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After the New Hampshire Senate passed its version of a state budget last week, it was expected the House would request a Committee of Conference, so it could ultimately have a say in the final budget negotiations. House conservatives, who led the charge to defeat the budget in April, were hopeful that Republican leadership would finally cooperate with their list of demands. Yet, representatives of a conservative caucus were disappointed Tuesday after House Speaker Shawn Jasper appointed none of its members to the conference committee, putting the fate of the state budget in jeopardy.

Acting under a recess rule, the House non-concurred Tuesday with the Senate version of the biennium budget and Jasper, R-Hudson, appointed members to a conference committee.

He named to the committee himself, House Majority Leader Richard Hinch, House Finance Committee Chairman Neal Kurk, Rep. Lynne Ober (R-Hudson), Rep. Karen Umberger (R-Kearsarge), and Rep. Mary Jane Wallner (D-Concord).

The conservative House Freedom Caucus criticized the conference committee because its members are “the same House leadership that led the House budget to fail in April.”

“With less than two weeks to go to the final House session, it is critical that the House leadership find a way to work with all of their members. However, the message that the House is sending in these negotiations when they put forth leaders who were so utterly clueless about the budget in April is they are only interested in more of the same. This is short sighted at best,” said Rep. JR Hoell, R-Dunbarton.

For the first time since at least 1969, the House failed to pass a budget on to the Senate. The Senate Finance Committee used Gov. Chris Sununu’s budget proposal as a starting point, but it also took into consideration some of the House Finance Committee’s spending plan. In last week’s Senate marathon budget debate, a trailer bill accompanied the budget to specifically incorporate the failed House budget “for purposes of committees of conference.”

During a conference committee, a selection of House and Senate members work to compromise on the specifics of a bill. A conference committee report would be sent to the House and Senate for final approvals. That’s where it can get dicey, especially in the House.

The House Freedom Caucus was instrumental in the demise of the budget in April. The group didn’t like that spending increased over former Democratic Gov. Maggie Hassan’s budget and that the House GOP leadership’s budget lacked tax cuts. If the Freedom Caucus can convince other conservatives or on-the-fence Republicans to jump ship, the budget could die in the House.

“The definition of insanity is doing the same thing over and over again and expecting different results,” said Rep. Anne Copp, R-Danbury, and a member of the House Freedom Caucus.

“By putting the same leadership on the committee of conference that led to a budget that failed by over 85 votes, the state is being set up for having no budget that can pass the House later this month,” she added. “We need a fresh start to begin the processing of a truly fiscally responsible budget, not the same group that offered a reckless spending increase.”

Jasper has not publicly responded yet to the criticisms from the House Freedom Caucus. Last week, Jasper sent an email to caucus members asking to sit down and discuss the budget with them on Tuesday and Wednesday this week.

“It is important at this point in the process that we hear your concerns and find areas where we share common ground,” he wrote. “Ultimately, we hope to be able to reach agreement on the major issues, which would be extremely helpful prior to the state of the budget committee of conference.”

Jasper told WMUR in an earlier story that a conference committee was needed to make passing a budget easier.

“The reason was simply that if the Senate hadn’t agreed to do that [a conference committee], we would have been amending our positions on the budget and…onto Senate bills everywhere possible in order to be able to preserve those positions,” he said. “The Senate realized that to have done it in that way would have made the committee of conference process very, very difficult.”

Yet, conservatives say its unfair to have the failed House budget included in conference committee discussions.

“How can the Senate or Governor even begin to approach a committee of conference knowing that there isn’t much chance that the House conferees can pull together a majority of the body?,” said Rep. James McConnell, R-North Swanzey. “This is a recipe for disaster and is something that we can all see coming.”

If either chamber fails to approve the budget, a continuing resolution to maintain spending at its current levels would likely occur, at least until a full budget is passed. Republicans only hold a slim majority in the House and even a small number of “nay” votes could spell doom for the budget if Democrats also oppose it.

Only one Democrat has been appointed by the House to sit on the conference committee. Democrats in the House and Senate have been critical of the GOP budget, but when it comes time to vote, some could change positions and vote in favor of a budget out of fear that the chamber would come up short again. They could also band together against the budget and watch the Republicans’ infighting, hoping that helps them in next year’s elections.

