What Just Happened: The NH House Passed a Budget!

If there is one thing you learn as a state rep, it’s to never be surprised at anything that takes place on the floor of the New Hampshire House of Representatives. But on Thursday, we surprised state house observers (and ourselves) by passing a bipartisan 2024-2025 budget by a loud and overwhelming voice vote. Here’s a quick rundown of what’s in, what’s out, and what else we voted on.

The Budget

To actually pass ALL of the elements of a budget in New Hampshire, passing three separate bills is required:

HB1: The operational budget, which funds state agencies and departments.
HB2: The “trailer bill”, which includes additional appropriations, policy changes, and allocations of surplus revenue left over from the prior budget.
HB25: The capital budget, which covers infrastructure investments in roads, bridges, buildings, and public works.

The Controversy

Most of the budget angst we hear about in the news typically centers around HB2—especially when it is used by the majority party as a vehicle to make policy changes. So why attempt to pass policy changes as part of the budget instead of in “regular” bills? Three reasons:

To give new life to a policy in a particular bill that has already been killed or tabled—and to ensure the resuscitated policy is funded in the budget.
To provide a second route to passage for a policy in a controversial bill that may be killed in the House or Senate before it reaches the governor.
To paint the governor into a corner. Although Gov. Sununu vetoed the lone Democratic budget to reach his desk in 2019, to date he has never vetoed a budget produced by a Republican legislative majority, no matter how many controversial add-ons were attached to it.

In the 2021 budget battle over the 2022-2023 budget, we saw all three of these come into play as HB2 was used as an alternate way to ram through legislation from dead (or soon-to-be-dead) bills that failed to win legislative approval earlier. Examples included the addition of Gov. Sununu’s 24 week abortion ban, the controversial “divisive concepts law”, the nation’s most expansive/expensive school voucher law, a much watered-down family leave program, and a $10 million fund to reimburse wealthy investors who lost money in the FRM Ponzi scheme. Bottom line: in the end, giving tax cuts to out-of-state corporations and subsidizing wealthy investors and private school tuitions were more important to the governor than a woman’s right to choose, working people, and New Hampshire communities struggling to fund public schools. GOP legislators knew that the governor would be extremely reluctant to veto a budget giving him business tax and school voucher “wins”—not to mention the authority to create and staff a new Department of Energy—so they loaded up the budget with extreme policies and dared him to veto it.

Spoiler alert: he didn’t veto it. Instead, he signed on the dotted line.

The Compromise

While the 2023 version of HB2 that emerged from the GOP-led Finance Committee earlier this month wasn’t as aggressively divisive as the 2021 version, it included more than a few problematic elements for Democrats. Chief among them were an accelerated phase out of the state’s Interest & Dividends tax, expansion of school voucher program eligibility with no guardrails, an education funding formula that short-changes property poor districts, and an arbitrary two year sunset on Medicaid Expansion.

But along with all of the challenges in HB2 itself, the almost even split between Democrats (197) and Republicans (201) created something else—the opportunity for a last-minute compromise. With ultra-conservative Republicans threatening to tank a budget written largely by other House Republicans based on the framework proposed by a Republican governor, Republican leaders in the House had a choice. Either they could risk not passing a budget at all by appeasing their most conservative wing with additional cuts and other poison pills at the risk of alienating all Democrats,, or they could reach across the aisle to try to forge out a compromise. Fortunately, they chose the latter. As a result of negotiations between the two leadership teams, a bipartisan floor amendment was hammered out that passed by a stunning 326-63 vote. Changes included:

Striking out the proposed expansion of school voucher program eligibility.
Increasing spending on Medicaid rates by more than $40 million in additional spending.
Overriding the governor’s proposed changes to the education funding formula to prioritize targeted funding for schools with low-income students.
Restoring a $30 million transfer to the state’s affordable housing fund proposed by the governor.
Adding new limits to the governor’s ability to call a state of emergency.

But that was only the start of a long day. Before a final vote could take place on HB2, legislators had to vote on 17 additional amendments proposed by Democrats and Republicans.

Yes, There Were Disappointments

An amendment that would have accelerated the elimination of the Interest & Dividends tax was defeated 190-199. The tax is New Hampshire’s 5th largest revenue generator and ending it sooner primarily benefits the highest-income New Hampshire residents while likely creating a budget squeeze down the road.
An attempt to prevent the transfer of school building aid, special education aid, and other elements of public school funding not directly linked to adequacy aid from the Education Trust Fund into the General Fund was defeated 191-197. This opens the door to money set aside for educational purposes potentially being used to meet other state expenses.
A proposal to use half of the funds allocated to renovate a hockey arena at UNH to lower student tuitions failed 128-259.
An attempt to increase school building aid by $10 million failed
But There We’re Also Pleasant Surprises

Attempts by conservative legislators to drastically cut the budget, remove the UNH hockey arena appropriation, and expand school voucher eligibility to 500% of the federal poverty level all failed to win approval.
An amendment striking a line item proposed by the governor to use $1.4 million to fund border enforcement using state and local police was approved 241-143.
A separate amendment requiring state, county and local law enforcement agencies to provide public notice of an immigration checkpoint within 24 hours of when the checkpoint is scheduled to occur passed

Blowing Smoke

While an attempt to amend HB2 to legalize cannabis (and allow users to grow it at home) as part of the budget failed 160-214, the House later passed HB639 by a 272-109 vote. This is a completely separate bill that would finally legalize cannabis and establish a regulatory framework for cannabis sales and taxation in New Hampshire. It appropriates $15.6 million to fund anticipated start-up costs, but faces rougher sledding in the Senate as well as a potential brick wall from Gov. Sununu, who has vetoed similar bills in the past. https://newhampshirebulletin.com/briefs/house-passes-cannabis-legalization-bill-sends-measure-to-senate/

Capital Budget (HB25)

The biennial capital budget was approved by a voice vote. The $137.4 million capital budget plan utilizes $105.7 million in federal funds and provides bonded funding for construction and renovation of state-owned buildings, critical maintenance, as well as investments in heavy equipment. More

Where We Go From Here

Now that the House has passed a budget, the Senate has until June to make tweaks or wholesale changes. Once the Senate has passed its version of the budget, the House has the option of “concurring” (agreeing) with the Senate’s changes, or requesting a Committee of Conference to hammer out their differences. Once lawmakers in both bodies have approved the final version, it will go to the governor for signature or veto.

Other Key Votes

In addition to the budget and cannabis bills, lawmakers voted on 15 addition bills with financial implications. Some of the highlights:

HB74, a bill requiring payment of unearned vacation time to employees who are terminated in good standing or when a company is sold passed 205-181.
HB234, a bill that would ended the practice of renewable energy credit (REC) sweeping was killed by a close 193-191 vote.
HB430, which would have required applicants for school voucher assistance to attend public school for a year before applying was defeated 194-192.
HB629, which would have required the Department of Education to administer the school voucher program instead of outsourcing the work to an outside administrator was killed 194-195 with House Speaker Sherman Packard casting the deciding vote.
HB534, which would appropriate $5 million over two years for a dedicated “Water Assistance for Natural Disaster Find” passed by voice vote after an attempt to kill it was defeated.

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