Doctors and state ready for Round 2

Lauren Dorgan reports in the Concord Monitor on the state's appeal of its loss in the JUA Lawsuit, and quotes from Associate Attorney General Anne Edwards' brief to the Supreme Court:

"During the economic recession, the Legislature needs as much time as possible during this biennium to consider alternative budget reductions and funding options if the excess JUA funds, as budgeted . . . are unavailable," the filing said. It went on to say that while the appeal is pending, the ruling "creates uncertainty for the State's completion of its Comprehensive Annual Financial Report for the fiscal year ending June 30, 2009, and for bond rating agencies that regularly evaluate the state's finances." (more)

If uncertainty exists, it's because Governor Lynch decided to balance his budget with someone else's money.

Also in the Monitor, Margot Sanger-Katz looks at who participates in the JUA.

NH Budget faces another lawsuit

Lauren Dorgan reports in the Concord Monitor on the latest legal challenge to the New Hampshire budget, this time from state retirees looking to block a new fee on their health care benefits.

The heart of the complaint centers on the way the state is taking the insurance premium, rather than the premium itself: Starting last week, a charge of $65 per single retiree or $130 per couple was deducted directly from the pension checks of hundreds of retired state employees who are under the age of 65.

The retirees claim that the deduction is an "illegal 'encumbrance' and 'diversion' " because the retirees' rights to a full pension payment is "contractually vested," according to a draft version of the lawsuit provided to the Monitor. State and federal constitutions "forbid legislation that impairs vested rights," the lawsuit reads. (more)

$3.4 billion shortfall for N.H. pension

The Concord Monitor's Lauren Dorgan reports on the projected shortfall in the state's pension system:

The sinking economy has taken a billion-dollar bite out of the state's already-ailing pension system, leaving the New Hampshire Retirement System with about 59 percent of what it needs to pay its long-term liabilities, according to preliminary calculations, for a shortfall of $3.4 billion.

Calculations on the state of the system at the close of the 2009 fiscal year, which ended last month, show that the system has $4.7 billion in assets, according to Retirement System Executive Director Dick Ingram. (more)

No Plan B after JUA Case

Lauren Dorgan reports in the Concord Monitor that Governor John Lynch didn't have any plans to respond to the state's loss in the JUA Lawsuit, beyond appealing the decision to the Supreme Court:

he 27-page ruling thoroughly took down each part of the state's case. As one person I talked to put it, it "wasn't just no - it was hell no."

The state is, of course, appealing the decision. But meanwhile, the $110 million question is: What will the state do if it loses at the Supreme Court?

Lynch is playing it extremely close to his vest. Asked by reporters, he's so far only repeated his faith that the money rightfully belongs to the state and that the state will prevail on appeal.

It just might not be a great posture to defend a legal case while planning for a loss. Democratic Sen. Harold Janeway of Webster said he hadn't caught a whiff of what the plan was. "I don't know what, if anything, is brewing behind the scenes as a Plan B," he said. (more)

Ruling sets state back $110 million

Lauren Dorgan reports in the Concord Monitor on the decision in the JUA case, and Governor Lynch's reaction to it:

Belknap County Superior Court Judge Kathleen McGuire found for a group of doctors and hospitals insured by the fund that claimed the money rightfully belongs to them. She found that the state budget plan to seize the money violates state and federal constitutional prohibitions against taking private property and against impairing a contract. McGuire's 27-page ruling dissected the state's claims to an ownership stake in the Joint Underwriting Association and concluded the planned seizure is "unconstitutional and shall not be enforced."

Lynch promptly vowed to appeal the decision to the state Supreme Court. In a statement, Lynch, a Democrat, restated his belief that the money rightfully belongs to the state.

"The Joint Underwriting Authority was established - and given tax-free status as a state entity - in order to provide a service, not a windfall, to doctors. The state established the Joint Underwriting Association to ensure doctors could get access to malpractice insurance and that service has been provided," Lynch said in a statement. "These surplus funds belong to the citizens of New Hampshire, who created the Joint Underwriting Association and gave it tax-exempt status." (more)

The Governor's logic is that the JUA's tax-exempt status makes its a state agency. If true, this would have wide-ranging implications for other tax-exempt organizations that are currently considered private entities. And any windfall going to doctors comes from money they paid. The State of New Hampshire has not provided a single dollar to the JUA in the 35 years its been in operation.

Since both parties to the case already stipulated the facts prior to trial, there is little room for appeal beyond showing some legal error on McGuire's part. That would seem to require the State coming up with some new cases specific to New Hampshire that dramatically alter the way the Court examined both the Takings and Commerce Clauses of the state constitution.

Both I and Charlie Arlinghaus have been warning budget writers for months that their attempt to transfer money from the JUA to the General Fund was illegal, unconstitutional, and unlikely to succeed. We doubt very much that the State would prevail on appeal.

