House budget writers seek to cut Sununu’s housing fund, delay new prison, boost Medicaid rates

When Gov. Chris Sununu addressed lawmakers to deliver his budget address in February, he promised “a smart and targeted budget that sets us all up for an even brighter future.”

But not all of the governor’s proposals have been embraced by House Republican budget writers. There’s a $40-million-a-year gap between Sununu’s revenue estimates and those reached by the House Ways and Means Committee. Republicans say that some spending should be pared back to adjust for that. 

This week, the House Finance Committee will vote on a series of amendments to the governor’s budget, hoping to stitch together a final product that closes that revenue estimate gap in time for a full House vote on April 6. 

Here’s a look at which proposals from the governor might hit the chopping block, such as housing assistance, civics funding, and $40 million for a new prison. Other amendments would give health providers a big increase in Medicaid rates and hospitals a requested reprieve.

Prison funding gutted

Sununu’s budget establishes a New Hampshire State Prison Fund for the design and future construction of a new men’s prison in Concord, and lawmakers want to keep the proposed $10 million deposited in it starting in June.

However, House budget writers are moving to eliminate the $40 million Sununu appropriated to the fund for the following fiscal year to move construction forward. 

“It was more a matter of we want to know what we’re spending money on, specifically,” said Rep. Dan McGuire, an Epsom Republican and vice chair of House Finance Committee Division 1. “We’d like to see a design before we decide to fund it. We weren’t ready to give construction funds without knowing what it is we’re constructing.”

State prison officials have pushed for a new prison, noting that the current structure, which was built in 1878, does not have a normal HVAC system, suffers from leaks in the roof, and experienced an infestation of rats during the COVID-19 pandemic that required significant expense for outside remediation services. 

Helen Hanks, commissioner for the Department of Corrections, has said parts of the Concord prison complex lacks basic security features and a third floor where windows don’t open.  Overall, she said, it’s not conducive to a rehabilitative environment. 

Housing assistance cut

Sununu’s budget included sweeping expenditures intended to boost housing development in the state. But some House lawmakers are proposing to take most of those efforts out. 

House budget writers are pushing to remove a $25 million appropriation to the New Hampshire Housing Finance Authority to go toward affordable housing. 

They’ve also advanced an amendment to the governor’s proposed historic housing tax credit. That tax credit provided a mechanism by which businesses in the state could support programs to restore and maintain historic homes for rental housing and receive a credit against businesses taxes in the state. 

And lawmakers are proposing to curtail Sununu’s “InvestNH” program, which is intended to use state funds to spur workforce housing development. A proposed amendment would spend $15 million – half the amount the governor had requested in his budget. The proposed program would not allow the state to send grants to developers, but rather would limit the money to go to municipalities.

Office of regulatory review deleted

House budget writers  want to strike Sununu’s plan to establish a new Office of Regulatory Review, Reduction, and Government Efficiency, an independent agency that would be administratively attached to the Department of Business and Economic Affairs. In doing so, they would also remove a total of $1.5 million appropriated for the office over the next two fiscal years. 

As proposed by Sununu, the new office would be able to intervene in any proceeding that involves private industry in New Hampshire, determine unnecessary regulatory burden, accept complaints and comments, and annually review all boards and commissions within the Office of Professional Licensure and Certification. Sununu wants to appoint an executive director, who would then select representatives from private industry and state government, and one staff member.

School civics textbook funding axed; computer science teacher funding slashed

Sununu included a number of specific, one-time education funding proposals. House Republicans are opposing many of them. 

Budget writers  are proposing to remove the governor’s $2 million appropriation to help create a New Hampshire civics textbook to distribute to schools across the state. Instead, they are supporting the governor’s suggestion for a civics commission to be formed with a number of state officials, without the $2 million appropriation. 

And they’re pushing to dramatically cut a program to incentivize educators to train themselves to teach computer science, reducing the budget for that incentive program from $5 million to $500,000.

Proposed expansion to education freedom account program

Sununu’s proposed budget would expand who is eligible for the education freedom account program – the voucher-like system that lets lower-income parents use state funds toward private school or homeschooling expenses. The governor suggested raising the participation threshold from the current cap of 300 percent of the federal poverty level, or $90,000 combined income for a family of four, to 350 percent, or $105,000 in combined income. 

