The New Hampshire Legislature passed a budget for fiscal years 2020-2021 on September 25, 2019. The vote followed months of wrangling after Gov. Chris Sununu vetoed an earlier version of the budget.
A majority from both parties supposed the new compromise budget, and Sununu indicated that he will sign it.
What’s in the 2020-2021 NH state budget?
The operational budget includes the day-to-day spending, based on revenue from taxes and fees, for state agencies and departments.The 2020-2021 New Hampshire operational budget contains $12.9 billion in spending. This includes:
- School funding: Returning school stabilization grants to their original levels. Additional money in 2021 – and only 2021 – for schools with a large percentage of kids receiving free and reduced lunch, and for schools in towns with lower property values. The state will also fully fund full-day kindergarten programs, regardless of keno revenues.
- Municipal aid: $40 million in cash for cities and towns, which they can spend on anything they want.
- Medicaid rate increases: Raising the rates Medicaid pays to health providers by 3.1% each year for the next two years, starting this January. An additional $8 million to raise the rates Medicaid pays to providers of mental health and substance abuse treatment services.
- Higher education: Enough additional funding to UNH to freeze tuition at current levels. An additional $9 million will fund expansion of USNH’s nursing, occupational therapy and speech therapy programs.
- Family planning: Family planning clinics will get $3.2 million in state funds to replace federal Title X dollars they lost due to Trump administration policy changes. They money cannot be spent on abortion services.
- State employee raises: The budget allocates $6 million for the governor to play with while negotiating a new contract with state employees.
- Inpatient mental health: $8.7 million will go to start construction of a new secure psychiatric hospital. The project will almost certainly require additional funding from a future budget or legislative action. $4 million will be used to move kids out of New Hampshire Hospital and repurpose that space for adult beds.
The Department of Health and Human Services will actually receive less funding. DHHS Commissioner Jeff Meyers will have to find $25 million in cuts, but can’t reduce money for developmental services, county programs, or Medicaid rates.
The 2020-2021 budget trailer bill also makes some changes to state policy.
- Smoking age: The age to purchase or use tobacco and e-cigarette products is raised to 19.
- Business taxes: Business tax rates were major sticking point in the debate over the budget veto. The final budget allows a scheduled drop in rates for 2019 to go ahead. However, a future drop or increase in business tax rates in 2021 will be tied to whether revenues are lower or higher than predicted. The budget also brings the way business taxes are calculated into line with recent federal changes. That move is expected to decrease the tax burden on New Hampshire-based companies and increase what out-of-state companies who sell goods or services here have to pay.
- Commuter rail: Allows the Department of Transportation to use federal funds to start working on project plans for a capital corridor commuter rail expansion.
- Dental benefits for Medicaid patients: Starting in 2021, Medicaid patients will also receive coverage for dental services.
- Housing appeals board: The budget creates a new state housing appeals board, where individuals or developers can appeal decisions by local boards or committees.
- Animal costs of care: There will now be a state fund to cover the costs towns incur when caring for animals confiscated during animal cruelty court cases.
For more information on the impact of the 2020-2021 budget on specific policy areas, see our issue pages.
The NH capital budget for 2020-2021
Gov. Christopher Sununu started the next two-year budget cycle on June 21, 2018 with the first of a series of hearings to decide priorities for spending in the capital budget. The capital budget includes long-term investments into large-scale projects, usually associated with new construction or upgrades. The new state prison for women, which opened in March 2018 at an approximate cost of $48 million, is an example of a capital budget expenditure.
The capital budget for 2020-2021 is contained in HB 25. This year’s capital budget includes a host of renovations at the Statehouse, HVAC repairs at the New Hampshire State Hospital campus, new boilers at the Coos County Courthouse, dredging at Hampton Harbor and Rye Harbor, replacing a backhoe at the Veteran’s Cemetery, and more.
History of the 2020-2021 NH state budget
The governor’s budget proposal
On Valentine’s day of 2019, Governor Sununu laid out his two-year budget proposal in front of the Legislature. Overall spending would rise by $1.3 billion thanks in part to larger-than-expected business tax revenue.
Key elements of the governor’s budget included:
- Business tax cuts: The governor wanted to continue with plans to steadily continue business tax cuts.