Senate President Chuck Morse is expected to announce his budget conference committee members on Wednesday.

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For art advocates, they say their work is needed for a thriving “creative economy” in New Hampshire. Gov. Chris Sununu understands that, but apparently, President Donald Trump does not.

Members of the New Hampshire Citizens for the Arts and N.H. State Council on the Arts held a press conference Wednesday to raise awareness about the economic impact the arts has on the state and national economies and to protest Trump’s budget, which proposes defunding the National Endowment for the Arts.

“The arts are vital to a vibrant nation,” said Roger Brooks, chairman of the State Council on the Arts. “The arts enrich our souls, expand our horizons and aspirations, and identify the best within us.”

The State Arts Council was established in 1965 and is advised by a 15-member board, who are appointed by the governor and confirmed by the Executive Council.

About 3,505 arts-related businesses and nonprofits in the state employ more than 10,300 people. A 2012 economic study from the Americans for the Arts of 161 nonprofit arts and cultural organizations in New Hampshire, showed a $115 million annual impact in the state. An estimated $62 million of that was spent by guests and visitors, which in turn supports more than 3,500 full-time jobs.

The National Endowment for the Arts (NEA) and National Endowment for the Humanities receive about $150 million annually from the federal government. In the current fiscal year, the State Arts Council receives about $719,000 from the NEA, along with about $310,000 in direct state appropriation.

Ginnie Lupi, director of the State Arts Council, said they receive about 70 percent of their budget from federal funds and the elimination of that revenue stream would be “devastating.”

“It would be devastating and also from our perspective, we use those funds very consciously to really, truly underserved populations,” she told NH Journal. “All of our youth arts projects and grant making go to those kids at risk and underserved areas in New Hampshire.”

That’s the key argument for the State Arts Council and NEA. Congress has a chance to rewrite Trump’s budget, and while conservatives have traditionally called for the defunding of arts programs and public media, their funding usually stays in the budget with bipartisan support.

“We are disappointed because we see our funding actively making a difference with individuals of all ages in thousands of communities, large, small, urban and rural, and in every Congressional District in the nation,” NEA Chairman Jane Chu said in a statement after Trump revealed his budget earlier this month.

The State Arts Council is seeing more support at the state level, though.

It’s been reported that Rep. Kenneth Gidge, D-Nashua, is reaching out to other representatives to start a new House Arts Caucus.

Sununu has been supportive of their cause. He noted the importance of the arts in New Hampshire’s economy in his budget address and he increased funding for the council too.

“We are also reorganizing a new Department of Natural and Cultural Resources to create more comprehensive management and promotion of New Hampshire’s most treasured natural and cultural assets,” he said in his budget speech in February. “In doing this, we want to acknowledge the natural beauty of New Hampshire, while supporting what we call ‘the creative economy’ to, I believe, to date has been really left on the sidelines. But, it is vital to the New Hampshire advantage and something that must be supported.”

Sununu increased funding to the council by about $50,000 in the next biennium. Despite cutting several other priorities Sununu had in his budget, the House Finance Committee kept that increase in funds for the council when they voted to approve of their budget on Wednesday. The full House will vote on the budget next week.

Lupi said the money will go to fill a community arts position that’s been vacant for two-and-a-half years.

“Governor Sununu is the first governor to mention the creative economy in a budget address,” she said. “That there is a recognition that this sector of the economy exists, it’s very big in how to sustain, promote, and grow the arts.”

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With about $59 million less to spend than expected, it’s natural that the House Finance Committee would trim a few items from Gov. Chris Sununu’s budget proposal. Yet, the cuts they’re making are concerning advocates who championed Sununu for including them in the first place.

On Wednesday, Republican budget writers in the House killed Sununu’s plan to spend $18 million over the biennium to expand full-day kindergarten programs. They also cut a $5 million college scholarship program.

