By GARRY RAYNO, InDepthNH.org
CONCORD — The Republican members of the House Finance Committee presented their proposed fiscal 2026-2027 operating budget to their colleagues Tuesday prior to the vote on the two-bill budget package Thursday.
The House had to reduce Gov. Kelly Ayotte’s proposed budget by about $800 million in general fund money after its Ways and Means Committee projected revenues well below what the governor estimated.
The House’s budget package contains $16.2 billion in total spending including other revenue sources such as federal funds, highway, and fish and game funds, while Ayotte’s plan spends $16.7 billion.
House Finance Committee Chair Ken Weyler, R-Kingston, noted this budget is the first without interest and dividends tax revenue and the committee still managed to produce a balanced budget.
The balanced budget draws about $150 million from the rainy day fund to make up the expected deficit in this fiscal year’s (2025) budget and raises fees across state government for additional money, along with raiding dedicated funds, assessing a 5 percent administrative fee to other dedicated funds, and increasing revenues over what the Ways and Means Committee set for gambling mostly through a change over from historic horse racing on video terminals to slot machines, but lowering the “tax” charities receive to 30 percent from the current 35 percent of profits.
While the committee said the increase in fees is a user fee and many of the rates had not been increased for decades leaving them well short of covering the cost of the service, others had other ideas.
One Representative arguing the fee increases may as well be new taxes.
Rep. Michael Harrington, R-Strafford, said if the revenue from the fees is going into the state’s general fund that is just another name for a tax.
“Some of these fees increase 200 and 300 percent,” he said. “That is a tax increase and we ought to call it what it is.”
But Division I chair, Rep. Dan McGuire, R-Epsom, said if the funding for the agency comes from the general fund and the fees go into the general fund that is a user fee, noting some of the fees were so tiny the general fund had to pay most of the costs and that impacts all taxpayers.
The committee noted it searched high and low for new revenue in order to fund what members said they believe are essential services, but budget writers still included across the board budget cuts for most state departments such as requiring the Department of Health and Human Services to cut $23 million in each year of the biennium from its appropriations, the Attorney General’s Office $15 million over the biennium, the court system $8 million, the state retirement system $8.7 million, and the Department of Environmental Services $6 million.
The budget also reduces the Corrections Department by 150 filled positions to save $35 million dollars, but not corrections officers, and essentially rescinds a 3 percent provider reimbursement increase in the Medicaid program to save $52.5 million, and cuts state aid to the University System of New Hampshire by $50 million over the governor’s proposed 4 percent cut.
Most of the cuts were not popular with representatives attending the budget briefing.
“We are very frugal to a fault,” said Rep. Chris Herbert, D-Manchester. “We need a better balance where spending might be better than cuts.”
He said his top priorities are young families and the education their children need and the elderly at the end of life, not tax cuts.
Spending too often is kicked out the front door when it is not the answer, Herbert said.
McGuire said the proposed budget still spends $15 billion, and the cuts they are talking about are in the $500 million range. “What is that 3 or 4 percent,” he said.
“This state is not poor. You have to spend money to raise money to help those who need help. That is where we fall short,” Herbert said. “There is spending and there is raising revenues and yes that is painful sometimes, but it does work.”
Other representatives said cutting aid to the university system by 30 percent is shortsighted and counterproductive if you want to retain educated young people to join the state’s workforce.
One representative asked how the committee could cut the university system aid by $50 million when New Hampshire is dead last in funding higher education and could double what it gives and would still be last.
He said the 30 percent cut will drive up the in-state tuition for students who already have the highest higher education debt load in the country, noting the state’s saving looks like a higher bill to students.
Committee member Rep. Daniel Popovici-Muller, R-Windham, said they tried to avoid further cuts to the university system, but at the end of the day they needed to do that to balance the budget.
He noted the university’s overall budget is $1.2 billion, so the $25 million cut is about 2.1 percent, which is quite different from 30 percent and the system is in a position to handle that.
But the representative said the state college system has already been cut to the bone, and one of the colleges is going to have a difficult time surviving with these cuts.
“It is cut to the bone,” he said, “it is potentially lethal.”
Rep. Sallie Fellows, D-Holderness, noted that the enrollment at the university system is three times greater than in the Community College System of New Hampshire yet they receive about the same amount of state aid.
In the community college system that aid is $9,500 a pupil, but only $3,000 a pupil in the university system, she noted. “How is that reasonable?” Fellows asked.
