NH’s $66M Budget Sink Hole Did Not Suddenly Appear

We have all seen it, the “news alert” flashing across our TV screens informing of us of a breaking story. The news reporter pops on the screen, standing in front of “live video.” In the video, we can clearly see a large sinkhole opening up in the middle of the street. We can see eyewitnesses standing around, some in awe, others just confused.

Inevitably, the reporter on the scene will state the sinkhole “just suddenly appeared, without warning. The truth of the matter is that it really isn’t a mystery, and usually there were warning signs. Recently, a big sinkhole “mysteriously” appeared in the New Hampshire Health and Human Services budget. Yet a further examination has revealed this was less a mystery and more a matter of potential ineptitude.

On Jan. 13 (Friday the 13th no less), Department of Health and Human Services (DHHS) Commissioner Jeffrey Meyers announced DHHS had overspent its budget by approximately $66 million (through the end of 2016). The state was informed the massive budget sinkhole was the result of several factors related to entitlement spending, in particular Medicaid funding. Like a dutiful bureaucrat, Meyers informed the Legislative Fiscal Committee, which has oversight of the state budget, that he had no control over the substantial discrepancy. The statement is only partially accurate.

The structural nature of our state budget has a foundation made up of numerous “entitlement programs.” These entitlement programs, such as Medicaid, are supposed to be funded through a relationship between the federal and state governments. The problem is that when the programs do not “go as planned,” often it is the states left holding the bag. The harsh reality of this funding paradigm is that a state’s obligation to support these federally mandated entitlements can by design exceed the state budget passed into law. It was because of this ill-conceived funding model that New Hampshire put in place a law requiring monthly spending reports. As with all laws, they are only effective if we adhere to them and they are enforced.

The state requires DHHS file monthly spending reports. To you and me that is just common sense, and one that should not have required a state law. This monthly reporting requirement was put in place to monitor potential issues, like for example a $66 million sinkhole. With the revelation that we are $66 million in the hole, we are also learning DHHS did not update the monthly fiscal data over three months-December, November and October 2016. What was going on during those months? Oh, that’s right, an election. The massive deficiency of funds is only matched by the utter lack of respect for the will of the people. Maybe the dates of a contentious election, and the failure to record required data (as mandated by law), is just a coincidence. Yet, this is a matter of accountability. There are clearly deficiencies; either in the structural process or individual commitment by those charged with preventing these types of issues. Either way, we are doomed to repeat this mistake if we do not take steps to prevent them in the future.

The simple factors that led to our current budget crisis are three-fold. The cost associated with paying hospitals for uncompensated care increased, caseloads did not fall as anticipated, and Medicaid reimbursement rates were higher than projected. The factors that led to our $66 million dilemma will certainly require further forensic evaluation. However, the fact those tasked with safeguarding the fiscal integrity of our state were seemingly left in the dark requires immediate accountability. Meyers should not be the only one answering questions on this matter. Former Gov. Maggie Hassan was the chief executive of this state at the time, and as such has some explaining to do as well.

During her tenure as governor, newly elected U.S. Sen. Hassan demonstrated a frightening lack of sophistication on almost every matter related to New Hampshire’s budget process. In previous articles I have discussed the concern held by many knowledgeable individuals that Hassan did not even have a basic grasp on the creation, passage and enforcement of our state budget. The question that needs to be asked now is did Hassan know of this shortfall, and if so, when?

Hassan left the people of New Hampshire with a heavy a burden, and that is unacceptable. Either Hassan knew or she did not know of the deficit. If Hassan knew and did not share this publicly, then the situation “stinks to high heaven,” and reeks of political shenanigans. If Hassan did not know, that is unfortunate, but only serves to reinforce a level of incompetence that thankfully has been lifted from the governor’s office with Hassan’s departure.

As for this budget sinkhole, there is little mystery who will be responsible for fixing it. The people of New Hampshire, our legislators, and our newly elected governor, Chris Sununu. I am confident all are up to the task, but in the end we deserved better.

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