“This is a short-sighted decision by a subcommittee of the Finance Committee,” said Mark Shriver, president of Save the Children Action Network, in a statement. “When he proposed his budget last month, Governor Sununu showed that he recognizes the importance of a full-day of kindergarten and understands the long-term economic benefits quality early learning programs can have for New Hampshire. The Republican majority in the House should stand with Governor Sununu and vote to put the full-day kindergarten funding request back into the budget.”

Full-day kindergarten isn’t the only proposal on the chopping block. The Alcohol Abuse Prevention and Treatment Fund was also cut this week.

The Alcohol Fund was created in 2000 by a bipartisan majority in the Legislature to be a funding mechanism that takes 5 percent of the gross profits from the sale of alcohol to support education, prevention, treatment, and recovery programs for alcohol and drugs. The funds would be allocated to the Governor’s Commission on Alcohol and Drug Abuse Prevention, Intervention, and Treatment to pay contracts for service providers in communities.

The fund has only been fully financed one time since its inception, which was in the 2003-2004 biennium. In his budget speech, Sununu proposed increasing the funds to 3.4 percent, double the 1.7 percent rate the previous budget had set.

“First, I propose we double the Alcohol Fund, increasing these important resources by more than $3 million and creating incentives to ensure that those funds are truly spent,” he said in his Thursday speech.

In several biennium budgets, the governor or Legislature would usually suspend the formula and allocate monies from the general fund to go to substance abuse prevention, treatment, and recovery.

Since there’s $59 million less in tax revenue coming in than expected when Sununu wrote his budget, Alcohol Fund advocates suspected that lawmakers would suspend the formula again. However, a more dramatic approach was taken by the House Finance Committee on Tuesday.

An amendment introduced by Rep. Neal Kurk, R-Weare, was added to the budget in House Bill 2 that would repeal the Alcohol Fund for good and it passed in a 6-4 vote on party lines.

“They’re trying to get to a number and they’re trying to come up with different avenues to do that, and some are very creative,” said Kate Frey, vice president of advocacy for New Futures, a nonprofit advocacy group that’s been one of the biggest proponents of the Alcohol Fund.

“New Futures has always been in favor of restoring the Alcohol Fund and using it as intended by the original statute to address problems for the substance abuse crisis,” she told NH Journal. “The fact that they are repealing the Alcohol Fund in its entirety is very unsettling.”

Advocates and some lawmakers like the fund because it’s non-lapsing and flexible, which is a creative and innovative solution to curb the opioid epidemic. The funds are non-restrictive, unlike some federal funds from grants that can’t be used to build brick-and-mortar recovery centers, for example.

New Hampshire is expected to receive $6 million, less than the $10 million previously anticipated by state officials, from the 21st Century Cures Act, bipartisan legislation approved by Congress and signed into law by former President Barack Obama in December, which gave $6.3 billion in funding to states hit hardest by the opioid crisis.

When Kurk introduced the amendment, advocates were also concerned because the language in the amendment appeared that he also repealed the authority of the Governor’s Commission to disperse the funds. The issue was cleared up on Wednesday, when that language was changed, giving the authority back to the Governor’s Commission to allocate funds, but still repealing the Alcohol Fund. The measure passed on a 5-4 vote on party lines, with Kurk absent.

Rep. Cindy Rosenwald, D-Nashua, who sits on the House Finance Committee, said the Governor’s Commission would receive $5.9 million in 2018 and $6.2 million in 2019 for alcohol and drug abuse education, prevention, treatment, and recovery, slightly less than what was allocated in the current biennium. If the elimination of the Alcohol Fund is passed, it would be up to the Legislature in each budget to allocate whatever they thought was an appropriate amount.

“Without the stability of that fund, it’s concerning to providers that are thinking about expanding their services here,” Rosenwald told NH Journal. “The flat funding for the next two years doesn’t expand access to treatment or recovery very much.”

When introducing the amendment in New Hampshire, Kurk said it was inappropriate for alcohol funds to go to the opioid crisis and that the issue the fund was originally created to solve, alcohol abuse, isn’t the main issue anymore — it’s opioids.

Advocates were quick to point out that the statute language when it was first written allowed funds to be used for alcohol and drug abuse programs. They also dismissed the idea that New Hampshire doesn’t have an alcohol problem anymore. According to a 2014 report, the Granite State’s per capita alcohol consumption is nearly twice the national average.

