New Hampshire’s budget basics

According to the National Association of State Budget Officers (NASBO), New Hampshire’s total expenditures in fiscal year (FY) 2019 were $6.2 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2019 were $2.1 trillion, ranging from $4.5 billion in South Dakota to $311.3 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 $11.1 billion in FY 2017 (the most recent year census data were available), or $8,222 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 $9,446.

New Hampshire’s largest spending areas per capita were elementary and secondary education ($2,202) and public welfare ($1,806). 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 $11.6 billion in FY 2017, or $8,621 per capita. National per capita general revenues were $9,592. 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 ($3,307) and federal transfers ($1,803).

New Hampshire’s politics

Governor Chris Sununu, a Republican, was elected in 2018 with 53 percent of the vote. The next gubernatorial election is in 2020 because New Hampshire governors serve two-year terms. (Vermont is the only other state where governors serve two-year instead of four-year terms.)

New Hampshire has a divided government. Democrats control both the House of Representatives (233 Democrats to 166 Republicans) and Senate (14 Democrats to 10 Republicans). The entire legislature is up for election in 2020 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

Governor Chris Sununu announced his proposed FY 2020–21 budget in February 2019. His priorities included additional spending for special education and nursing programs. In his 2019 state of the state address, Governor Sununu implored the legislature not to raise taxes or increase spending beyond his proposed levels, crediting the state’s low taxes for its recent economic growth.

The legislature passed its budget in June 2019. However, Governor Sununu vetoed the appropriation bills because the legislature’s budget rolled back two business tax rate cuts scheduled for 2019 (the legislature’s budget kept them at 2018 levels). The governor also argued that the legislature’s approved spending levels were not fiscally sustainable. In September 2019, the governor and legislature came to an agreement, allowing the scheduled rate reductions but making future rate cuts dependent on revenue growth, and enacted the FY 2020–21 budget.

Governor Sununu gave his 2020 state of the state address in February 2020.

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 $63,880 in 2019, ranking eighth among the states. It was above the national average of $56,663, but below the New England regional average of $70,683. The state’s median household income (five-year estimate) was $74,057 in 2018, ranking seventh among the states and above the national average of $60,293. New Hampshire’s poverty rate was 7.9 percent in 2018 (five-year estimate), below the national rate of 14.1 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 $38,315, and its poverty rate was 19.8 percent; the city of Portsmouth’s median household income was $78,027, and its poverty rate was 6.1 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.)