Hassan, GOP lawmakers talking but agencies feel strain as budget deal remains elusive

The state is entering the second month of a budget stalemate and Republican leaders say a compromise could be months away even as discussions continue between GOP lawmakers and Democratic Gov. Maggie Hassan.

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In the meantime, state agencies are starting to feel the strains of a short-term spending plan, which keeps the government running for six months at last year's spending levels. Agency officials from the health, transportation and other departments went before a joint legislative committee on Wednesday to ask for money beyond a six-month chunk of the budget, while others sought approval to accept federal or private grants.

The fiscal committee takes such votes throughout the year, but its decisions hold more weight without a budget in place. In June, the Senate adopted a two-year budget worth $11.3 billion, less than the $11.5 billion Hassan had proposed. She vetoed it.

Members of the committee are divided on how much new spending they should approve without a budget.

"I have no intention of putting the 2016 budget in place until it's voted on or approved," GOP Senate President Chuck Morse said.

The committee rejected, for example, a request from the Department of Transportation for $674,000 to purchase new equipment in bulk.

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It also tabled a DOT request for $3.1 million to fulfill existing contracts for several road and bridge projects, including repaving several miles of the turnpike system near Nashua and Concord and replacing guardrails along Route 16. The turnpike resurfacing was scheduled to be completed by September and DOT has already chosen a contractor. Deputy Commissioner Patrick McKenna said he's now working to reschedule parts of the project.

"The planning occurred before any of the budget woes occurred," McKenna said.

Debate reveals the ongoing headache for department heads who have no idea how long the short-term plan will last, making it hard to operate normally. Cities and towns could feel the squeeze, too, if a budget isn't adopted in time to set tax rates for the fall.

Hassan met with Morse and House Speaker Shawn Jasper on Wednesday, roughly a week after she laid out the framework of a budget compromise she could support. It included business tax cuts sought by Republicans, but it would pay for them by raising the cigarette tax and car registration fees, among other things. Republicans still say tax and fee increases are non-starters.

"The governor looks forward to continued negotiations on a path forward," said her spokesman, William Hinkle.

Morse didn't rule out the possibility of voting on a new budget when the Legislature returns Sept. 16 to take up Hassan's vetoes, a suggestion Hassan made when she announced her compromise plan. But he wants to see final revenue and spending numbers for the last budget before getting back to work.

The fiscal year ended June 30, but a final picture of the spending and revenue numbers won't come out until September, giving budget writers a clearer picture of spending in the last budget as well as savings from the short-term plan.

In the meantime, Morse said, the effects of the budget stalemate will become clearer to voters.

"I think the people will weigh in as we go through the summer as to what services they're missing," he said.