As the lengthy New Hampshire state budgeting process unfolds in the State House, residents were finally given the opportunity to weigh in during a hearing last week.

Gov. Kelly Ayotte unveiled her proposed state budget — outlined in House Bill 1 — and an accompanying policy-related “trailer bill” – House Bill 2 — last month. That budget, which comes amid a tight fiscal environment, seeks to cut down on costs while still expanding several programs in what the governor has called an effort to “recalibrate.” Those cost-cutting measures include shifting more of the cost of Medicaid to recipients and reduced funding for the state university system. The two budget bills would also dramatically expand the voucher-like education freedom accounts program and spend $1 billion to ensure there’s no waitlist for people with developmental disabilities trying to receive services from the state.

That budget proposal is now being considered by the New Hampshire House of Representatives.

Ayotte’s budget relies on rosy fiscal projections that predict a strong rebound on state business tax revenues, which have lagged in recent years. These projections have seen pushback from Ayotte’s fellow Republicans in the State House, where the House Ways and Means Committee is basing its work on projections hundreds of millions of dollars lower than the governor’s. To kick off the March 12 hearing, which was held by the House Finance Committee, Committee Chairman Ken Weyler addressed this challenge.

“We must fit (the budget) to the revenues proposed by the House Ways and Means Committee,” he said. “That revenue differs from the governor’s estimate by almost $800 million in an almost $16 billion budget. Obviously, this is a bigger challenge than most budgets, but less than some previous challenges.”

Another challenge, he said, is that the budget is “on a path to overspend by about $50 million.”

Speakers at the hearing took the time Wednesday to express concerns about the changes to Medicaid, to call for increased education funding, and to commend the governor for committing to restoring a key benefit to retired first responders.

Pleas for increased education funding

Many speakers raised concerns that Ayotte’s budget does not contain enough funding for education – and voiced opposition to Republican plans to expand the income eligibility for the education freedom accounts program.

Rob Nadeau, a member of the Hopkinton School Board, argued his town needs more property tax relief from the state. After Hopkinton’s recent five-year property revaluation, 62 of the 127 properties in town that saw their property taxes double are located in The Meadows, a manufactured home park largely occupied by seniors, Nadeau said.

Raising the amount the state pays out to school districts through the adequacy formula could help those residents, Nadeau argued.

“When you increase adequacy, you help lower the burden for the people that are least able to pay that property tax,” Nadeau said. “That, I believe, is a duty that we all hold as public agents.”

Ellen Farnum argued her Lakes Region town of Tamworth also has high property taxes: in 2024, the town’s total tax rate was $14.43 per $1,000 of property valuation, according to the Department of Revenue Administration, just under the statewide average of $17.03 per $1,000.

“We have an aging population with many people living on fixed incomes, and we are struggling right now to fund our town services and our public schools,” she said. “I therefore find it astonishing that this proposed budget adds to our problems by including money for educational freedom accounts.”

Education freedom accounts allow households making up to 350 percent of the federal poverty level — $112,525 for a family of four — to access state adequacy funds that historically had gone to public schools and use them for private and homeschooling expenses.

Republicans and school choice advocates have proposed lifting the income cap entirely, arguing the program makes alternative education programs more accessible. Farnum argued the money should be spent on public schools instead, and that it would privilege wealthier private schools and families over less wealthy property-tax payers.

Executive Councilor Karen Liot Hill, a Democrat, former mayor of Lebanon, and current Lebanon city councilor, agreed.

“When the state fails to cover special education costs and diverts taxpayer dollars from public schools to private schools, local property taxes go up,” she said. “…I know this because I’ve seen it firsthand for the past 20 years as a city councilor.”

At one point, Weyler, House Finance Chairman, chastised those testifying for devoting too much time to the subject.

“It seems like we’ve heard a lot about school funding,” he said. “More than we really need to know. We know that it’s a problem. We don’t need to hear it 50 times. Thank you.”

Changes to Medicaid

As a cost-cutting measure, Ayotte has proposed a number of changes to New Hampshire’s Medicaid program in HB 2.

First, she wants to charge certain Medicaid recipients — those with children who earn 255% of the federal poverty level and those without children who earn between 100% and 138% of the poverty level — premiums of up to 5% of their income. She also wants to increase the portion of prescription costs Medicaid recipients are responsible for, from $1 or $2 to $4 per prescription (unless it exceeds 5% of household income). Finally, she’s calling for a complete end to continuous enrollment, a system implemented during the COVID-19 pandemic to allow people to stay on Medicaid even after they no longer met the requirements; that system already ended, but it’s taken time for the state to disenroll recipients.

Andrew Harmon, of New Hampton, pointed to problems he’d have with these changes as someone who works as an independent contractor.

“This 5% increase would be an income tax I have to pay, and I would not be sure exactly what amount I am going to be paying since my income literally changes from month to month,” he said. “I’ve had some months where I’ve made as little as $200. I’ve had some months where I’ve made almost $1,000, so not knowing how much I’d have to set aside would be a huge problem, especially since some of my medical needs are not always covered by Medicaid.”

