-Jaffrey. “There were threats contained within it, and that’s not what I would consider a bipartisan approach.”

“We certainly support some of the things the governor is proposing, although of course the devil is in the details. But at the same time, we were all hoping for a more cooperative and collaborative approach.”