By PAULA TRACY and GARRY RAYNO
InDepthNH.org
CONCORD — The finishing touches on a proposed House budget that cuts many state programs and services for the next two years but offers a balanced budget were worked out Thursday by the House Finance Committee.
It looks to eliminate funding for the arts, drastically cut tourism promotion and funding to the university system, raise fees and eliminate the human rights commission, the office of the child advocate, the board of tax and land appeals and defund family planning.
These are among a handful of the changes contemplated including a 3 percent decrease for Medicaid providers.
The proposal looks to increase fees in everything from landfill tipping fees to car registration and license plate fees.
It would eliminate more than 100 positions that are occupied and terminate 200 or more other unfilled positions mostly in the prison, which has fewer inmates, in the liquor commission which will transfer out the job of enforcement.
Cuts of about 30 percent of its general fund money would be faced by the University System of New Hampshire if passed and the elimination of a grant program for needy New Hampshire students, the Governor’s Scholarship Program.
It would, however, fund a $30 million-a-year pension hole for the Group II first responders, as a way to ensure that they can retain and recruit individuals throughout the state for that vital role, which the Democrats supported.
And as Democrat Rep. Mary Jane Wallner of Concord pointed out all these cuts come while there are Republican plans to expand Education Freedom Accounts to the wealthy without “guardrails.”
The proposed House budget also eliminates funding for poor women to get WIC coverage at farmer’s markets.
Republicans said the budget comes at a bad financial time for the state and the legislature has a requirement that a balanced budget be presented.
Michael Kane, legislative budget assistant, told the committee Thursday “this is a balanced budget proposal and in accordance with law.”
The votes on HB 1 and HB 2 as amended were 14-11 with Democrats calling it “devastating” and Republicans calling it “necessary.”
But it is only half-way through the process to find a new state budget before July begins.
In all, there are four budgets (Governor’s, House, Senate & final conference committee version) all predicated on revenue projections which are not set in stone and going up and down, but expected to be mostly down compared to the current budget.
March revenue, just released, was up $10 million overall but mostly related to interest from federal funds expected to be clawed back by the Trump Administration.
Business tax revenues continue to perform 16 percent below expectations and down $130 million for the year. Bright spots were lottery revenue and to a lesser extent rooms and meals revenue. A link to the March revenue report is here.
https://www.das.nh.gov/accounting/FY%2025/FY2025_Monthly_Revenue_March.pdf
The most optimistic budget so far came from the governor in February.
The House had less money projected to work with.
But the Senate still has yet to tackle the issue and could have different revenue projections than the dire ones the House set in budget priorities.
The governor’s budget is $15.9 billion including federal funds but $3.1 billion per year from the general fund which is money raised in New Hampshire through taxation.
Overall, the House’s proposed budget would spend $15.6 billion in total funds, and $5.6 billion in general funds over the next biennium.
Because the Granite State must balance its budget by law, the House had to look at the revenue picture which is only a snapshot in time from the Ways and Means Committee.
Gov. Kelly Ayotte’s budget came out first and since that time, revenue projections went down and the House Ways and Means Committee told the House Finance Committee that only 75 percent of the governor’s number could be feasible.
Hundreds of millions had to be cut to meet those projected numbers by law.
This week the arduous process in the House came to a culmination, with the Legislative Budget Assistant’s office offering the finishing touches Thursday.
A vote is expected in the full House next Thursday but on next Tuesday a presentation to the full House will be made in Chambers by the Finance Committee with the LBA to answer questions.
The way the process of developing the House budget began was with a public hearing and then the committee was broken down into three divisions. Divided up by state departments, members worked on the task paring down the requests and ultimately in some cases, drastically cutting things.
The House budget anticipates layoffs of some state workers. But it’s not over yet.
The whole process starts anew with the Senate crafting its budget next.
They will also have the benefit of fresh revenue numbers and April will be a key revenue month.
Revenues have been coming down from last August through December, 2024 but are now picking up. January revenue projections were above target. February was also above target and March numbers look strong, say budget analysts.
