2017 Legislative Session – Final Report
The only thing that doesn’t change is change itself
With no incumbent in the race, the 2016 presidential election promised at least some degree of change, but the final outcome surprised many. In New Hampshire, change came when, for the first time in almost a decade, one party controlled the House, the Senate and the Governorship. The Republicans who took office in January of 2017, led by Governor Chris Sununu, promised that much would change, and much did. There were changes in firearms rights, business taxes and education policy that ran counter to the positions of the two previous Democratic governors. There were also significant moves to direct resources at problems that crossed party lines, such as the opioid crisis, mental health and child welfare. With more than a month to go before 2018 bills begin to get filed and more than five months before the next legislative session, it’s too early to say what changes will be in store for next year. But it’s a good bet there will be some.
The last mile is always the hardest
With apologies to The Beatles, it was a long and winding road from the release of the 2018-2019 Biennial Budget in the middle of last winter to the vote that approved the final document on the day after the summer solstice. The budget came off Governor Sununu’s desk in February at $12.1 billion. The House Finance Committee trimmed it to $11.9 billion, but that was too big for the House Freedom Caucus, and too small for almost all the House Democrats. They joined together and voted it down, and for the first time in decades, the House had no budget. The Senate budget, crafted with some input from the House, came in at $11.7 billion. Senate Democrats objected, insisting the Governor’s original revenue estimates were accurate, and that the legislature could spend as much as $45 million more on social issues. In negotiating the final agreement, Republicans had the choice of increasing spending to bring the House Democrats on board, or making reductions to appease their more conservative members. They chose to stay within their party, but it took additional spending cuts, combined with the repeal of a consumer tax and reductions in business taxes, to bring in the votes. The House Freedom Caucus still voiced their dissatisfaction with the final budget, but enough of them supported it to carry the day. Governor Sununu signed the budget into law on June 28.
How much is enough?
The new budget contains additional millions for some of the toughest problems facing the state, although Democrats do not believe the appropriations are nearly adequate to handle what lies ahead. Opioid overdose deaths continue to mount, and in response, the budget contains funds for prevention, treatment and law enforcement approaches. Over the course of the past two years, the tragic deaths of two children that were under state care shone a light on the Division for Children, Youth and Families (DCYF). The budget and companion legislation signed into law by the Governor directs new resources to the issue. The measures make changes in DCYF structure, procedures and oversight. The mental health crisis, which many feel plays a role in both of the above problems as well as crime and other social troubles, will also see increases in the funding for the number of beds and services that will be available.
Open for business
A priority this session for both Governor Sununu and the Republican majority in the legislature was putting their mark on the economy, with a major goal of further reform of business tax laws. They had success, passing budget bill provisions that will incrementally accelerate ongoing reductions to the Business Profits Tax and Business Enterprise Tax. By 2021, the BPT will be lowered to 7.5% while the BET will fall to 0.5%. They also increased the tax deduction for capital investments against the BPT, bringing it in line with the federal tax code. Democrats were critical of the tax reductions, arguing that it is still too early to understand the effects of the ongoing cuts that were passed last year, and that high energy costs and workforce issues are the real obstacles for the economy. Republicans said the business tax reductions passed in previous sessions have already resulted in economic growth, and the new cuts will produce more benefits. Consistent with actions he took upon assuming office in January that put a temporary freeze on new administrative rules, Governor Sununu issued an executive order on July 20 that created a steering committee to study and make suggestions on further reforms and reductions of administrative rules.
Here comes the sun
Addressing the high cost of energy in the state was another priority for the Governor and the legislature this session, but the complexities of the issue did not make that an easy task. Pulled by interests from both sides, the Governor allowed a renewable energy bill to help the struggling biomass industry and increase goals for solar energy use to become law without his signature. Heavily supported by biomass interests and policy makers from the North Country, the bill was opposed by the business community, which was concerned the result would be higher, not lower energy costs. In an effort to offset costs from that action, the legislature agreed on a measure to eliminate the Electricity Consumption Tax in 2019. In practice, the move will primarily help large-scale consumers in the business sector, and politically, it helped win conservative support for the budget. In a further boost to the solar industry, the Public Utilities Commission (PUC) issued a ruling in late June that was touted as a compromise between solar and other energy utility interests. The ruling eliminates the cap on net metering, which is the system that allows alternative energy producers, such as residential solar panel owners, to sell power back into the grid at rates more favorable to the producers. It also establishes temporary rates that will remain in effect pending several studies that will go forward over the next year. Reshaping the state’s energy future will continue as a work in progress. Going into next year, there will be more legislation addressing the many issues that are still unresolved, including net metering, grid modernization, valuation of utilities, the Regional Greenhouse Gas Initiative and electric utility restructuring. Lest we forget, the Northern Pass debate continues, although the main venue seems to have shifted from the halls of the State House to Site Evaluation Committee (SEC) hearings rooms. Many issues remain to be resolved, and the next several months will be important for the project. The SEC has fifteen hearings scheduled before the Sept. 30 deadline for its decision, and the final environmental impact statement from the U.S. Department of Energy is expected in August. Additionally, public hearings are just beginning on a similar transmission project, the Granite State Power Link, proposed by National Grid. As such, the outcome for the two projects still appears to be on a somewhat distant horizon.
