Down in Concord

There are two kinds of people, those who do the work and those who take the credit. — Indira Gandhi

Just like high school or college kids making up for lost time, the House leaders (Democrats) finished the budget process with a late, late, late night session. After wasting most of Friday, Monday, and Tuesday, the budget conferees met Wednesday at 9 am and did not finish until Thursday in the wee hours of the morning, 3:42 am to be precise.

The short story is that the House is to be congratulated for persuading the Senate to agree to all of the Senate’s demands. That’s right, the final budget is pretty much the Senate (Republican-led), not the House (Democrat-led), budget.

Observers tell me that the Democrats opposed this budget up until the very end when they caved. Senior leaders, including representatives of the governor, were holed up behind locked doors for hours apparently searching for a way out. There was even talk that they would reject the budget and go for a Continuing Resolution (CR) while they tried to negotiate a better budget. In the end, “the House acceded to the Senate” on almost every issue.

House Democrats are trying to put the best spin on it. The Democrat chairman of the House Finance Committee wrote that they “… produced a balanced and fiscally responsible budget investing in the priorities of the people of New Hampshire without increasing taxes or fees. … there is a great deal for us to be proud of in this budget.” But the fact is that the budget is almost entirely what was passed by Senate Republicans, which every single Senate Democrat voted against.

The Governor “applauded the bipartisan budget agreement” even though it is virtually identical to the Senate Finance Committee budget, which three weeks ago she slammed for (so-called) “deep cuts”, “nothing short of devastating”, and a “fiscally irresponsible approach”. Now she labels that same budget as “fiscally responsible” (which it is) and praises the restored funding (added by Senate Republicans).

Why do so many politicians not tell the truth? Either they lied weeks ago when they decried the Senate budget as terrible, or they are lying now when they say it is great. Perhaps both. (How do you tell when a politician is lying? His lips are moving.)

I would have more respect for them if they admitted, “We don’t like this budget. We wanted to spend much more money; we wanted to eliminate some programs and create other programs. We agreed to the Senate plan because we didn’t have a good alternative. Our only fallback was a Continuing Resolution, which would have given us even less money to spend.”

But politicians like to take credit for everything – even if they had nothing to do with them. If they told the truth now and admitted they don’t like the budget they couldn’t take credit for it.

Democrats cannot be happy about this budget. Total spending is $400 million less than the Governor requested, $300 million under what the House Democrats approved.

This budget has zero tax or fee increases. Democrats had proposed numerous new taxes or fees. They voted overwhelmingly (155-35) for a beer tax; they didn’t get it. They really, really wanted a massive increase in the gas tax; they didn’t get it. Ditto an increase in cigarette taxes. They proposed to delay scheduled business tax decreases; the Senate nixed that idea. Democrats passed increases in the Salt Water Fishing license fee and the Marriage License fee; Senate Republicans removed them.

Democrats included a provision letting the Governor raid 400 dedicated funds to spend the money elsewhere. Senate Republicans said no.

Senate Republicans added funds for LCHIP (the Land Conservation and Heritage Improvement Program) and for the UNIQUE scholarship program. The Senate increased State Aid Grants for water treatment projects. Democrats now try to take credit for these increases.

Democrats reduced funding for Charter Schools and put in a moratorium. Senate Republicans fully funded them and removed the moratorium. House Democrats repealed the school choice scholarship program passed last year. Senate Republicans killed that bill and removed a parallel provision from the budget.

Democrats had been emphatic about expanding Medicaid as part of Obamacare. The Speaker of the House, Terie Norelli, had declared that without Medicaid expansion, “I do not know if I could get the votes in the House to support the budget.” As late as Wednesday afternoon, conference Chairwoman Wallner said there would not be a budget agreement unless the Senate budged. The Senate replied that this issue was too important to rush into without a thorough study, they called her bluff and the Democrats folded.

In addition to the budget bills, there were 22 other bills reported back by conference committees. The changes appear to be slight and the bills seem uninteresting. There were eight bills where House and Senate conferees could not reach agreement. These bill also seem uninteresting; few will mourn their loss.