Concord Monitor- SEA, State have deal

Lauren Dorgan reports that the SEA has reached an agreement on a new contract with state negotiators:

State and union negotiators have tentatively agreed to a new contract for state employees that would require workers to take 18 unpaid furlough days over two years and accept a wage freeze next year while restoring to them modified "bumping rights" and providing extra paid "annual days" in years to come, a union source said.

The source spoke on the condition of anonymity because union leaders were waiting to make an official announcement. (more)

Leading with layoffs

The latest dustup between Governor Lynch and the State Employees Association is a big story in the state's most widely read papers. Here's how Dan Touhy, Lauren Dorgan, and Kevin Landrigan.

Union hopeful for deal

Lauren Dorgon reports in the Concord Monitor that the state may be close to a new contract with its largest union:

Negotiators for the State Employees' Association and the state appear to be nearing a new contract deal likely to include widespread unpaid furloughs instead of as many as 750 additional layoffs.

"It feels really close," said union President Gary Smith, who met with Democratic Gov. John Lynch this week. Smith cited that meeting plus the involvement of two new mediators - former labor commissioner Jim Casey and former SEA negotiator Dick Molan - as reasons to hope a deal could be reached as soon as tomorrow. (more)

HHS hoping to use vacancies instead of layoffs

Lauren Dorgan spends most of her Capital Beat column discussing the Senate race, but reports on how Health and Human Services is planning to meet the personnel cuts outlined in the state budget:

Commissioner Nick Toumpas wrote a rather hair-raising letter to Health and Human Services employees last week about layoffs.

So far, according to Toumpas's letter, the 46 employees at the soon-to-be-closed Tobey School are the most clearly impacted; five were laid off last week and four others were reassigned to the Sununu Center or to the Bureau of Drug and Alcohol Services.

Beyond that, to meet the budget, Toumpas wrote, the department needs to "reach and maintain a 10 percent vacancy rate," which equals 335 vacancies. As of last week, the department had just over 250 vacancies. "Hopefully, retirements and normal attrition will get us close to the 10 percent mark, and we will not have to resort to additional layoffs to achieve this reduction," Toumpas wrote. (more)

HHS accounts for half of New Hampshire's General Fund, and would presumably have to come up with half of the $25 million in personnel savings tacked onto the back of the state budget.

Plan now for worse budget woes ahead

The Concord Monitor weighs in on NH's growing budget problems:

Though lawmakers and Gov. John Lynch passed an ostensibly balanced budget for fiscal years 2010 and 2011, New Hampshire is not out of the fiscal woods yet.

As Monitor State House reporter Lauren Dorgan noted in a column on Sunday, that budget will be short some $110 million if a court finds that the state can't take money from a medical malpractice fund set up decades ago to ensure that health-care providers could buy coverage at affordable rates. But even if New Hampshire does make it out of the forest of fiscal despair, it will only be to limp into a landscape of political fissures, parched revenue streams and mountains of obligations.

2 out of 2 think tanks agree: NH Budget is a mess

Lauren Dorgan reports in the Concord Monitor that New Hampshire's budget situation is worse than it was two years ago:

That budget will start out with a $550 million hole, estimates Steve Norton of the New Hampshire Center for Public Policy Research, who gets to that number by tallying up about $450 million in federal stimulus money, primarily for education programs and Medicaid, plus the $110 million the state plans to seize from a state-established medical malpractice fund. (That seizure effort is now tied up in court.)

Charlie Arlinghaus of the conservative Josiah Bartlett Center calls it a "close to $600 million hole." He factors in the same things Norton does plus $50 million in "revenue sharing" aid to cities and towns that the state suspended for this budget cycle.

"I think the next budget will be dramatically worse than the current budget," Arlinghaus said.

Passing the Buck on the JUA

In her Capital Beat column in the Concord Monitor, Lauren Dorgan sees legislative supporters of the controversial raid on the Joint Underwriting Association passing the buck to the AG's office:

Democratic Majority Floor Leader Dan Eaton, who worked on the budget, said that the budget, for now, is out of the Legislature's hands. He, too, reminded us of who backed the idea.

"The proposal to use JUA money was researched in depth at the attorney general's office at the request of the governor, and the attorney general felt that the state was on very solid footing," he said. "And I would have to yield to the legal expertise of the attorney general in that area."

Concord Monitor follows state employee negotiations

Lauren Dorgan reports in the Concord Monitor that the state's lead negotiator sees progress in talks with the SEA:

The state's chief negotiator charged with hammering out a new union contract with state employees said yesterday that he hopes to seal a deal within a week, but it's difficult for the state to offer either long-term promises or contract sweeteners amid an ongoing recession and severe budget crunch.

The challenge facing Assistant Secretary of State Tom Manning is eight figures large: The newly passed two-year budget requires the executive branch to lop $25 million over two years off of personnel expenses, either through unpaid furloughs, benefits cuts or - if all else fails - several hundred layoffs on top of the roughly 200 specifically laid out in the budget. Gov. John Lynch, a Democrat, has repeatedly described layoffs as his least-preferred option.

