Budget 2026-2027

Gov. Ayotte’s budget proposal

On February 13, Gov. Kelly Ayotte presented her budget proposal to the state Legislature. She highlighted several funding priorities, including:

• A nearly 50% increase in funding for special education
• Allowing all students currently enrolled in public school to participate in the Education Freedom Account program, which lets students spend the per-pupil share of public school funding on private or home school expenses
• Increasing state funding for the Community College System (by about $10 million)
• Funding the Northern Border Alliance and other law enforcement initiatives, including increased funding for retirement benefits

Her budget also includes policy changes, such as:

• Reversing the bail reform law passed last year and limiting the conditions for bail (which legislators quickly passed through a different 2025 bill, HB 592)
• Requiring state agencies and departments to process permits related to housing within 60 days
• Placing a moratorium on new landfill permits
• Allowing charitable gaming locations to bring in slot machines, which would in turn increase state revenue from gambling

With falling business tax revenue, pending lawsuits against the state, and the loss of federal funds related to COVID-19, Gov. Ayotte also proposed several ways to cut state costs, such as:

• Decreasing state funding for the University System (by about $16.5 million)
• Adding co-pays for some Medicaid recipients
• Dipping into the state Rainy Day Fund

The House of Representatives budget proposal

The House of Representatives had much lower revenue estimates than Gov. Ayotte, and the House cut her budget proposal accordingly. Some of their most notable cuts include:

• Decreasing state funding for the University System by about $50 million
• Eliminating 190 positions in the Department of Corrections
• Reducing Medicaid reimbursement rates by 3%
• Cutting funding for the state Council on the Arts, family planning, the Human Rights Commission, and the Office of the Child Advocate

The House also added several policy changes, including:

• Prohibiting any language related to diversity, equity, and inclusion in state contracts
• Adding an exception to state anti-discrimination laws for bathrooms, locker rooms, sports, prisons, hospitals, and treatment centers to classify individuals based on biological sex (also passed through a separate bill, HB 148)
• Removing the authority of the Department of Health and Human Services to require vaccinations beyond those in state law. Chickenpox, Hepatitis B, and Hib vaccination requirements would expire in 2026.

The House budget also legalizes slot machine gaming, like Gov. Ayotte's budget. The House budget also gradually expands Education Freedom Accounts so that all students are eligible, regardless of family income or whether or not they ever enrolled in public school.

The House voted down a hotly-debated provision that would have required a supermajority to increase local school budgets over a cap.

The Senate budget proposal

Taking into account spring reports, the New Hampshire Senate approved updated revenue estimates fairly close to Gov. Ayotte’s original proposal. The Senate accordingly reversed many of the House funding cuts, such as:

• Funding the University System at $85 million each fiscal year, a significant increase over the House proposal of roughly $66 million
• Eliminating only 60 positions from the Department of Corrections instead of 190
• Restoring funding for Medicaid, mental health, and developmental disability services; Medicaid recipients would still have to cover a copay
• Reinstating funding for the state Council on the Arts, family planning, the Human Rights Commission, and the office of the Child Advocate, although at lower levels than the governor proposed

The Senate also removed some of the more controversial policy changes in the House budget, such as a limitation on vaccination requirements from the Department of Health and Human Services. They revised other policy changes to make them less dramatic. For example, the Senate approved reducing annual vehicle inspection requirements instead of eliminating them entirely.

The Senate is continuing the plan to legalize slot machines and expand eligibility for Education Freedom Accounts, although the House and the Senate differ on the details.

The conference committee budget

A conference committee of legislators from the House and Senate agreed to a final compromise on the state budget that was fairly close to the Senate version, thanks in part to much higher revenue estimates from various state agencies. The House got some notable “wins” however, including eliminating the annual car inspection requirement. The final compromise budget also prohibits any language related to diversity, equity, and inclusion in state programs and contracts.

The conference committee compromised on vaccine requirements. As part of the budget, the Department of Health and Human Services (DHHS) would lose its authority to require vaccines beyond state law. However, chickenpox, Hepatitis B, and Hib were added to the childhood vaccine requirements in state law. 

The final compromise budget still legalizes slot machines as a way to generate more revenue. 

Gov. Ayotte signed a separate bill expanding eligibility for Education Freedom Accounts, SB 295.

Lastly, the conference committee budget revises retirement benefits for some Group II members (police and firefighters). There is currently a lawsuit over the same issue. Gov. Ayotte supports fully restoring benefits that were changed about a decade ago and said she would veto the budget over this issue. Nonetheless, the legislative conference committee only agreed to restore some of the benefits with added restrictions, such as a cap on how overtime counts towards retirement. 

The final budget compromise

In the week before the last budget vote, Republican legislators worked with Gov. Ayotte to amend an unrelated bill, HB 282, to address her budget concerns. HB 282 does not completely restore first responder retirement benefits, but brings the state budget much closer to Gov. Ayotte's proposal.

After a series of dramatic votes in the House and Senate, legislators narrowly passed the committee of conference version of the state budget bills, HB 1 and HB 2, as well as the amended version of HB 282. Gov. Ayotte signed this final, grand compromise into law on June 27, 2025.