Several New Hampshire providers who treat and care for patients on Medicaid spoke during the hearing.

Jacob Reagan, director of operations at Maxim Healthcare in Bedford, said the state should be increasing the amount of money it puts into Medicaid, not decreasing it.

Maxim Healthcare employs more than 100 nurses and provides skilled nursing to medically complex pediatric and adult patients with chronic conditions in their own homes. Reagan commended the Legislature for approving Medicaid rate increases during the pandemic that allowed them to better recruit and retain nurses. However, in previous budget cycles, he said the Legislature’s failure to similarly invest in this area “created critical access issues for essential services and left many patients forced to seek more expensive care at nursing homes or hospitals at precisely the time when the capacity was needed elsewhere.”

“Each time provider groups such as ourselves and parents are forced to get involved and raise awareness, it is already too late,” he said. “This committee had the opportunity and the responsibility to offer these children and their families a better way of life while also helping balance New Hampshire’s Medicaid budget.”

That opportunity, he said, was to increase the Medicaid rate again with a cost-of-living adjustment to make New Hampshire competitive with other states. He urged the Legislature to use general funds to add these cost-of-living adjustments every year in this budget.

Cuts to renewable energy fund

While education and health care topics dominated the hearing, Ayotte’s proposal to remove $10 million from the state’s renewable energy fund also got some attention.

HB 2, in its current form, directs the Department of Energy to transfer millions from the fund’s coffers into the state’s general fund.

The renewable energy fund, created in 2007, provides money for several rebate and grant programs, including for projects like installing “a wood chip biomass boiler in a high school,” low and moderate income community solar efforts, and incentivizing the use of wood pellet boilers and furnaces, according to the fund’s most recent annual report.

The pot of money was brought into existence as a part of the state’s Renewable Energy Portfolio Standard law, which requires that renewables make up 25.2% of the state’s electricity by 2025, according to the DOE. Electric services providers that don’t meet that benchmark must make Alternative Compliance Payments, also called ACPs, which are deposited into the fund.

These payments brought in a little more than $5.8 million to the fund in 2023, according to the annual report.

Rep. Wendy Thomas, a Merrimack Democrat, said the fund has benefited more than 1,100 businesses in the state since its inception and leveraged “over $355 million in private spending.”

“On average, the REF leverages six times more private investment than public dollars,” Thomas said, “and, this past year, it was a 9-to-1 ratio of private investment versus public subsidy.”

She argued that redirecting the money would violate the agreement made with taxpayers and stakeholders when the fund was created for renewable energy initiatives, and that it would hurt workers and businesses that have benefited from the programs.

“Redirecting funds like this only leads to an erosion of public confidence in government fiscal responsibility,” Thomas said.

Meredith Hatfield, associate director for policy and government relations with The Nature Conservancy, an environmental nonprofit, also urged the committee to reject this transfer of funds. She said the proposal would shift the funds from “their lawful, intended uses that benefit electric ratepayers.”

She also raised issues with certain aspects of the bill’s effort to streamline the permitting process. Though these changes are aimed at increasing the housing supply in the state, they would impact all permitting, Hatfield said. She pointed to the fact that housing makes up a minority of alteration of terrain permits and only a small sliver of wetland permits received by the Department of Environmental Services.

Hatfield said the group was also concerned about “proposed shifts of staff and duties from the Fish and Game Department and the Department of Natural and Cultural Resources to DES.”

“We deeply respect the work of DES,” Hatfield said, “but we are concerned that this proposed streamlining that consolidates the staff and duties would be detrimental to the important services that DNCR’s Natural Heritage Bureau and Fish and Game provide to protect the health, the water resources, and the wildlife of New Hampshire.”

She urged the committee to carefully consider these proposals and bring them before the House’s related policy committees.

Praise from first responders

One piece of Ayotte’s budget received praise from public employees: her proposal to restore retirement benefits for police officers and firefighters who retired prior to September 2013.

Those employees, known as Group II employees, saw their benefits reduced by the Legislature in 2011 as lawmakers slashed spending in response to budgetary pressures during the Great Recession. Ayotte’s budget would restore the benefits for those employees who retired before September 2013, and would devote another $33 million to do so.

Brian Ryll, president of the Professional Firefighters of New Hampshire, welcomed that change. He said the 2011 reduction in benefits had demoralized firefighters in the state and had driven many to take jobs out of state.

“This exodus threatens to undermine the integrity of public safety in our state, leaving the rest of us to pick up the pieces, given that word of mouth is the most powerful form of advertising,” said Ryll. “Reinstating these benefits for those who have been taken away should be seen as the most effective strategy for retaining senior leadership and attracting the leaders of tomorrow.”

Ryll and others called on the House to keep those provisions in their version of the budget, which they must pass by April 10.

Frank Campo, president of the New Hampshire Trooper’s Association, said the 2011 changes had had a measurable impact.

Ayotte’s budget “simply restores benefits that were unfairly taken away from first responders prior to those changes,” he told the Finance Committee. “New Hampshire never had an issue retaining police officers. Since then, especially in the past five or six years, police service in the state has become a revolving door.”