On Wednesday, July 26, the House and Senate will each meet to vote on conference reports. It is very likely that all will be passed and go to the governor for signing.

Down in Concord

“The government solution to a problem is usually as bad as the problem and very often makes the problem worse.” — Milton Friedman

The House is not in session this week or next. Many members will be busy in Committees of Conference trying to resolve differences between House and Senate versions of bills. Each conference committee crafts a compromise on one bill, then submits the compromise bill with explanation to both the House and the Senate by June 20. This year there are 26 bills headed to conference. The biggest and most important bills are, of course, the budget bills.  On June 26, the House will vote on conference committee reports, and that should be their last session of the year.

Most of the bills other than the budget bills will be of little interest to most people. (Does a bill “consolidating the property appraisal division and the municipal services division of the department of revenue administration” interest anyone?) Most people probably aren’t particularly interested even in the budget bills – for the simple reason that most people have little interest in anything to do with politics.

There is one bill that might interest quite a few people. And that is the Medical Marijuana bill, HB 573. The House approved it by an overwhelming bipartisan majority, but the governor said she had problems with parts of the bill, so the Senate amended it, and then passed it by a 3-1 bipartisan majority. Advocates of medical marijuana no doubt will be contacting their representatives trying to influence the conference committee.

Down in Concord, the most difficult, time-consuming, and important conference will be on the budget. The numbers aren’t all that different – the Senate increases spending by 7%, the House increases by 10%. The Senate spends $23 million more than the House on the Department of Health and Human Services. Governor Hassan labels that increase a “devastating cut”.

In the State House there is an Office of Legislative Budget Assistant (LBA), staffed with professional number crunchers. One of the many documents they produce is a line by line – 1611 pages worth – comparison of the House and Senate budgets. One column shows the dollar difference between the two versions. On page after page after page the difference is zero. I managed to get through about 800 pages before I ran out of energy. It is fair to say that over 90%, perhaps closer to 99% of the spending proposals are identical.

The numbers aren’t the problem. The contentious debate won’t be about a million here, a million there. The debate will be about expanding Medicaid to cover not just the poor but people with incomes up to 138% of the federal poverty level. Proponents say that it will help thousands of poor people, that it will cost us nothing because the federal government will pay 100% of the cost for three years.

Opponents reply that “If it sounds too good to be true, it probably is.” There are always unintended consequences from any program, especially from a federal government program. Let’s look at the long-term effect of this program.

People often complain that politicians rarely plan beyond the next election. Well, the New Hampshire Senate is now saying let’s look beyond the two years of this budget to study whether this program will be good for the long term.

Politicians all too often judge a program by its intentions, not by its results. They feel good for how much money they spend, rather than how many people are actually better off. They create some new program, congratulate themselves for how well it will work, but only rarely measure the results of the last program they created.

Supporters of expanding Medicaid live in a fantasy world where every program works as intended. Let’s look at the real world.

A study of 13,000 Oregonians conducted by Harvard and MIT economists and recently published in the New England Journal of Medicine concluded that “Medicaid coverage generated no significant improvements in measured physical health outcomes in the first two years.”

A University of Virginia study of 1 million surgeries showed Medicaid patients were twice as likely to die as those with private insurance. The same study showed that compared to NO insurance, Medicaid patients were 13% more likely to die.

A Journal of Cancer article showed that Medicaid cancer patients are two to three times more likely to die than other patients.

Our neighboring state of Maine 11 years ago decided to expand its Medicaid coverage. Supporters thought it would reduce the number of uninsured, thus reducing the costs of uncompensated care. A decade later, the number of uninsured was unchanged at 12 percent. Medicaid participation grew 7 percent but private health insurance dropped by 7 percent. The main effect of expanding Medicaid is shifting people from private insurance to government insurance and sticking taxpayers with the bill.

Medicaid is a program of low quality and high cost – not just in dollars but also to the well-being of the recipients of poor care. If we truly care about people who need help – not just feeling good about throwing money at a problem – we should try to find a replacement, not expand Medicaid.