Ayotte, who is new as governor but possesses a lot of experience from her six years in the United States Senate, and was once a state department head as its attorney general, tapped some top talent to help her come up with her budget including well known New Hampshire economic analysts Brian Gottlob and Lindsey Stepp, commissioner of the state Department of Revenue Administration.
This has been a while coming.
Department heads were warned by former Gov. Chris Sununu last year to expect to tighten their belts and that this would be a very tough year compared to the previous go round, but Ayotte’s proposal does not include layoffs. She did impose a hiring freeze with some exceptions for essential positions.
There are two bills that the House will be asked to pass, HB 1 which is the money and HB 2 is the enabling policy language to support what’s in HB 1.
Senators will be lobbied tremendously from all sides to come up with different budget numbers in the coming days and because there are only 24 of them, compared to 400 in the House this chamber is easier to work with for lobbyists.
There are more Republicans than in the last budget go-round with a 16-8 majority rather than 14-10 in the Senate.
Compared to the last budget Sununu signed, now in its second year – crafted in much better times, financially – this governor’s budget actually asks for more money.
But if “adjusted authorized” funds are considered, Ayotte’s budget cuts 150 million in general fund dollars, while the Education Trust Fund grows.
“Adjusted authorized” is a way to look at a budget if all current appropriations are maxed up and included from all the legislation passed, which is a way to compare, budget writers say.
Layoffs in the House budget include those at Safety and the Human Rights commission, which would be abolished and are bound to be controversial.
The House also has yanked a majority of all funding for tourism promotion which the governor has said she does not support, nor does she support elimination of the state Council on the Arts grants which the proposed House budget does. Studies have shown that tourism promotion by the state assists in raising revenues from multiple sources, most notably the rooms and meals tax, but one Republican member of the House Finance Committee, Division I chair Rep. Dan McGuire, R-Epsom, called state tourism promotion “corporate welfare.”
There is no line item veto for Governor Ayotte, who must sign it, let it become law without her signature or veto what budget comes to her desk.
Compared to Sununu she appears much more hands-on in terms of the budget and legislation, based on the fact she campaigned on a number of priorities which she wants to see enacted.
She is working the halls and watching the Youtube meetings in the House and working to be prepared to convince the Senate of her views on spending.
And she is just coming off a slew of victories.
The proposed House budget does restore funds for the Group II retirement group, which she campaigned on, which benefits first responders across the state. An amendment to the “seven-year rule” was made Thursday which was called “a technical cleanup.”
Ayotte is proposing more gambling revenue as a way to make ends meet and there are several bills related to that with different allocations for revenue, but the state is seeing casinos along the border with Massachusetts boom and begin to build out to meet demand. Ayotte proposes replacing historic racing machines with slot machines to increase revenue.
She has eschewed the idea of legalizing cannabis which some say is a missed opportunity for revenue, with the state surrounded by legal weed and residents going out of state to buy it.
Medicaid provider rates are due to go down by 3 percent in the House budget which is bound to be controversial in the Senate.
The influential House Freedom Caucus issued a statement indicating serious concerns that the proposed House budget does not cut enough, and this may imperil the budget vote next week or lead to amendments to cut it even more, while the Democrats are also likely to look to provide amendments to increase funding.
Wallner, D-Concord, said the Democrats could not support the proposed budget.
“As in any budget there are going to be provisions the minority supports, particularly to the Group II retirement. But HB 2 goes on to take some radical action,” Wallner said.
She noted it only funds $20 million for the YDC settlement fund for the biennium which is far too little, she charged.
“House Bill 2 also contains legislation that would decimate our renewable energy initiatives and our renewable energy fund,” she said.
By eliminating EFA income thresholds in HB 2 by 2027, it is contrary to the stated original intent which was to make alternative education plans for low-income families, Wallner added.
And then there is the tax cap issue.
“House Bill 2 seeks to limit local control by preventing municipalities from setting their own school budgets by capping the amount that can be spent,” the minority leader said.
