Amid veto pledge, lawmakers likely to create short-term spending plan to keep government open

New Hampshire lawmakers and Gov. Maggie Hassan are speeding toward a budget showdown this week that could result in months of financial uncertainty for state programs, workers and residents and set up the political dynamics of the next election.

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An $11.3 billion budget approved by Republican lawmakers last week heads to the House and Senate floors Wednesday for final approval. But Hassan, a Democrat, already has pledged to veto it because it cuts taxes for businesses while leaving out a raise for state employees or money to continue Medicaid expansion beyond 2016.

Seeking to keep the government open come July 1, when the existing budget expires, lawmakers are furiously working to craft a short-term spending plan through a continuing resolution. Party leadership will need two-thirds support from each chamber to even introduce the short-term plan, which must pass both chambers and get Hassan's signature to take effect.

While such a plan would keep the government's doors open, no one is quite sure what it would look like or how long it would last. Senate Majority Leader Jeb Bradley said he expects the short-term spending plan to extend for six months, although the two sides could reach a compromise before then.

"I would like to think we're going to be able to resolve this sooner than six months, that's certainly my hope," Bradley said.

If the short-term spending plan keeps state spending at existing levels, some programs will get less money than they would have under the Republican-backed budget. Home health care providers, for example, would see a rate increase of 5 percent under the GOP budget proposal. It would mark their first increase in years, and providers say the money is badly needed to ensure older residents can stay in their homes longer.

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A short-term spending plan could delay that increase, said Gina Balkus, chief executive officer for the Home Care Association of New Hampshire.

"The committee of conference budget is the best budget we've seen in years," Balkus said in an email. "We hope our needs don't get lost in the political fray that ensues from a veto."

At this point, however, it's hard to see where both sides could reach compromise. Republicans are digging in their heels on business tax cuts and, for now, are unwilling to consider several of Hassan's new revenue ideas. She has suggested more aggressive auditing of business owners to ensure they are not counting profits as personal income to avoid taxes as well as taxing overseas profits for New Hampshire companies.

As the stalemate drags on, political calculations may change for both parties. Republicans are accusing Hassan of using her veto power to set up a run for U.S. Senate against GOP incumbent Kelly Ayotte in 2016. Hassan hasn't said whether she will seek that seat or run for another term as governor, and many Democrats remain unsure about her plans.

Either way, her plans to veto the budget serves as a way to rile up her base and show Democrats she is fighting for their priorities, said Dean Spiliotes, a longtime New Hampshire political observer. Republicans, similarly, are energizing members of their party by holding firm on tax cuts and limited spending.

With Republicans in control of both legislative chambers, there is less of an imperative for compromise than there was two years ago when Democrats controlled the House.

"The reality of this sort of divided government is, for all the rhetoric now, they're going to have to compromise," Spiliotes said. "But it may take a while for this to cool down."