Down in Concord

“It is much more important to kill bad bills than to pass good ones.” — Calvin Coolidge

Down in Concord, the Senate Finance Committee has made its recommendation about the State budget. The full Senate no doubt will approve it next Thursday, June 6. Their version of the budget calls for spending $10.7 billion. The Governor initially proposed $11.1 billion, which the House reduced to $11 billion. The budget for the current two years is about $10 billion, so the new budget will be an increase of about 7%, perhaps more.

A piece of the budget that has received little press is downshifting of Medicaid costs to the county budgets. In Sullivan county, and I think in most counties, the single biggest expense is not the nursing home, not the jail, it is paying for Medicaid. Last I looked at the Sullivan county budget, we had to write a $4.5 million check to the state to pay for Medicaid. Our next largest expense was a net cost of $3 million for the county nursing home. The House-passed budget downshifts an additional $8 million Medicaid expense to the counties. The Senate budget still downshifts but not as badly – about $3.5 million.

One of the main reasons for the difference between House and Senate spending is a difference in revenue estimates. E.g., the House estimates $107 million more revenue from the Medicaid Enhancement Tax than the Senate estimates. Given that the House revenue estimators have consistently overestimated revenue for more than four years, I trust the Senate estimates more than the House estimates.

Opponents of the Senate budget quickly demonstrated a lack of understanding of simple arithmetic or the English language. Gov. Hassan and other Democrat leaders complained about “devastating cuts” to the Dept. of Health and Human Services. Try this quiz: Which is higher, $1296 or $1319? The Senate budget increases spending on HHS from the House-passed $1296 million to $1319 million. Is higher spending a “cut”? Is it “devastating”?

For Developmental Services, the Senate proposes spending the exact same amount as the Governor and as the House. All three budgets increase spending over the current budget by about $38 million, or about a 15% increase. What is Hassan’s definition of “devastating”? As the old saying puts it, “She is entitled to her own opinion but not to her own facts.”

In terms of the legislative process, the House has not officially received the Senate amendment to the budget. You and I have heard about it, but the full Senate has not yet voted on it and the House has not received written notification about it. In the meantime the House continues with routine business. Wednesday, June 5, it will vote on the last of its Senate bills. If it doesn’t finish them Wednesday, it will meet the next day because its deadline for all Senate bills is June 6. This week and for the next few weeks, committees will meet to work on retained bills. (If you have been reading my columns, you know all about retained bills.)

On Thursday, June 6, the Senate will meet to vote on the last of its House bills, including the Finance Committee’s recommendations on the budget bills. When the Senate has voted on the proposed budget, it will send an official message to the House declaring that it “has passed House Bill 2 with an amendment and requests the House concurrence thereon.”

When it meets on June 12, the House will officially receive the Senate message. It then has three options: 1) It can Concur with the Senate amendment, thereby sending the Senate budget to the Governor for signature. It won’t do that. 2) It can Non-concur, which would have the effect of killing the bill, leaving the state without a budget. It won’t do that. 3) What the House will do is Non-concur and request a committee of conference.

The Senate, meeting on June 13, will receive the House request for a conference and will “Accede” to that request. On occasion, and only on relatively unimportant bills, the Senate might refuse a request for conference. It won’t refuse a conference on a budget bill. So finally, more than two weeks after everybody knows what is in the Senate budget, finally the committee of conference will meet to discuss an agreement on the budget. Their deadline is just seven days later, June 20, so I expect they will be rather busy in those seven days.

The House and Senate conferees must reach a unanimous agreement on the compromise budget. On occasion the Speaker of the House or the President of the Senate will replace a conferee with someone more willing to accept a compromise. Once a compromise has been reached, the bill will go to the House for a vote on June 26, and to the Senate for a vote on June 27. The votes will be up or down, no amendments will be allowed.

In the unlikely event the two sides cannot reach an agreement, they will vote on a Continuing Resolution (CR) to keep the government running past the June 30 deadline. That CR would be based on the current budget, which is less than either the House or the Senate budget, so they and the Governor behind the scenes have some motivation to pass a normal budget.