Gov. Chris Sununu presented his budget proposal for the next two years on February 11, 2021. After months of hearings and negotiations, House and Senate budget writers drafted a final, compromise version of the budget. The full House and Senate passed that budget on June 24. Gov. Sununu then signed it into law.
The governor’s budget proposal
You can find the line-item detail of the governor’s budget proposal here. His executive budget summary included the following highlights.
Gov. Sununu’s budget proposal used sunny predictions for future tax revenue, based on the high returns at the end of 2020. He proposed using that revenue to fund several tax cuts, including:
• Cutting the Meals and Rooms Tax from 9% to 8.5%
• Cutting the Business Enterprise Tax from 0.6% to 0.55%
• Increasing the filing threshold for the Business Enterprise Tax to $250,000
• Phasing out the Interest and Dividends tax over five years
Sununu’s budget proposal also included sending more Meals and Rooms Tax revenue to towns and cities. You can learn more about that ongoing debate in our issue brief on the subject.
The governor did not propose any major changes in the school funding formula, despite a pending lawsuit and a recent study commission on that issue. Instead, focused on some smaller funding changes.
For example, the governor proposed using enrollment numbers from the 2019-2020 school year, rather than the 2020-2021 school year, as the basis for per-pupil school funding. Public school enrollment fell during the pandemic, so this could help schools maintain some state funding.
Gov. Sununu also proposed sending $30 million to school building projects.
Gov. Sununu’s budget proposal included a merger for the New Hampshire university and college systems. Gov. Sununu says this would increase efficiency, and his budget accordingly decreased total funding for both systems.
He also proposed a new state Department of Energy, including an Offshore Wind Industry Development Office.
Paid family leave
Gov. Sununu still hasn’t given up on this issue, which was a feature of the 2018 and 2020 state elections. His budget included his plan to offer opt-in paid family leave, based on a pool of state employees. You can learn more about the pros and cons in our issue brief on this subject.
Planning for the next rainy day
Gov. Sununu’s budget proposal increased the amount the state saves in the so-called “Rainy Day Fund.”
It also revised the calculations that set the tax rate for the Unemployment Trust Fund. That fund took a major hit during the first coronavirus shutdown. Whenever the fund falls low enough, the unemployment tax rate goes up for businesses. Emergency funding from the federal government helped cushion the blow last year. According to his executive budget summary, Sununu’s new formula aims to “build the fund during strong economic times” and stop future unemployment tax rate increases.
The House budget proposal
The House Finance Committee cut some spending from the governor's budget proposal. The full House of Representatives voted in favor of the Finance Committee’s recommendations on April 7. The most significant changes are as follows.
Rolling back the governor’s emergency powers
One budget amendment requires legislative approval to continue a state of emergency. Under current state law, the governor has the power to renew a state of emergency every 21 days indefinitely—which Gov. Sununu has done throughout the COVID-19 pandemic.
House Republicans said they needed this amendment to persuade some representatives to vote for the budget. Learn more about the governor's executive actions during the COVID-19 emergency.
Reproductive health funding
Another budget amendment would require women's health clinics to move abortions to a physically separate location in order to receive any family planning funds from the state. The amendment was targeted at providers such as Planned Parenthood.
Ban on critical race theory
The House Finance Committee added text from HB 544 to the budget. That bill would prohibit any public employee training or education in New Hampshire that teaches "divisive concepts." The definition of "divisive concepts" includes several concepts on race and sex, such as the concept that "an individual, by virtue of his or her race or sex, is inherently racist, sexist, or oppressive, whether consciously or unconsciously." As a result, schools would not be allowed to teach critical race theory or systemic racism.
Cuts to Health and Human Services
The House Finance Committee recommended cutting over 200 positions from the Department of Health and Human Services (DHHS). Many of those positions are currently unfilled due to a statewide workforce shortage as well as a hiring freeze during the COVID-19 emergency.
The committee also cut out Gov. Sununu’s proposal for a statewide paid family leave program.
