COVID-19: Stimulus Funds, the State Budget, & Protecting Critical Services
Right out of law school and up until serving in the State Senate, I served as a legal aid attorney with New Hampshire Legal Assistance where I represented hundreds of people during the Great Recession, helping protect against foreclosure, helping families and seniors with needed services, and representing those crushed by job loss, so I understand the economic impacts this crisis will have on our state and every Granite Stater. It also means I understand how critical state programs are for working families and how important it is that we use the federal stimulus to protect working families and our communities, not bail out corporations or big businesses.
There is no doubt that the COVID-19 public health crisis will have a dramatic impact on New Hampshire’s economy and employment across the state. Our state revenues are going to be significantly lower than expected this year and likely the next fiscal year as well. We are already seeing record high unemployment insurance claims and many businesses have had to shut down, meaning fewer jobs and a decrease in business tax revenue. In figures released by the Department of Administrative Services, business tax returns for March are $17.5 million below projections — and April will likely be even further below projections. This decrease in revenue threatens vital services across the state.
When revenues are below projections, the state typically has two options — cut critical services or raise taxes — but, due to the hard work of Senators Jeanne Shaheen and Maggie Hassan and Representatives Annie Kuster and Chris Pappas who secured $1.25 billion in largely unrestricted federal resources in the latest stimulus package, we have a third option; we can use a portion of the stimulus funds to provide revenue relief and save the state budget. At this critical moment, we cannot afford to cut vital services or lay-off employees.
This week, Senator Shaheen and Senator Hassan led a bipartisan group of United States Senators who all formerly served as Governors in writing a letter to Vice-President Pence asking for the flexibility to use these critical stimulus funds to shore up state revenue shortfalls. In the letter they wrote:
“Governors and state legislators are best positioned to know how to put these funds to good use. The loss of state and local revenues is just as much a result of the COVID-19 pandemic as the additional costs that state and local governments are facing — and states should be able to use these funds to address both challenges.”
Thank you, Senators, for fighting for us. I agree with you — the loss of state revenues is a direct result of COVID-19. New Hampshire should not be forced to lay off critical employees or cut needed services.
Here’s the direct language from the CARES Act:
(d) USE OF FUNDS. — A State, Tribal government, and unit of local government shall use the funds provided under a payment made under this section to cover only those costs of the State, Tribal government, or unit of local government that -
(1) are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19);
(2) were not accounted for in the budget most recently approved as of the date of enactment of this section for the State or government; and
(3) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020.
The state budget meets all three criteria. Key services such as public health, mental health, public safety, are all within the state budget and are clearly necessary to deal with COVID-19. This crisis was unanticipated and therefore unaccounted for in the 2020–2021 state budget revenue projections. These additional costs due to COVID-19 were incurred between March 1, 2020, and December 30, 2020, thus, using the stimulus funding for the state budget would be an appropriate use of these funds.
The legislature worked hard to pass a budget that provided the greatest increase in public education funding in two decades. Made critical advancements in health care that must be protected. This budget fully backfilled the Title X funding that was jeopardized by the Trump administration’s so-called “gag rule” to ensure continued delivery of critical family planning care. It funded increases in key programs to combat homelessness and established a consistent, ongoing affordable housing fund. It funded the municipal water grants and funded the ongoing litigation costs against big corporations responsible for polluting our water and much more. These are just some of the critical programs at risk if the state budget is cut. COVID-19 and the CARES Act should not be used as a justification to cut the budget.
However, Governor Sununu has made it clear that he would rather cut the budget than use the federal stimulus funds for the revenue shortages. Arguing the budget and COVID-19 aren’t connected. But the Governor has deemed state workers essential to combat the crisis and opened up the state budget by using general funds for the $50 million hospital fund and for other programs related to COVID-19. It is disingenuous to view the budget and the COVID response as separate issues when we are using general funds and other critical state programs to combat this crisis — every dollar DHHS is spending on COVID is unexpected spending and unaccounted for in the budget.
The $1.25 billion in largely unrestricted federal resources should be used in part to backfill and hold harmless our state’s biennial budget and guarantee we are able to protect critical state services. This is the right thing to do. And it’s what I’m going to fight for.