“I was very surprised at the elimination of the [Alcohol] Fund and I was surprised that they would suggest that somehow there is a disconnect between alcohol and our current opioid epidemic,” said Tym Rourke, chair of the Governor’s Commission, in an interview with NH Journal.

“The suggestion that New Hampshire only has an opioid problem is just false and somewhat disappointing that the Legislature would be picking one group of individuals who are suffering over another,” he added.

Previously, the Senate Finance Committee recommended passage of Senate Bill 196, which would put the Alcohol Fund at the 3.4 percent rate originally proposed by Sununu. The bill was laid on the table so lawmakers could go through the budget process before deciding on the fate of that bill.

Once the House Finance Committee signs off on the budget, it goes to the full House for a vote. The Senate will then get their turn to go line-by-line in the budget. At this point, Senate budget writers could have more money to play with since revenue estimates change throughout the year, so in theory, reinstating the Alcohol Fund and funding full-day kindergarten could see a new life. Advocates for those issues are hopeful the Senate would return them to the budget for Sununu to sign.

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As expected, it didn’t take long for Democrats in New Hampshire to point out what proposals they didn’t like in Gov. Chris Sununu’s budget speech last week.

“I am encouraged by statements of Governor Sununu in support of full-day kindergarten and funding for the developmentally disabled, but as we all know, the devil is in the details,” said House Democratic Leader Steve Shurtleff in a statement. “The Governor’s budget address made no mention of the successful NH Health Protection Program, leaving serious unanswered questions for the 50,000 Granite Staters who rely on the program for their health care coverage.”

But the more divisive statements came from the Senate Democratic Caucus and New Hampshire Democratic Party (NHDP). While they applauded Sununu for keeping several initiatives put in place by former Gov. Maggie Hassan, they criticized him for not fully funding the Alcohol Fund to combat the opioid crisis.

“And in the midst of a substance abuse crisis, we need to find out why Governor Sununu chose not to fully fund the Alcohol Fund, which supports our effort to combat this crisis,” said Senate Minority Leader Jeff Woodburn in a statement.

NHDP Chairman Ray Buckley echoed Woodburn’s sentiments saying he was “disheartened to see that the governor did not fully fund the state’s alcohol fund, which would provide key resources to combat this epidemic.”

The Alcohol Abuse Prevention and Treatment Fund was created in 2000 by the Legislature, and it’s a mechanism that takes 5 percent of the gross profits from the sale of alcohol to support education, prevention, treatment, and recovery programs for alcohol and drugs. The fund has only been fully financed one time since its inception, which was in the 2003-2004 biennium — the first year it began. In his budget speech, Sununu proposed increasing the funds to 3.4 percent, double the 1.7 percent rate the previous budget had set.

In each budget after that, the governor or Legislature transferred the revenue to the general fund and only appropriated a small amount to the Alcohol Fund, which means Republican Gov. Craig Benson and Democratic Govs. John Lynch and Maggie Hassan suspended funding during their terms.

In the most recent budget, for the 2016-2017 budget biennium, Hassan and the House proposed suspending the funding formula. Hassan proposed giving the fund $9.6 million over the two-year period, but the Republican-controlled House dropped that figure to $3.6 million. Senators proposed bringing the formula back and lowering the cap to 1.7 percent, which would give the fund $6.7 million.

If the fund was fully financed for the whole biennium, it would have received approximately $19 million, still nearly $10 million less than what Hassan suggested. After the Senate put forward its recommendation for the budget, the NHDP called their budget “unbalanced and partisan” with “irresponsible gimmicks.”

It’s interesting that the NHDP would criticize Sununu for not fully funding the Alcohol Fund, when previous Democratic governors did not fully fund it either.

“We haven’t had a Democratic governor who has fought as hard as Sununu is fighting for it [the Alcohol Fund] right now,” said former state Rep. Joe Hannon, R-Lee, who made his mark in the Legislature by focusing on the opioid crisis.