Republican budget writers want to take that further. They are bringing forward an amendment this week that would raise the income threshold and also allow all children who are in military families, have disabilities, are English language learners, victim of three or more bullying incidents, are homeless, have a documented educational hardship, go to schools with a less-than-69-percent graduation rate, or who attend schools that rank within the lowest 5 percent in the state in terms of performance. 

The amendment is similar to a Republican bill expanding education freedom accounts that was tabled in the House last week.

Hospitals may get a win

Sununu has made his frustration with the state’s 30-plus hospitals clear, accusing them of contributing to the mental health crisis by declining to make their beds available to the state for its involuntary admissions.

“I’m calling bullshit on the hospitals,” the governor said in remarks this week at the Concord Chamber of Commerce, as reported by NHPR. 

He opted to force the issue with his budget, including a provision requiring all hospitals to give the state two to nine beds, depending on their size, for involuntary admissions. Refusing would cost them their license to operate. The hospitals pushed back, citing their challenges in finding beds for their existing patients.

An amendment would drop that requirement. It would also eliminate Sununu’s effort to give the state more time to transfer a patient from a hospital emergency room to an inpatient bed by dropping an existing requirement to move a patient “immediately.”

Rep. Jess Edwards, an Auburn Republican who sponsored the amendment dropping the mandatory bed requirement, cited moral and financial concerns. He noted that Sununu, contrary to what the governor told the Bulletin, did not include funding to pay hospitals for use of its beds.

Edwards said that felt like an illegal taking of private property. He said the state also needs to leave clinical decisions about caring for patients to medical providers

“I don’t see us directing them to do something that we’re not willing to pay for, at least,” he said. “And that’s before we even get into the clinical issue. Is the governor the clinician-in-chief for the state, or do we still delegate that to localities to figure out what their local healthcare needs are? And last time I checked, we have a distributed healthcare system where localities are responsible for figuring out the community needs.”

Steve Ahnen, president and CEO of the New Hampshire Hospital Association, declined to comment on the amendments before the Legislature votes on them. Sununu’s spokesman Brandon Pratt emailed the Bulletin a comment from Sununu.

“The hospitals are coming in with their lobbyists and lawyers begging the Legislature to let them off the hook from the mental health crisis,” it said. “It’s not right, and I’m still confident a solution can be reached that ensures stronger community-based solutions to this crisis.”

Even more for Medicaid rate increases

Organizations that work with Medicaid recipients, from community mental health providers and hospitals to organizations caring for older residents, have said they can’t fill staff vacancies without a significant increase in Medicaid reimbursement rates.

Sununu included about $34 million for a 3.1 percent increase in each year of his budget for all providers. An amendment from House budget writers would spend an additional $70.2 million over two years to provide even higher rate increases, though not all providers will see the same increases. The amount of each provider’s rate increase was not available Friday.

One group of Medicaid providers wouldn’t see an increase with changes proposed by House budget writers: the state’s hospitals, at their request.

Hospitals said they would give up their $10 million in proposed rate increases over two years so their share could go to other providers whose healthcare work keeps people out of the hospital, including for mental health emergences, or provides long-term care for people ready to leave the hospital.

But even with Republican proposed rate increase, providers would be getting less than half what they had requested. House Democratic budget writers had proposed spending $200 million over two years to give providers their requested increases. The Republican proposal cuts that by about  $108 million over two years.

Rep. Mary Jane Wallner, a Concord Democrat working on the budget, called the increases insufficient but at least a start. “It’s considerably more than the governor included in his budget,” she said.

A tighter-than-expected budget outlook

Many of the changes being proposed by House Republicans are a result of revenue projections made by the House Ways and Means Committee. The latter sets the cap for House spending, meaning the House Finance Committee will have to cut enough in expenditures to close an $80 million gap between Sununu’s two-year budget request and the revenue estimate determined by the House Ways and Means Committee. 

Typically, the Senate reverses some of those cuts because when it gets the budget in May, tax revenue estimates are more clear and higher than what they are when the House makes its estimates. Edwards said he expects the Senate to have less latitude this year because current revenue estimates are inflated by federal pandemic assistance that is ending.

“It’s like they get to be Santa Claus,” said Edwards, speaking of the Senate. “But not this year.”