New Hampshire’s budget basics

According to the National Association of State Budget Officers (NASBO), New Hampshire’s total expenditures in fiscal year (FY) 2020 were $7.1 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2020 were $2.3 trillion, ranging from $4.7 billion in Wyoming to $337.7 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, New Hampshire’s combined state and local direct general expenditures were $11.3 billion in FY 2018 (the most recent year census data were available), or $8,359 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $9,801.

New Hampshire’s largest spending areas per capita were elementary and secondary education ($2,276) and public welfare ($1,778). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

New Hampshire’s combined state and local general revenues were $12.2 billion in FY 2018, or $9,005 per capita. National per capita general revenues were $10,071. New Hampshire does not levy a general sales tax or individual income tax. (New Hampshire reports some income tax revenue because it levies a tax on interest and dividend income.) New Hampshire’s largest sources of per capita revenue were property taxes ($3,362) and federal transfers ($1,842).

New Hampshire’s politics

Governor Chris Sununu, a Republican, was elected in 2020 with 65 percent of the vote. The next gubernatorial election is in 2022 because New Hampshire governors serve two-year terms. (Vermont is the only other state where governors serve two-year instead of four-year terms.)

Republicans control both the House of Representatives (213 Republicans to 187 Democrats) and Senate (14 Republicans to 10 Democrats). Control of the governor’s mansion and each house of the legislature gives Republicans a trifecta in New Hampshire. The entire legislature is up for election in 2022 because both representatives and senators serve two-year terms.

New Hampshire’s budget institutions, rules, and constraints

New Hampshire uses a biennial budget. The legislature must pass a balanced budget, but it can carry a deficit over into the following year. There are no further tax and expenditure limits in New Hampshire, nor are there limits on either authorized debt or debt service incurred by the state.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

New Hampshire’s recent fiscal debates

• New Hampshire is one of five states that do not levy a general sales tax. As such, New Hampshire gained nothing from the Supreme Court’s decision in South Dakota v. Wayfair that empowered states to require remote sellers to collect sales taxes. In fact, Governor Sununu feared the Wayfair decision could hurt New Hampshire businesses that now had to collect other states’ sales taxes on remote transactions. Legislation to block states from collecting taxes from New Hampshire businesses failed in 2018. Instead, in 2019, the legislature passed a bill that requires states to notify the New Hampshire Department of Justice before imposing their sales taxes on New Hampshire businesses, and it empowers New Hampshire’s attorney general to file suit if it believes a state’s request is unconstitutional. New Hampshire is the only state without a sales tax to consider such legislation, and supporters acknowledge the law will likely be challenged in court.
  
• New Hampshire approved an expansion of Medicaid eligibility under the Affordable Care Act in 2014. The law was signed by then -governor Maggie Hassan, a Democrat. However, when Republican Governor Sununu took office, he signed legislation in 2018 imposing work requirements on enrollees. After thousands of recipients lost coverage during the first month of implementation, the state delayed the work requirements in July 2019. Later that month, a federal judge blocked the state’s work requirement program because of the potential loss in health coverage. The state is appealing the decision.
  
• New Hampshire does not levy a broad-based tax on individual income. But the state does levy a 5 percent tax on interest and dividend income. Republican legislators attempted to repeal the tax in 2018, but the legislation failed, in part because the tax raises $100 million annually for the state. In 2019, Democratic legislators tried to make capital gains taxable, but the legislation was dropped during budget negotiations.

New Hampshire’s current budget

New Hampshire enacted its FY 2020-2021 biennial budget in September 2019. Over the two-year period, the budget approved $3.2 billion in general-fund spending and $13.0 billion in total fund spending. The governor did not submit a budget adjustment proposal, and the legislature did not make any significant changes to the budget in calendar year 2020.

Governor Sununu released his FY 2022-2023 biennial budget proposal and gave his State of the State address in February 2021. Over the two-year period, the governor proposes $3.5 billion in general-fund spending and $13.8 billion in total spending. The governor’s plan does not include any tax increases but proposes several tax cuts, including phasing out the state’s tax on dividend and interest income (New Hampshire already does not tax other forms of income), reducing the meals and rooms tax from 9 percent to 8.5 percent, and reducing the business enterprise tax from 0.6 percent to 0.55 percent. In his speech, the governor said a big part of his proposal is “tax cuts for everyone.”

For more on New Hampshire’s budget, see

• the New Hampshire Department of Administrative Services Budget Office,
  
• Transparent NH, and
  
• the New Hampshire Office of Legislative Budget Assistant.

New Hampshire’s economic trends

New Hampshire’s per capita income (per the Bureau of Economic Analysis) was $66,418 in 2020, ranking eighth among the states. It was above the national average of $59,729, but below the New England regional average of $73,961. The state’s median household income (five-year estimate) was $76,768 in 2019, ranking seventh among the states and above the national average of $62,843. New Hampshire’s poverty rate was 7.6 percent in 2019 (five-year estimate), below the national rate of 13.4 percent.

Although New Hampshire’s averages tell a story about the entire state, New Hampshire is composed of diverse localities. For example, the city of Berlin’s median household income was $39,130, and its poverty rate was 18.5 percent; the city of Portsmouth’s median household income was $83,923, and its poverty rate was 6.7 percent.

New Hampshire’s unemployment rate has historically been below the national average, particularly following the Great Recession, and in recent years it has been among the lowest in the country. (See how COVID-19 is affecting state employment and earnings data.)

Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. However, New Hampshire does not have enough Black or Latino residents for the Bureau of Labor Statistics to break down its unemployment rate by race.