“No one has taken the leadership on this, and the battle will be in the House and Senate Finance Committees,” he told NH Journal. “I’m always happy when the governor speaks about how he is addressing substance abuse treatment. He gets it, and that’s something I haven’t seen in awhile from leadership in the state.”

New Futures, a nonprofit group looking to curb substance abuse in the state, is a fervent supporter of fully funding the Alcohol Fund at 5 percent. They believe the money from the non-lapsing, flexible fund could be used for creative and innovative solutions to stop the opioid epidemic.

“We are encouraged by the fact that Gov. Sununu has increased the funding for the Alcohol Fund by doubling the current amount,” said Linda Paquette, president and CEO of New Futures. “However, we anxiously await the release of House Bill 2 in order to clarify the support in the budget for addressing New Hampshire’s substance abuse epidemic.”

Paquette said she was “very curious” what Sununu meant when he talked about “incentives” with the Alcohol Fund.

“First, I propose we double the Alcohol Fund, increasing these important resources by more than $3 million and creating incentives to ensure that those funds are truly spent,” he said in his Thursday speech.

Pacquette said she is hopeful that the Alcohol Fund will be a priority for the Republican-controlled State House because the funds are “not restricted.” New Hampshire is expected to receive federal money from grants and the 21st Century Cures Act, legislation approved by Congress and former President Barack Obama in December 2016, which gives $6.3 billion in funding to circumvent the opioid crisis and enhance medical research and development.

“The Alcohol Fund can be used to fill gaps where grant money and federal funds are restricted for certain uses,” Paquette told NH Journal. “It can be used for supporting recovery housing and investing in early childcare as a substance abuse prevention strategy. He [Sununu] clearly has made the opioid crisis a priority of his administration.”

Sununu presented his budget to the House and Senate Finance Committee in a Tuesday joint committee meeting. The House Finance Committee will take a look at his budget first and put forward recommendations to the full House later in the spring. After passage in the House, the Senate Finance Committee will review that budget and put it up for a vote to the full Senate, before returning to the governor’s desk for his signature or veto.

“We’re going to double that fund and get the money where we can have a lot of impact,” he said in the meeting. “Not just in the high-density areas, but really all across the state. None of our communities have been immune to that.”

The Senate Finance Committee recommended passage of Senate Bill 196 on Tuesday, which was amended to increase the Alcohol Fund to the 3.4 percent rate proposed by Sununu. If the House changes the formula or suspends it in its budget recommendations, this bill could override it and fund it at the rate Sununu proposed.

“This is a sound proposal that I and a majority of the Senate Finance Committee supported today by recommending a bill to do just that,” said Senate Finance Chair Gary Daniels, R-Milford, in a statement. “We have established a number of initiatives that serve to stem substance abuse, including the heroin crisis, and I know we can do more with the funding Governor Sununu has proposed as part of his budget.”

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After Gov. Chris Sununu released his $12.1 billion biennium budget on Thursday, the overall sentiment among Democrats and Republicans was “the devil is in the details.”

Those details will be hammered out in the next few months as the House and Senate make their recommendations to Sununu’s 2018-2019 budget. Overall it appears both parties believe it’s a solid budget with room for improvement. Republicans praised it for being “a realistic, conservative budget which is transparent, forward thinking and strengthens education, supports our cities and towns and focuses on solving real problems that have plagued taxpayers for years,” according to Senate leadership.

Democrats were glad that Sununu kept some of his campaign promises, but were also critical that he didn’t provide too many details on proposals they deemed important, including Medicaid expansion and full-day kindergarten.

“I am very concerned about the $500 million cut from state agency budget requests and what that could mean to the citizens of New Hampshire,” House Minority Leader Steve Shurtleff said in a statement. “The governor’s budget address made no mention of the successful NH Health Protection Program, leaving serious unanswered questions for the 50,000 Granite Staters who rely on the program for their health care coverage.”

In his budget proposal, Sununu includes more than $50 million in spending to address an existing shortfall in the Department of Health and Human Services’ (DHHS) fiscal 2017 budget.

In January, DHHS projected a $65.9 million dollar budget shortfall. Commissioner Jeffrey Meyers pushed back against the accusation his department overspent, claiming instead Medicaid costs did not decline as the legislature expected during the last budget debate. That put Sununu in the awkward position of writing a budget with an unexpected hole in it, while also figuring out how to handle Medicaid for the state.