In response to allegations of abuse and to save money, House budget writers recommended closing the Sununu Youth Services Center, New Hampshire’s juvenile detention facility.
Lastly, the House Finance Committee cut out funding for a new forensic psychiatric hospital that was postponed by the COVID-19 emergency.
Higher education changes
While Gov. Sununu proposed merging the community college and university systems and cutting their funding, House budget writers wanted to slow down the process without cutting any funding this budget cycle.
Adding back some spending
The House Finance Committee recommended higher spending than the governor in some budget areas. For example, the committee voted to restore funding to the Small Business Development Center (SBDC) that was cut in Gov. Sununu’s budget.
The committee also added historic horse racing to the budget. Historic horse racing allows people to bet on historic horse races with minimal detail about the horses and jockeys. Historic horse racing terminals have been compared to slot machines, but supporters argue they could boost revenue for charities and the state. Learn more here.
The Senate budget proposal
The Senate Finance Committee made several significant changes to the House version of the budget. The full Senate passed their version of the budget on June 3.
Removing changes to emergency powers
The Senate Finance Committee removed the House budget amendment addressing the governor's emergency powers. The Senate instead passed a separate bill to revise the governor's emergency powers, HB 417.
Reproductive health care
The Senate Finance Committee removed the House amendment that requires women's health clinics to move abortions to a physically separate location in order to receive any family planning funds from the state. Instead, Senators added an amendment to ban abortion after 24 weeks gestation. This ban is similar to HB 625.
Ban on critical race theory 2.0
The Senate Finance Committee revised the House amendment that bans the teaching of "divisive concepts," such as critical race theory. The Senate amendment expands the amendment to include other forms of discrimination besides racism and sexism. So, for example, this new version would prohibit any teaching that people without disabilities are inherently oppressive of people with disabilities.
The Senate amendment also states, "Nothing in this section shall be construed to prohibit discussing, as part of a larger course of academic instruction, the historical existence of ideas and subjects identified in this section." According to Sen. Jeb Bradley, this will allow the discussion of critical race theory in historical context. Opponents argue the amendment still silences necessary discussions about implicit or unconscious biases.
Health and Human Services funding
The Senate Finance Committee added back some funding to the Department of Health and Human Services, including $30 million for a new secure psychiatric hospital. The Senate also restored Gov. Sununu's proposal for an opt-in family and medical leave program.
"Education Freedom Accounts"
The Senate Finance Committee added the "Education Freedom Accounts" program to the state budget. "Education Freedom Accounts" are somewhat similar to school vouchers. The program allows the parent of a school age child to receive funds from a scholarship organization to pay for education expenses. Once a parent contracts with a scholarship organization, the state must transfer funds to the parent's account equal to per-pupil state education funding.
The Senate was working on "Education Freedom Accounts" through another bill, SB 130.
The conference committee budget
House and Senate budget writers met in conference committee to forge a compromise version of the House and Senate budgets. That committee approved most of the Senate additions, including “education freedom accounts,” $30 million for a secure psychiatric hospital, and opt-in family and medical leave. They only made small changes to the Senate’s version of a ban on teaching critical race theory.
The conference committee also kept the ban on abortion after 24 weeks and added an ultrasound requirement before any abortion. The conference committee budget does not require women’s health clinics to physically and financially separate abortion procedures. Instead, it requires audits to ensure state funds are segregated from abortion services.
Representatives refused to support the budget unless there was some check on the governor’s emergency powers. The conference committee budget therefore requires the governor to appear before the legislature 90 days after declaring a state of emergency; at that point a majority of the House and Senate can vote to end the state of emergency. The budget also gives the Joint Legislative Fiscal Committee more involvement in emergency expenditures.
What comes next?
The full House and Senate passed the final conference committee budget on June 24. Gov. Sununu then signed it into law. The next budget cycle will begin in 2022 with state agency budget requests.
If you want to learn more about the New Hampshire budget process, check out the following Civics 101 podcast episodes featuring Citizens Count staff:
The State Budget: How It's Made
The State Budget: Where the Money Goes
Last update: June 28, 2021