NH budget deal ups funds for higher ed, services

CONCORD, N.H. (AP) -- New Hampshire's Legislature will vote on a $10.7 billion, two-year state budget next week that increases funding to higher education and services for the disabled and mentally ill, but does not authorize expanding Medicaid as Democrats had hoped.

Expanding Medicaid was the last big hurdle negotiated Thursday to reach a compromise.

Gov. Maggie Hassan, a Democrat, applauded the bipartisan agreement, but said she was disappointed it did not authorize expanding Medicaid to an estimated 58,000 poor adults.

The Republican-led Senate negotiating team and Democratic-House team traded several proposals on Medicaid expansion before agreeing to establish a commission to study the impact expansion would have on the state and possible alternatives, such as using federal funding to buy private insurance for some.

States can choose to expand Medicaid as part of a key component of the federal health care overhaul, which will be fully implemented Jan. 1. If New Hampshire were to expand the program, the U.S. government would pick up the full cost for the first three years and 90 percent over the long haul. States can withdraw from covering adults at any time without penalty.

New Hampshire's Medicaid program covers low-income children, parents with nondisabled children under 18, pregnant women, senior citizens and people with disabilities. The expansion would add anyone under age 65 who earns up to 138 percent of federal poverty guidelines, which is about $15,000 for a single adult.

Legislative leaders could call a special session to vote to authorize expansion after the commission files its report, but the Senate would not agree to a firm date as the House wanted. Hassan also could call lawmakers into special session — a move she indicated might be needed to ensure New Hampshire starts the program Jan. 1 to begin capturing the estimated $2.5 billion in federal funding the state would get over seven years.

"While I believe we could move forward now with accepting the $2.5 billion in federal funds for Medicaid expansion, I respect the Senate's desire to study a New Hampshire-specific model and appreciate its willingness to do so in a timely way," Hassan said in a statement. "I am confident that once members of the Legislature see the results of the study, they will want to move forward as quickly as possible through a special session."

The House and Senate largely had agreed on spending priorities entering negotiations. The compromise budget increases funding for higher education and services for the mentally ill and disabled. Negotiating teams agreed to ease cuts after learning their proposed reductions for the Veterans Home would force residents to pay for their own incontinence supplies. Both teams also agreed to pay for new union contracts negotiated with state workers and add back spending cut at the state revenue department and attorney general's office.

To help pay for the spending, they also agreed to require the Department of Health and Human Services to cut $7 million out of its budget and the governor to cut $25 million in staff and benefits with $10 million coming from state-tax supported workers. Senate Finance Chairman Chuck Morse, R-Salem, said layoffs could be avoided depending on how well Hassan went about getting the required savings.

The Senate had insisted on no tax increases and rejected a 20-cent cigarette tax increase and a delay in implementing tax breaks for businesses, both proposed by the House and governor.

In the end, the two sides agreed to raise some revenue estimates and to increase the tax rate applied to smokeless and similar tobacco products. The agreement also lets an automatic 10 cent increase in the cigarette tax take effect, but not the additional 20 cents or delay in business credits the House and Hassan proposed. The House also agreed to drop an increase in the gas and diesel tax to pay for highway improvements. The House earlier had killed a Senate casino bill that earmarked some revenue to road work. The budget includes a gambling study focusing on regulations needed if a casino was to be approved.

The House also agreed to a Senate proposal to fund four new charter schools.