Rep. James Gruber, D-Alstead, asked how the committee could justify a funding cut of that magnitude to the university system which will have a profound impact on the state, while funding a program that primarily benefits parents who can already afford to send their children to private schools, referring to the Education Freedom Account Program, which expands to parents at 400 percent of the federal poverty level in 2026 and to no income cap in 2027.
Under the budget the EFA program is expected to cost $91 million over the biennium from about $52 million this biennium, with about 75 percent of the program grants going to students who were already in private and religious schools or homeschooled and not in public schools.
He was also critical of a last minute amendment to the budget that forbids any school or organization from having diversity, equality and inclusion (DEI) programs.
Gruber noted the bill says any school that has a program could lose their state funding and wondered what that was doing in the budget.
Popovici-Muller said such programs use elements of racial discrimination to determine demographic outcomes.
That is a violation of the state discrimination laws and should not be part of the education system, he said. “Decisions should be based on merit and not protected characteristics.”
Rep. Connie Lane, D-Concord, said the committee members have talked about adding what is absolutely necessary into the budget and she asked why EFAs are absolutely necessary when public schools are suffering from a lack of state aid.
Popovici-Muller said the Claremont education decision did not say the parents of school children should be means tested when you don’t do it for public schools.
Lane said children in low property value communities are suffering and should be the focus of tax dollars not those who can afford private schools.
“Not everyone is that lucky,” Lane said. “I suggest the state budget focus on those less lucky rather than those who already have children in private schools and are capable of paying for that.”
She said the committee is not focusing on need and what the people are asking for.
Others were concerned about the cuts to Health and Human Services programs.
Rep. Zoe Manos, D-Stratham, was concerned about family planning services which were not funded in the budget saying it serves the poor through federally qualified health centers.
“These are potentially life saving services for women who need this care,” she said.
Rep. Jess Edwards, R-Auburn, said family planning was fully funded in the current budget but unfortunately the committee had to make a Sophie’s Choice this year.
He said he supports a carve out for Coos County, but noted in southern New Hampshire there are alternatives.
Rep. Linda Haskin, D-Exeter, was concerned about the 3 percent reduction in provider rates for Medicaid which includes mental health counseling, addiction treatment and tobacco and vaping programs.
Rep. Tracy Bricchi, D-Penacook, said a budget should reflect what the legislature values. “What this budget does not value is all the people,” she said. “I value all the people and I cannot support this budget.”
Others were concerned about the addition of premiums for children on Medicaid and adults in the expanded Medicaid program called the Granite Advantage, as well as co-pays for some services and medications.
“Where are they going to get the money?” asked Rep. Molly Howard, D-Hancock. “They are not that well off.”
One of the governor’s priorities, restoring retirement benefits to Group II (emergency responders) members that were eliminated in the last overhaul of the benefit calculation system, was taken care of in the budget.
The budget includes $55 million this biennium and will eventually cost about $280 million to rectify. Cities and towns and state officials say the change is needed in order to retain and recruit people for police, fire and corrections positions.
The change also includes a new Group III which would be for new state workers, which would be a defined contribution system like a 401K instead of the defined benefit system that serves state and local and county workers.
McGuire said currently state workers do not stay long enough to be vested in the system and lose their benefits when they leave.
The defined contribution could go with workers when they change jobs, he explained, much like they do today in private businesses.
Several representatives expressed concerns that the change to the new system would not be attractive to state employees.
The budget effectively ends the state’s renewable energy program as budget writers have designated the remainder of the fund go into the general fund.
That upset Rep. Wendy Thomas, D-Merrimack, who noted the renewable energy fund has been raided to help balance the budget and after the next biennium will go back to ratepayers as rebates.
“You’ve gutted or stolen what ratepayers paid in with the understanding it would go to renewable energy, a dedicated fund,” Thomas said. “You have essentially stolen the money.”
McGuire said: “That’s your opinion.”
He said the committee had to find $770 million and had six weeks to do it.
One way to balance the budget is looking at dedicated funds, he said, noting the dedicated funds were created by law and now they are passing a law to change it.
“How do you sleep at night after gutting New Hampshire’s energy future,” she asked.
Edwards told her that was inappropriate, and she should retract it.
“I will not,” Thomas said. “How do you feel comfortable gutting New Hampshire’s energy future?”
The House meets at 10 a.m. Thursday to vote on the budget and the remaining House bills that have to cross over to the Senate or die.
If the budget passes, it will go to the Senate where the Senate Finance Committee will work on its version of the budget.
The Senate has until May 5 to act on the budget bills.
Garry Rayno may be reached at garry.rayno@yahoo.com.