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Granite State Rumblings: State and Federal Budget Woes

Sad child (Image by AXEL on FLIKR)

Sad child (Image by AXEL on FLIKR)

Last Wednesday the House Labor- Health and Human Services (HHS) – Education Appropriations Subcommittee passed the fiscal year (FY) 2016 appropriations legislation that cut several programs that are important to children. It is the largest of the domestic spending bills that has not been considered by the Subcommittee in three years and almost six years (2009) by the full House Appropriations Committee. The full Committee is expected to review the FY 2016 bill this week.

From our friends at First Focus is this summary of what is in the bill and the bad news for kids.


How children fare in the House spending bill (and it’s bad news)

By: Sarah Kyle

Under the leadership of Congressman Tom Cole (R-OK), the 2016 Labor HHS Education bill would provide about $153 billion for Labor, HHS, and Education programs – $3.7 billion less than the current level of spending and $14.6 billion less than what President Obama proposed in his FY 16 budget. Altogether, 27 programs were eliminated in the bill, including 19 for education. The cuts are symptomatic of the greater issue relating to the discretionary caps in place for FY 2016, widely acknowledged during the mark up by Republicans and Democrats on the Subcommittee. According to OMB, in the absence of congressional action in FY 2016, both defense and non-defense discretionary spending will be at the lowest levels in a decade, adjusted for inflation.

For the U.S. Department of Education, the bill includes $64.4 billion, a $2.8 billion cut that is more significant than sequestration in 2013, and $6.4 billion less than president’s budget request.

The bill eliminates 19 education programs, including:

  • Preschool development grants,
  • Teacher quality partnerships and safe, and
  • Drug-free schools and communities.

Some programs’ funding levels were level funded or frozen, effectively a cut due to inflation and student population growth, and comes after years of cuts, freezes, or small increases. This is of particular concern for important education programs intended to benefit low-income children, such as Title I grants, 21st Century Community Learning Centers, and English Language Acquisition State Grants. The draft bill freezes funding at $14.5 billion for Title I grants, which reach about 20 million American children each year, at a time when child poverty is growing, particularly for young children, and when LEAs are significantly underfunded.

The bill does not include funding for 21st Century Community Learning Centers that support before-and after-care and summer activities for students in high-poverty and low performing schools.

Finally, the bill freezes funding for English Language Acquisition State Grants at $737 million towards helping English language learners (ELL) develop high levels of academic achievement. In 2011-2012, about 4.4 million ELL students attended public schools, representing about 9.1 percent of total student enrollment.

The bill also eliminates the Preschool Development Grants, which provide critical funds to states to develop the infrastructure and improve the quality of preschool programs for 4-year-olds living in low-income families. The elimination of this program endangers the ability of states to develop and expand access to high quality preschool for the children who need it the most.

There were some notable increases to education, including investments to support children with special needs, as authorized by the Individuals with Disabilities Education Act, which was funded at $12 billion, roughly about $500 million more than current level funding. Impact Aid basic support payments went up by about $10 million while other Impact Aid programs were frozen. It also provides an additional $20 million for Indian Education to support a comprehensive approach to educational improvement and reform for Indian students.

At the U.S. Department of Health and Human Services, the draft bill provides $71.3 billion, an almost $300 million increase above FY 2015 and $3.9 billion below the president’s request. There is an increase of approximately $300 million to Head Start, resulting in overall funding of $8.8 billion. Head Start is celebrating its 50th year anniversary of providing comprehensive services to the most disadvantaged children and families to ensure that they are healthy and ready to thrive in school. The increase in funding falls far short of what is needed to serve all children in need of Head Start, which serves less than 50 percent of the children eligible for the program. The president requested roughly $10.1 billion for Head Start, an additional $1.5 billion or 17 percent increase over the current funding level of $8.5 billion, to provide full-day and full-year Head Start services for low-income children and families. The increase would also help mitigate the impact of sequestration on Head Start that resulted in 57,000 slots lost in the program.

This bill also provides level funding for the Child Care and Development Block Grant (CCDBG), which Congress recently reauthorized with important safety and quality requirements. The president proposed a 15 percent increase to the program, funding it $2.8 billion to help low-income families in obtaining child care so that parents can work or attend classes or training. The recently reauthorized CCDBG requires significant funding increases to enable states to implement the safety and quality provisions. Level-funding the CCDBG means that working families will receive fewer childcare subsidies, resulting in the loss of adequate, affordable childcare nationally. This negatively impacts children, who will be forced into potentially unsafe childcare facilities and providers, and for parents, who without childcare, cannot maintain stable employment to support their families.

