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NH’s General Fund Appropriations: The Committee of Conference

Executive Summary

Author: Steve Norton

Date: June 21st, 2017

New Hampshire now enters the final phase of its budget process. The Committee of Conference has passed a budget and it now moves onto the House of Representatives. 

While the Governor, House and Senate have struggled over the past 4 budget biennia to balance the budget since the Great Recession, this budget is different.  Revenues have grown significantly more quickly than anticipated and, more importantly from a budgetary perspective, more quickly than spending has increased.   Budget makers now face a situation where they will have the option to fill the state’s rainy-day fund, strategically invest in state services, and/or provide tax relief to property owners or businesses. 

How has this situation happened?  Growth in revenues has exceeded all expectations.  Between fiscal years 2015 and 2016 (which ended in June of 2016), revenues grew by almost 7%, driven by torrid growth in business taxes (16.3%) and real estate transfer tax receipts (14.5%) and a 6.9% increase in the state’s tax on meals and rooms.   And FY 2017?  Through May – the last month for which we have data – revenues appear to be continuing to increase, albeit at a slower rate.   Growth in the first half of 2017 is being driven by meals and rooms and real estate transfer tax receipts. 

In this analysis, we look at long term trends in appropriations of general funds (those funds driven largely by the state’s tax structure).   For this analysis, we focus on HB 1 – the legislation which clearly delineates and defines state spending.  We then turn to an analysis of the recently passed Committee of Conference budget.   

The analysis shows that the Committee of Conference-approved budget represents a departure from post Great Recession budget trends, investing heavily in health and human services, which accounted for almost two thirds of the growth.   Despite this growth, general fund appropriations are only now reaching the levels that existed prior to the Great Recession. 

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