Now go make something of yourself
Education reform with his own touches was another priority issue for Governor Sununu as he took office. Highest on his list was full-day kindergarten, which had bipartisan support but ran into late-session difficulties when funding for the program was tied to keno gaming and did not include enough money to meet state adequacy levels. In the end it passed, and the Governor signed the bill on July 12. The Governor asked for and the legislature created a new scholarship program for New Hampshire students who attend in-state colleges and universities. A modified version of school choice also went through with the passage of the so-called Croydon bill. Under the bill, school districts that do not have certain grades will be able to contract with other public schools or nonsectarian private schools to educate those students. The Governor also got former State Representative Frank Edelblut, who had opposed him in the 2016 Republican primary race, appointed as state Education Commissioner. Governor Sununu said Edelblut, a businessman, will bring a needed private sector approach to public education.
Goodbye yellow brick road
Political junkies who have been around a while may remember the brouhaha between then-Governor Steve Merrill and former Department of Transportation Commissioner Chuck O’Leary after O’Leary offered this advice to drivers regarding the state’s red-listed bridges: “Drive fast and don’t look back.” O’Leary’s advice cost him his job, though years later he returned for another stint as DOT commissioner. That was then, this is now. The legislature this session appropriated about $30 million in the budget for infrastructure improvements in local cities and towns, which should fill a few potholes and make it so life in the fast lane doesn’t make you lose your mind.
Ding, dong, the DRED is dead
In a move many thought was long in coming, the worst acronym in state government went to its just reward on July 1 with the new biennial budget. The Department of Resources and Economic Development, DRED, is now two separate state agencies. The Department of Natural and Cultural Resources will house two divisions, Parks and Recreation and Forests and Lands, and will continue to be led by the former DRED commissioner, Jeff Rose. The Department of Business and Economic Affairs will encompass the current Economic Development and Travel and Tourism divisions. Taylor Caswell, former director of the NH Community Development Finance Authority, has been confirmed as the new commissioner of Business and Economic Affairs.
I fought the law and the law changed
Every session brings changes in the laws that govern us, and this one was no exception. You can now carry a concealed weapon without having to obtain a permit. Starting in mid-September, you can carry up to three-quarters of an ounce of marijuana, and instead of being arrested, you’ll only get a ticket. The legislature passed four new ways to let the good times roll: keno gaming will be legal in establishments that have a liquor license, if local officials give approval; lottery scratch tickets will be available for purchase online or even on your mobile device; fantasy sports play is legalized, and it’s now okay to have a few friends over and play poker at home. You knew home poker wasn’t okay until now, right? Have fun, but don’t put your eye out: the Fourth of July is behind us, but firecrackers aren’t just for the Fourth anymore. As the result of a bill this session, they are now legal in the state. And remember you can still light your firecrackers with your flamethrower, since a bill to ban those devices failed last year. Last but not least, lawmakers designated the painted turtle as the Turtle of the Biennium and the common blackberry as the Berry of the Biennium.
The Following Preview Has Been Approved For All Audiences
With the end of the regular session, all that remains is for committees to report on legislation that was held over for a closer look and for the legislature to reconvene this fall to act on the only bill Governor Sununu vetoed this session. That bill was a measure relative to voting on variances by local zoning boards that the Governor felt was contrary to his overall desire to reduce state regulations and was an intrusion by the state on the idea of local control. So, what lies ahead? Summer is in full swing, and state finances look healthy. The legislature added to the Rainy Day Fund and raised it to just over $100 million, and figures for June showed state revenues generally running ahead of estimates. Lawmakers will be watching to see what effects the ongoing business tax reductions will have on revenues as the new biennium progresses. One of the biggest questions for 2018 will be Medicaid expansion, which may see a contraction, depending upon what happens in Washington and/or what the state legislature decides. As usual, when legislators return in January, they will face in the neighborhood of one thousand bills on tax policy, education, energy, and an array of social issues.