The Centers for Medicaid and Medicare Services – which is charged with carrying out Medicaid and Children’s Health Insurance Program (CHIP) — were cut by $344 million, and $919 million (almost $1 billion) below the President’s budget request. According to HHS, CHIP and Medicaid provided coverage for more than 45.3 million children in the U.S. in FY 2013. With more than 60 percent of all children relying on CHIP and Medicaid at some point last year, these programs are essential to our nation’s overall health and well-being.

The bill also freezes funding for Community Health Centers (CHCs) that play a critical role in serving over 7 million children across the nation, including more than 350,000 children who are covered under CHIP, and one in three children who live in poverty. Communities served by a CHC have significantly reduced the rates of infant mortality and low birth weight babies. The president’s budget included $4.1 billion for CHCs in FY 2016, including $2.7 billion in Affordable Care Act mandatory funding, to support 1,300 grantees and approximately 28.6 million patients.

The largest increase in the bill went to the National Institutes of Health (NIH) with $1.1 billion, bringing the nation’s premier research agency up to $31.2 billion. The Eunice Kennedy Shriver National Institute of Child Health and Human Development received $1.305 billion, an increase from last year, and slightly below the president’s request of $1.318 billion. The bill also restores the National Children’s Study (NCS). In December 2014, the NIH made an announcement that it would dissolve the study as a result of recommendations by the Advisory Committee to the Director (of NIH) that the NCS is not feasible.

The Administration for Children and Families also received $27.8 billion, a $50 million bump from FY 2015, yet almost $2 billion less that the president’s request, to carry out activity for federal programs relating to children, including foster care, adoption assistance and the Community Services Block Grant.

For the U.S. Department of Labor, the bill allows for $11.07 billion, which is $206 million less that FY 2015, and $1.4 billion below the president’s budget request that included paid leave initiatives. The bill level funds Job Corp, which provides young people 16 through 24 with educational and vocational training at no cost, as well as youth training activities under Workforce Innovation and Opportunity Act that provides workforce preparation. Youth Build, which provides grants to provide education, employment skills and training for disadvantaged youth, received $82 million, a slight increase, but less than the president’s request for $84.5 million. The Connecting for Opportunity initiative for additional summer and year-round job opportunities for disconnected youth was not included in the bill.

While there are a few bright spots in this bill providing additional resources to some programs, there are alarming cuts and program eliminations that could be extremely damaging to federal services for children. Congress needs to consider a broader approach to FY 2016 spending and raise discretionary spending caps in order to make long term investments in our greatest domestic priority: our kids.


Growing Up Granite

On Wednesday the NH Senate and House will vote on the $11.3 billion budget approved by Republican lawmakers on the Committee of Conference last week. Governor Maggie Hassan has expressed her intention to veto the budget should it make its way to her desk.

Below is a piece that was published in Sunday’s Concord Monitor written by Governor Hassan.


My Turn: Why I will veto the Committee of Conference budget proposal
By Gov. MAGGIE HASSAN
For the Monitor
Sunday, June 21, 2015 (Published in print: Sunday, June 21, 2015)

In recent days, Republicans on the budget Committee of Conference finalized a budget proposal that is unbalanced and dishonest about what it funds. It also includes unpaid-for corporate tax cuts, creating a hole in this budget and in future budgets at the expense of critical economic priorities. For these reasons and more, I will veto their budget if it reaches my desk.

What this means is that the Legislature needs to return to work immediately, prepare a continuing resolution that will fund state government in the short term, and get back to the table and negotiate in good faith to develop a bipartisan budget that is fiscally responsible and that supports the priorities needed to keep New Hampshire’s economy moving forward.

To keep our economy moving in the right direction, I proposed a fiscally responsible, balanced budget that was transparent and honest about how we would support critical economic priorities without an income or a sales tax. The plan that I proposed clearly set those economic priorities, including making higher education more affordable, strengthening public safety, ensuring access to affordable health care, and repairing our roads and bridges.

I have been at the table with Republican leadership and have been clear throughout the budget process about how we can achieve a bipartisan budget that addresses our shared priorities. Unfortunately, Republican leadership has refused to compromise on any of the major issues – most critically on a responsible way to pay for their unfunded tax cuts for mostly big corporations.