No new contract for SEA

Lauren Dorgan reports in the Concord Monitor that negotiations between the Governor's office and the State Employees Association are going slowly:

Union leaders yesterday faulted the governor and his team, saying they lacked focus on the challenge and declined to consider creative suggestions.

"The only reason we are at the eleventh hour and the 59th minute on this is because of their action or, I should say, their inaction," said SEA Vice President Diana Lacey, who leads the union team. She said that from the outset union leaders had wanted to meet every day, rather than twice a week, to speed negotiations.

The state's contract with the SEA expired at midnight, but under the Evergreen Clause approved by the last legislature, the expired contract remains in effect until a new one is negotiated. This leaves little reason for the SEA to strike a new deal during a bad economy.

Monitor podcast looks at NH Budget

The Concord Monitor hosts a podcast with reporter Lauren Dorgan looking back at the New Hampshire budget process.

The Monitor's "Off the Page" podcasts provide an opportunity for their reporters to share more about the stories they cover than they can print in the daily paper. It continues to blur the line between old media and new media.

Size of Budget Debated

Lauren Dorgan weighs into the conflicting claims about the increase in the New Hampshire budget. If we ignore cuts already made from 2007, and $200 million in accounting gimmicks in this year's plan, and a half-billion dollars in one-time federal stimulus money, budget supporters say that General Fund spending drops by 1%.

To Arlinghaus, of the Josiah Bartlett Center for Public Policy, Lynch isn't being straight if he's basing his budget crunching on the plan crafted in June 2007. "For the governor to say this is either flat or a cut, he has to pretend he didn't do anything last year," Arlinghaus said.

To be fair to the Governor, if you compare this budget to another budget that never really happened, and don't count the spending increases, this budget is level-funding. It only increases if you acknowledge reality.

Monitor follows JUA Case

Lauren Dorgan take some time in the middle of her Sunday Monitor column to report on this week's progress in the case against the state's raid of the Joint Underwriting Association:

In a ruling late last week, Judge Kathleen McGuire sided with the plaintiffs on some preliminary issues, deciding that the attorney general's office cannot represent the JUA.

"Given the quasi-private/public and voluntary nature of the JUA; the lack of any State funding to implement or support the JUA; the fact that the Department does not guarantee coverage to policyholders if the JUA were unable to do so; and the broad powers and responsibilities of the JUA board, the Court concludes that the JUA is a separate entity from the Insurance Department and is not part of the executive branch of State government," McGuire ruled Thursday.

She also looks back at the budget debate, and looks ahead to the end of the State's contract with state employees.

State employees contract runs out in less than a week

The Concord Monitor leads with Lauren Dorgan's piece on the unresolved contract talks between the state and state employees:

Now is an uncertain time to be an employee of the state of New Hampshire. Less than a week before the term is up for the State Employees' Association contract, there is no new one to replace it, and negotiators haven't struck a tentative deal, according to union leaders.

Meanwhile, the Legislature this week approved a budget that, according to Gov. John Lynch, will require laying off at least 200 state employees. The final tally could be much higher, depending on how Lynch, who has said he will sign the budget, meets legislators' mandate to cut an additional $25 million in personnel expenses. Lawmakers said they hoped the governor would negotiate unpaid furloughs with state unions.

Deep cuts, higher fees on the way

Lauren Dorgan leads her budget coverage in the Concord Monitor with the potential impact on state employees:

The plan provides for laying off hundreds of state employees, shuttering the Laconia prison and the Tobey School, cutting social programs, and raising a wide variety of fines and fees. Gov. John Lynch swiftly pledged to sign a budget that he had lobbied hard to pass and billed as "tough but responsible."

The total number of layoffs remains unclear. Lynch said he expects "a minimum of 200 layoffs." The budget requires the governor to trim $25 million more from personnel expenses, a target legislators said they hoped Lynch would reach by negotiating unpaid furloughs with state employee unions. If other solutions aren't found, that cut could mean laying off 750 state employees, although Lynch said yesterday that layoffs are his "least-preferred option."

Keep in mind that this budget actually includes zero layoffs. Not one. The Legislature has directed the Governor to find $25 million in personnel savings, which may come through furloughs or other mechanism. The budget defunds vacant positions, but it may not reduce state payrolls by a single employee.

Concord Monitor- "Balancing budget with stipulations"

Lauren Dorgan outlines in the Concord Monitor the many strings attached to the New Hampshire budget that came from the federal stimulus package:

The impacts of the stimulus are clearly visible in the final $11.6 billion budget for 2010 and 2011, which was finalized in committee last week and goes to a vote in the House and Senate tomorrow. The plan fully funds education "adequacy" grants and contains no cutbacks to Medicaid eligibility while paring a variety of programs large and small - from burials for the indigent to help for drug addicts. It also calls for layoffs or furloughs for hundreds of state employees, and closing the Laconia prison, the Tobey School and New London District Court.