JUA Case Raises Concerns Over New Budget Deal

A number of top Democrats in Concord agree with the governor that it’s way too early to think the state will lose its case against the New Hampshire Medical Malpractice Joint Underwriting Association, or JUA.

Count House Finance Chair Marjorie Smith in that camp.

TAPE: at the moment I have no reason to believe that the state cannot rely on the JUA money...the fact that there is a lawsuit is understandable, but does not, at least at this point, mean in anyway the eventual outcome will be altered.

At this point it doesn’t appear like Democratic lawmakers are making contingency plans to either make additional cuts or bring in new revenues to replace the $110 million dollars in JUA money.

But Republican Senate leader Peter Bragdon says it’s been clear to him and others in his party that taking money from the fund isn’t sound fiscal policy.

TAPE: when you try to take money from a private organization and do something of questionable legality and then base a significant percentage of your budget on something that is questionable legality, you run the risk of these types of things happening.

Bragdon has called for budget writers to come back to the negotiating table and figure out how to balance the budget without JUA money.

The lawsuit obviously raises the question what would happen if the state loses this case.

Lawmakers balanced the 2008-2009 budget counting on $65 million dollars of JUA funds.

Treasurer Catherine Provencher says in the short-term the state could continue to pay its bills on time.

She says she wasn’t sure when that money would make it to state coffers in the first place.

TAPE: it wasn’t until late in the session that it was discussed that $65 million would come in in July, the way the law was written...so in other words, that money would come in, it wouldn’t come in July and you would have to shift monies around...correct. here at the Treasury that is what we do.

If the state loses it legal battle, there is about $20 million dollars in the rainy day fund that potentially could be applied to the ’08-’09 biennium.

That would leave the state with a $45 million dollar hole before even looking at the 2010-2011 budget.

The state would have until September- when auditors complete their work- to close out the last biennium in the black.

If that doesn’t happen, the state’s bond rating could take a hit, making it more expensive to borrow money.

And New Hampshire would also eventually have a cash flow problem.

But House Finance Chair Representative Smith says, if the state can’t rely on the JUA money or any other revenue source, then she is prepared to revisit the budget, no matter how unappealing the prospect.

TAPE: The budget for the next biennium was the most difficult budget that anyone remembers constructing in living memory. We have services that must be delivered to the people in the state...and we had an understandable decrease in revenue. We had to make very significant cuts....and it’s certainly not going to be easier next month than it was last month.

In a nod to how sensitive the timing is to transfer funds, the court has adopted a streamlined process.

A final hearing is scheduled for July 20, with a decision anticipated prior to July 31st.

There will be a lot of people waiting for the court’s ruling.

For NHPR News, I’m DG.