Instead, their fiscally irresponsible approach undermines our economic future by giving unpaid-for tax cuts to big corporations, mostly headquartered out-of-state, that will create a hole in this budget and a more than $90 million hole in future budgets. It puts big, out-of-state corporate interests ahead of New Hampshire’s families, small businesses and economy, and only 1 percent of businesses – many of which are large multi-state corporations – would receive more than 75 percent of the benefits from the proposed rate reduction.

The Republican budget also fails to reauthorize our bipartisan health care expansion plan, even though leaders from both parties, the business community and the health care industry agree that it has been successful. This leaves more than 40,000 hard-working Granite Staters at risk of losing their coverage and creates uncertainty for all businesses and consumers.

And the Republican budget fails to live up to the fair contract negotiated in good faith with our dedicated public employees.

At the same time, the Republican budget is left unbalanced by relying on misleading budget gimmicks. It uses money from fiscal year 2015 that is already designated to pay this year’s bills, and it does not honestly fund the services we all agree are essential to our people, families and businesses.
Without a plan for how we would pay for Republicans’ corporate tax cuts now and in the future, we cannot sufficiently support the shared priorities that we all agree on. These are the priorities that are critical to our small businesses and families, and they are the priorities that businesses tell me are critical to their ability to grow, to thrive and to create jobs.

While maintaining our low-tax environment – which the Tax Foundation ranked as the seventh-best in the country in its business tax climate index – is critical, low taxes alone will not move our economy forward. We must also continue supporting priorities such as a strong and healthy workforce, a modern transportation infrastructure and safe communities. Nothing in my budget proposal would jeopardize New Hampshire’s status as having one of the lowest tax burdens in the nation, but unlike the Republican budget, it responsibly and transparently supports critical economic priorities.

By failing to pay for their corporate tax cuts, the Republican budget is setting our state on a perilous fiscal path. It will make college tuition more expensive. It will hurt our ability to ensure that workers can access health care without financial ruin. It will lead to unplowed, unsafe roads for commuters and businesses. And it will not adequately address substance misuse, even as we are in the midst of a heroin crisis.

Our families deserve better. Our businesses deserve better. And the hard-working people of the Granite State deserve better.

Republicans need to join me in putting New Hampshire’s families, businesses and economic interests first, and I invite them to join me and follow the example of the people of New Hampshire, who work together to improve their communities every day. That’s what Granite Staters deserve from their elected leaders.


For a clearer understanding of the tax cuts in the proposed budget and what they mean for NH businesses and state revenue, here is the newest Common Cents blog from our friends at the NH Fiscal Policy Institute.

Revenue Loss from Business Tax Cuts Will Benefit Select Set of Companies

The version of the FY 2016-2017 budget that both the House of Representatives and the Senate will consider on Wednesday includes significant reductions in the rates of New Hampshire’s twin business taxes: the business profits tax (BPT) and the business enterprise tax (BET). While policymakers should be concerned about the impact that such changes would have on New Hampshire’s ability to fund vital public services both now and in the future, questions should also be asked about which businesses would stand to gain from lower BPT and BET rates.

As data from the Department of Revenue Administration (DRA) make quite clear, at present, a relatively small number of businesses pay the lion’s share of the BPT and BET. Of the $462 million in combined BPT and BET paid in tax year 2012, 68 percent was paid by businesses with tax liabilities in excess of $50,000. Furthermore, DRA data indicate that just 1,097 businesses – or about 2 percent of businesses filing tax returns that year – fall in this range of liability. Not surprisingly, then, in an analysis issued earlier this month, DRA finds that 76 percent of the proposed BPT rate reduction would accrue to just 718 businesses, while just under 50 percent of the proposed BET rate reduction would accrue to just 440 businesses.

Moreover, given the nature of the modern economy, it seems likely that a sizable share of any business tax cut will not remain here in New Hampshire to spur its economy, but rather would flow out of state. Indeed, information compiled by the New Hampshire Business Review for its 2015 Book of Lists indicates that many of the state’s largest employers are owned by parent companies based out of state. For example, among the 50 largest manufacturing employers in the Granite State, 40 appear to be owned by parent companies situated in another state or another country. Consequently, multistate or multinational companies operating in New Hampshire – and benefitting from a business tax cut – will not be constrained in what they do with those dollars. Rather than invest here, they could use them to bolster operations in another part of the country or to increase dividend payments to shareholders worldwide.

In short, the revenue loss associated with lower BPT and BET rates will result in gains for a relatively select set of companies with little guarantee of a return to the New Hampshire economy.

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About MaryLou Beaver

New Hampshire Campaign Director Every Child Matters Education Fund
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