CONCORD — State budget negotiators and Gov. Chris Sununu reached a tentative agreement to end the three-month impasse over a permanent two-year spending plan.
Lawmakers will be asked to endorse the nearly $13 billion blueprint and break the political logjam when they meet Wednesday afternoon.
“At the end of the day I think both sides got a lot of what they needed and had to give up a little of what they wanted,” Sununu told reporters. “I think that is what compromise is all about.”
Private talks persisted late into the night Monday and sources said handshakes were exchanged on the outline of the agreement a short time before midnight.
But on Tuesday, the office of Legislative Budget Assistant Michael Kane spent several hours poring over the numbers and putting the final agreements into budget language.
Legislative negotiators also wanted and did get one last look at all the agreed-to details on Tuesday. Some late tweaks were made, but none that changed the four corners of the compromise, sources said.
Two rounds of business tax cuts, a pay raise for all Medicaid providers and a collective bargaining contract for state workers were some of the last hurdles that had faced Republican Gov. Sununu and Democratic legislative leaders.
The negotiators were under the gun; House Speaker Steve Shurtleff, D-Penacook, and Senate President Donna Soucy, D-Manchester, had scheduled a Wednesday session starting at 1 p.m. with the hope that lawmakers would approve the compromise.
Both predicted their legislative bodies will approve the compromise once they hold a briefing and answer all questions from rank-and-file members.
“Budgets are a statement of our values, and this budget compromise makes clear that New Hampshire values the people of our state and is committed to ensuring every Granite Stater has the resources and opportunities they need to thrive,” Soucy said.
“This budget maintains vital investments that the Democratic Legislature made in mental health, substance use disorder treatment, and child protection and ensures meaningful raises for providers who deliver critical care to our loved ones by implementing long-overdue Medicaid reimbursement rate increases.”
Shurtleff said there was a classic give-and-take in the final days leading up to the deal.
“The Legislature didn’t win; the governor didn’t win but the people of the state did win and all sides are proud of what we have accomplished,” Shurtleff said.
Sununu vetoed a two-year budget bill that lawmakers sent him last June, declaring it used too much one-time money to support permanent programs and threatened to create a future budget deficit of nearly $100 million.
Before Sununu vetoed the budget, the Legislature approved keeping state government operating with a continuing resolution that spent money at last year’s levels.
Without further action, this authority expires next Monday at midnight.
Aides to Sununu said this final deal reduces the potential deficit by 75 percent, which the governor decided was manageable.
Even raising the age for consumers to buy tobacco products became a source of the horse trading.
The vetoed budget raised the age from 18 to 21.
The final deal would raise that legal age to 19; advocates said this should help keep cigarettes out of high schools.
The vetoed budget had repealed business tax cuts, one last January and a second in January 2021 and used that tax revenue to produce huge increases in state aid to school districts and communities.
This new deal creates the near-certainty that a chief demand of Sununu will be met — that business taxes won’t go up.
Under the agreement, last January’s tax cut remains in place and the planned business tax cut for 2021 will go forward if receipts are 6 percent over projected revenues.
“Given the strength of our economy and a $200 million surplus that built up, I think we can be optimistic about another business tax reduction,” Sununu said.
Even if that target is not met, business taxes would remain the same and avoid going up unless taxes come in below 94 percent of the forecast.
State revenue observers agree that means business taxes would only go up if the national economy went into a severe recession.
Sununu and budget writers last week did reach an important but incremental agreement on a proposal to increase aid to school districts at about the level that was in the vetoed budget.
The governor prevailed in convincing lawmakers to use much of that money, $60 million, as a one-time increase and not a permanent upgrade to the aid formula.
The compromise plan also increases aid to communities by $40 million, a major selling point in the vetoed budget.
An approval vote Wednesday would mean city and town officials could claim the increased aid grants on their local budgets as they seek to get Department of Revenue approval for the setting of local property tax rates next month.
“This was a huge incentive for us to get this job done,” Sununu said.
Soucy said the aid increase is the largest “in decades” and should help clear its passage.
“I think anyone concerned about their property taxes should urge their House members and senator to support this agreement,” Soucy said.
Democratic legislative leaders did get another key provision they wanted — an across-the-board, 3.1 percent increase in rates for all Medicaid providers. Sununu had wanted to give some providers more of an increase, and some less.
The deal delays the provider rate increases until January.
The budget plan does not use state dollars to support the expansion of Medicaid to low-income adults as has been the case since New Hampshire endorsed that Obamacare option in 2014.
A major spending cut was Sununu letting the deal pare down the cost of his secure psychiatric unit from $26 million to $8.75 million.
Democratic legislators gave up on start-up spending for a paid family and medical leave program Sununu had blocked with his veto of a separate bill (SB1).
The compromise also makes a $25 million, back-of-the-budget cut to the Department of Health and Human Services, easily the largest agency, with more than 3,000 workers.
But the language exempts from that cut politically popular programs for developmental disability clients waiting for services and all spending on Medicaid and nursing homes.
Sununu agreed to set aside $6 million to pay for a state workers’ contract that is still under negotiation.
The final agreement also dealt with the issue of the Trump administration seeking to block Planned Parenthood family planning grants.
The Legislature responded in the vetoed budget with a state of New Hampshire carve-out from the federal Hyde Amendment, which blocks government spending for abortion services.
This agreement gives Planned Parenthood the family planning money. It would force the Legislature to take a new vote in the future to use any state money to subsidize abortions.