As for the deficit, Sununu is requiring the commissioner to make quarterly reports to him and members of the legislature leadership “about where we actually stand on our true costs, so we can become a more nimble government that’s responsive, not just reactive.”

“As governor, I won’t make people wait until after an election to discover we may have a shortfall,” he said in remarks during a Thursday joint legislative session. “We have to be transparent. We have to be honest with the people and honest with ourselves.”

Democrats’ claim he didn’t mention Medicaid expansion is true. He only mentioned the program when talking about the DHHS deficit, since that’s where the department says its money went.

“And where we have failed in the past, I am pushing for true accounting of our Medicaid program so we can reconcile estimated Medicaid payments to actual costs,” Sununu said. “And as we go forward, be sure that we won’t wait two years to check in on them again.”

He doesn’t say if he plans to expand, repeal, or replace NH Health Protection Program. The Medicaid program in New Hampshire received bipartisan support in the legislature last year when lawmakers extended the program until Dec. 31, 2018.

That legislation gives Sununu wiggle room as he attempts to balance politics and health coverage for the state. As Washington debates repealing the Affordable Care Act, several states including New Hampshire are waiting to see how Congress and President Donald Trump’s administration handles the issue.

Sununu was reluctant to say anything about Medicaid on the campaign trail, commenting he was worried about financing the program in the long-term, but didn’t mention repeal. Not wanting to permanently fund the program, he told voters it was better to let the federal government make the first move.

Before the budget speech, Democrats waited to see if Sununu would fulfill his campaign promise of funding full-day kindergarten. His proposal includes $9 million a year for full-day kindergarten, but after the speech Democrats sought clarity on determining which communities get funding.

.@ChrisSununu needs to explain targeted full day k. $9 million a year while giving $15 million to charter schools? #nhpolitics

— NH Young Democrats (@NHYoungDems) February 9, 2017

Sununu said funds, which will be awarded in addition to education adequacy grants, would target the communities that need it most based on a community’s property wealth, the number of students on subsidized lunch programs, and communities with a high number of English as a second language students.

“So I am proud today to be the first governor to deliver a real full-day kindergarten program for communities across the state,” he added.

There’s a big distinction to be made with the state “mandating” full-day kindergarten and simply funding full-day kindergarten. Several Democrats sought to require school districts to offer full-day kindergarten, but Sununu’s budget doesn’t make that a requirement. He’s leaving it up to the individual cities and towns, but they’ll receive more funds if they opt-in.

In towns that vote to implement full-day kindergarten, school districts presently only receive 50 percent of the state’s per-pupil grant for kindergarten students. Under Sununu’s plan, the neediest communities can apply for additional grants to make the program possible.

Rep. Victoria Sullivan, R-Manchester, who sits on the House Education Committee, said she wasn’t thrilled about Sununu’s full-day kindergarten funding proposal. Sullivan said it should be a local community’s decision, and could eventually lead to mandated full-day kindergarten.

I agree with @NHSpeaker. This is a huge issue 4 me. Parental & local control in jeopardy. Next step=Mandated K. #NHPolitics https://t.co/HuCwQVuCv9

— Victoria Sullivan (@VSullivan4NH) February 9, 2017

House Speaker Shawn Jasper told reporters Sununu’s full-day kindergarten proposal probably won’t be included in the House version of the budget.

“I think that is going to be a stretch,” he said. “I think if you looked around the hall, you probably didn’t see a lot of enthusiasm on the part of Republicans on that issue. We’ll have different priorities in some areas than the governor has, certainly. I don’t think there’s ever been a budget that’s gone into the House and come out looking the same way, but he’s given us a great starting point.”

The two-year budget must be passed by June 30 to go into effect on July 1 of the next fiscal year. The House Finance Committee will look at Sununu’s budget before making a recommendation to the full House. After the House passes its version of a budget, it goes to the Senate Finance Committee, which will recommend its own proposals to the full Senate, before going to the governor’s desk for his signature or veto in spring.

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