Key Point: House and Senate Republicans "bungled" the budget with their "new tax on hospitals, many of which slashed jobs in response to losing revenue" and "the ill-conceived 10-cent per pack tax cut on cigarettes that was questionably enacted, led by Speaker O'Brien."
Portsmouth Herald: Republican lawmakers bungled N.H. budget
The Republican-controlled New Hampshire Legislature hailed its $10.3 billion budget as lean, balanced and responsible. But after only six months, it can be said that the devil is in the details.
The worst devil is the crushing impact of the GOP's doomed decision to end the policy that returned the 5.5 percent tax on net patient service revenue on hospitals via the Medicaid Enhancement Tax to the hospitals through the Disproportionate Share program. The short story is that the affected hospitals switched guidelines for determining the tax, which resulted in New Hampshire getting $50 million less than expected in November revenues.
Reports indicate the shortfall will double by the end of the two-year budget.
GOP leaders are challenging the switch and acted shocked by the shortfall. Hospital executives, however, said they warned legislative budget writers that federal tax guidelines on such Medicaid taxes didn't encompass as large a revenue base as the state had been using. "Reports of a potential shortfall in the New Hampshire Medicaid Enhancement Tax should come as no surprise to anyone," said Steven Ahnen, president of the New Hampshire Hospital Association.
Ironically, the state GOP regularly criticized Democrats for increasing taxes and fees, and Republicans touted that their budget plan did not do so. Gutting the Disproportionate Share program resulted in a new tax on hospitals, many of which slashed jobs in response to losing revenue. And now the impact to the state budget is even worse, as the GOP's lean spending plan offers little opportunity for spending reductions.
GOP leaders indicated they will try anyway. Senate Finance Chairman Chuck Morse suggested that if the hospitals' decision to follow federal guidelines instead of state guidelines stands, Gov. John Lynch might need to make cuts to keep the budget in balance. It's irresponsible to push the GOP's mismanagement to the governor, who spoke against the Republicans' MET decision.
Some Republican leaders seem gleeful in their calls to further cut spending. It could be interesting next month, when the Legislature reconvenes based on House Speaker William O'Brien's reaction to an earlier ruling that New Hampshire will have to pay back $35 million in federal Medicaid funds. Following that ruling, which put the budget out of balance, O'Brien broke out the standard, tired rhetoric: "We are going to need to do what the working families across New Hampshire are doing right now: tightening their belts to live within their means."
Given that it was the GOP's decision on the MET that created the $50 million, and growing, shortfall, it makes sense for their leadership to find a reasonable solution. Cutting from a lean and "responsible" budget doesn't seem a viable option. But one option that should be considered first next month is to repeal the ill-conceived 10-cent per pack tax cut on cigarettes that was questionably enacted, led by Speaker O'Brien.
This was the worst devil in the details of the GOP budget until the MET disaster. The theory that dropping cigarette the tax would increase revenues has proven a failure. In November alone, tobacco receipts were $3.5 million below the projected level and $4.3 million below November 2010.
Shock and finger-pointing are not going to absolve Republican leaders from their responsibility for creating their own budget mess.