And she noted an amendment brought forward which would prohibit all state contracts from having language related to diversity, equity and inclusion was thrown in at the last minute without public hearing or input.
She also addressed the DHHS budget and noted Medicaid coverage would require a 5 percent family income premium for the lowest income families and a 3 percent rate decrease for Medicaid providers.
She charged that it will have negative implications for years to come.
For Republicans, Chairman Kenneth Weyler said it was a particularly hard year financially for budgets.
“This was a very difficult budget,” said Weyler. “The economy that has happened in the last two years has been terrible.” He also blamed the federal government for mismanagement.
“We tried to find new ways to add a little more revenue. Some of them were looking at these small boards that we just mentioned, board of tax and land appeals and so on. A person could file a case for $40 but the cost to the taxpayers was several thousand dollars for that action. And so a lot of those things we put there for a convenience to the public we can no longer afford.”
He said the budget now would increase fees which would be “fairer to the taxpaying public.”
Wallner added there are devastating cuts to the Department of Corrections, by as much as 20 percent cuts to the judicial branch and other departments back of the budget cuts.
She said when there are devastating reductions to the developmental disabilities community and will create “a major setback in the progress made to these very needy citizens.”
She said even after $23 million is cut in HHS each year, it will lead to an equal amount of loss of federal funds.
Weyler corrected her numbers to state the proposed budget reduction for UNH went from $91 to $66 million. “That’s $25 million and…I am looking at $1.2 billion budgets. That’s not a huge hit.”
He said the state is fortunate that there is a 16 percent vacancy rate in jobs in state government, though not all were funded.
This, he said, allowed Republicans to take away the positions but “they coped…for more than a year…so a lot of the money came from removing many of those vacant positions.”
Back of the budget cuts give departments flexibility to find and fill those positions in some cases, Weyler said.
There are fewer people looking for jobs with a low unemployment rate, he said “and there aren’t as many people who want to take those government jobs,” which allowed them to pare down the payroll.
“Some of the education funding is a reflection of the loss of enrollment as well the fact that some of it, increases in education have been above inflation with no seeming reason to do so. None were really explained. So, we’ve had a lot of complaints about the taxes,” he said.
“Interestingly enough, people vote for school budgets that raise their taxes and then complain to us that property taxes went up. So we did put in a bill that I believe will pass, to limit the increased rate of school budgets going forward. That should be a big help on property tax increases but unfortunately it doesn’t help for the property taxes people are presently paying,” Weyler said.
Reaction came even before the vote which could have an impact on whether or not these two key bills pass the House.
The New Hampshire House Freedom Caucus expressed serious concerns over the revenue estimates included in the proposed state budget, warning that they are overly optimistic given current economic uncertainties. The Caucus urged lawmakers to adopt a more conservative approach to safeguard taxpayers from potential shortfalls.
“New Hampshire has long prided itself on fiscal discipline and now is not the time to abandon those principles,” said Rep. Len Turcotte, R-Barrington. “We must make prudent decisions today to ensure economic stability tomorrow.”
The New Hampshire House Freedom Caucus is a grassroots organization consisting of legislators and private citizens, who believe in personal liberty and the traditional conservative “Yankee” values.
House Speaker Sherman Packard, R-Londonderry released the following statement: “Crafting a budget with so many moving pieces requires both ingenuity and experience. Thanks to the collaboration between Finance, Public Works and Highways, and the Ways and Means Committees, we had an exceptional group dedicated to shaping both the Operating and Capital budgets with precision and foresight.
“Like the families we represent, the House understood the need to tighten its belt and align spending with revenue. We made tough decisions, finding smarter, more efficient ways to do more with less. Every dollar in this budget was carefully allocated as part of our tax relief strategy to protect our citizens, support law enforcement, safeguard our freedoms, and secure our financial future.
“The Property Tax Protection Act is the heart of this budget. It will ensure municipalities stay fiscally responsible, curb runaway budgets, and protect Granite Staters from tax hikes—without cutting essential services,” he said.