- Rainy Day Fund: Sununu proposed sending $27 million of the state’s surplus to the Rainy Day Fund.
- Education: The governor’s plan included funding for certain job training programs and a student loan assistance program in the university system, but overall kept UNH at the same funding level as the last four years. As for public schools, Sununu’s proposal funded specific initiatives but did not make any major changes to the per-pupil school funding formula.
- Mental health: The governor proposed building a new state forensic hospital to replace the Secure Psychiatric Unit at the Concord prison. His budget also provided funding for executing the state’s Ten Year Mental Health Plan.
- Family and medical leave: The plan also included language to implement Sununu’s version of family and medical leave. It is an opt-in plan that differs from the Democrats proposal in several key ways. See how.
Changes made by the House
The House reworked the governor’s initial proposal, passing their own version in April along party lines with no Republicans voting in favor of it. It included $500 million more in state spending than Sununu proposed.
The budget passed by the House included:
- Mandatory family and medical leave: This program would be funded by a premium on employees’ wages (rather than the opt-in version favored by Sununu).
- Business tax cut freeze: Business taxes would remain at 2018 levels rather than continue to decrease as planned.
- Infrastructure project cuts: The House eliminated most of the infrastructure projects proposed by Sununu as a way of using up surplus money – these were called “pet projects” and “pork” by Democrats in the House, who see other uses for the extra funds.
- Capital gains tax: The House budget instituted a capital gains tax to help relieve property tax burdens and fund education.
- Kindergarten funding: Under the House budget, full day kindergarten funding would no longer be tied to keno revenue and would be funded from the education trust fund the same as grades 1 through 12.
- State forensic hospital: House members scaled back Sununu’s proposed $26 million psychiatric hospital construction project back to a $1.2 million planning phase.
The Senate budget
The Senate passed its version of the budget in June, which totaled around $13 billion. While there was bipartisan support for some elements of that budget, such as increasing staffing at the Department of Children, Youth and Families, others issues divided legislators along party lines. New elements of that plan included:
- Giving $40 million back to cities and towns, no strings attached, with most of the money allocated for towns with high poverty rates.
- Increasing the rates health providers are paid for services to Medicaid patients by 6.2%, a change that is estimated to cost around $60 million.
- Changing funding for Medicaid expansion to allow state funds to fill in the gap if contributions from hospitals and insurance fees don't cover the tab.
- Creating 77 new positions at DCYF.
- $17.5 million to build a new secure psychiatric facility.
- More funding for UNH and the community college system, which will allow the schools to freeze tuition prices.
The Senate budget also kept some key elements of the House version, including a mandatory paid family and medical leave plan and eliminating planned cuts to business taxes. The Senate budget increased funding for schools, restored stablization grants to their original levels and provided extra aid to towns with low property values. However, that $95 million was less than the $160 million the House planned to spend, which would have been paid for with a new tax on capital gains.
The House and Senate compromise budget
In June, the Legislature passed a compromise budget, largely based on the Senate version, but with a few important changes:
- $138 million for schools, restoring stabilization grants, increasing cash for kids receiving free and reduced lunch, and bumping up the per-pupil budget in towns with low property values.
- Dropping a mandatory paid family and medical leave program, which Sununu promised would trigger a veto.
A few other surprises found their way into the budget's trailer bill, HB 2. This includes raising the smoking age to 21, creating a "costs of care" fund for animals confiscated during cruelty cases, and repealing the ban on using state funds to pay for abortions.
Sununu vetoes the budget
Gov. Sununu vetoed the compromise budget in June, stating that he opposed an increase in business taxes and the use of surplus funds for ongoing expenses. Legislators passed a continuing resolution - an extension of last year's budget - through September 30.
An attempt to introduce a new budget plan - billed by Democratic leaders as a compromise without the endorsement of the governor - failed on September 19. Democrats were unable to muster the 2/3 majority needed to introduce those new bills.
Last year's budget numbers
The current capital budget for fiscal years 2018 and 2019 is $262 million. The current operating budget approved by the state Legislature is $11.7 billion.
Information about past and current budgets can be found at the state Department of Administrative Services.