Promising that New Hampshire is “on a path to greater prosperity,” Gov. Kelly Ayotte presented a $16.5 billion state budget Thursday that would expand eligibility for the state’s voucher-like school choice program, increase pension benefits for public safety workers, and institute co-pays for some state Medicaid programs.
Ayotte won election on the promise to manage New Hampshire on the model of her predecessor, former Gov. Chris Sununu, and while her 30 minute speech repeatedly touted the state’s performance on metrics ranging from employment to wages to business start-ups, Ayotte also repeatedly stressed the need to “recalibrate.”
“For the past number of years, our budgets have been bolstered by billions of dollars from the federal government because of the COVID pandemic. We have also seen high revenues that made it easy to engage in surplus spending,” Ayotte said, noting that the current state budget adopted by Sununu and the Republican-controlled Legislature two years ago increased state spending by more than 21%.
Ayotte’s proposed budget would cut spending funded by state tax dollars by $150 million or roughly 3%, a reduction Ayotte claimed was undertaken “with a scalpel, not a shovel.”
“We cut bloated contacts with out of state vendors, took a hard look at how our agencies operate and worked with commissioners to dial-in spending,” Ayotte said.
Revenue concerns on the horizon
Ayotte’s budget proposal comes as the state faces significant financial challenges, exacerbated by the expiration of pandemic-era federal spending programs that pumped more than a billion dollars into state coffers in recent years.
Her budget also arrives amid a shift in state revenue trends. After several years in which collections from key state business taxes exceeded estimates, recent collections are down.
During the first seven months of the current fiscal year, business taxes receipts have fallen more than $100 million short of estimates.
In addition to underperforming state tax collections, there are also large potential liabilities on the horizon, including pending school funding lawsuits and the mounting multi-million dollar cost of settling decades of abuse claims at the state’s youth detention center.
Ayotte’s spending plan honors her campaign promise to oppose state tax increases. But unlike Republican leaders in the New Hampshire House, who are backing bills to further reduce state business taxes, Ayotte’s plan relies on the state’s current business tax rates.
It also banks on the state generating $127 million in new revenue by allowing charity casinos to replace historic horse racing terminals with video slot machines.
More money for special education
Schools would see more for rising special education costs under Ayotte’s budget. The additional $16 million a year would cover the shortfall Education Commissioner Frank Edelblut told schools in November to expect.
“We understand the skyrocketing costs facing towns and providing special education, and we want to lessen the financial burdens and ensure that students are receiving the resources that they need,” Ayotte said.
Ayotte’s budget would send schools nearly $100 million over two years, about a 50% increase.
Schools are seeing their special education costs increase because more students are being identified and their needs are increasingly complex.
In 2023, 10 of the state’s 176 public school districts spent more than 25 percent of their total budget on special education services, according to the New Hampshire School Funding Fairness Project, an advocacy group. Last year, 70 districts did.
Jane Bergeron, executive director of the New Hampshire Association of Special Education Administrators, said local school districts would welcome the additional money. But it would be a temporary fix, she said.
“New Hampshire’s school districts are struggling to adequately fund special education,” Bergeron said in an email. “Governor Ayotte’s budget offers partial and temporary support to districts but does not begin to address the long-term statewide special education funding challenges that New Hampshire faces.”
Universal school choice — with a catch
Ayotte wants to make the state’s Education Freedom Account program available to all families, regardless of income —-but only for families whose students are currently enrolled in a public school. That group has been a small percentage of students using the program so far.
At the start of this school year, of the 5,321 students receiving an EFA, 493 — or about 9% — left public school to participate, according to enrollment data on the New Hampshire Department of Education's website. However, the number of these so-called “switchers” has grown significantly since the program began in 2021, when 263 students used the funding to leave public school.
Ayotte’s proposal stops short of the universal school vouchers that House and Senate Republicans have proposed this year.
Under her expansion, Ayotte estimates the annual cost of the program would be $29.5 million the first year, about the same as current spending, and $44 million the following year.
Currently, the program is open to families who earn at or below 350 percent of the federal poverty limit. For a household of four, that would equate to $112,525 or less a year.
Participants receive $3,700 each year, but students who have disabilities or qualify for free and reduced lunch can receive additional money.
Kate Baker Demers, executive director of the Children's Scholarship Fund NH, which oversees the EFA program, said Ayotte’s proposal will allow more parents to choose the education that is best for their child.
“The New Hampshire families that are still in need of that power are so grateful to Governor Ayotte for acknowledging them and working to bridge the opportunity gap for their children,” Baker Demers said in an email. “All New Hampshire children, regardless of income or neighborhood, should have the opportunity to get the education that is best suited to their unique learning needs.”
Megan Tuttle, president of NEA-NH, reiterated the teacher union’s opposition to the EFA program.
“Let’s be clear: any budget that expands our state’s unaccountable voucher program will take more money away from public schools, which are attended by nearly 90% of New Hampshire students and 95% of students with a disability,” Tuttle said in an email.
Ayotte also proposed increasing some funding for special education by nearly 50%, about $16 million a year. That amount equals the increase in special education reimbursement costs schools submitted this year.
Ayotte also proposed the creation of a $1 million fund to help districts develop plans to keep cellphones out of students’ hands in classrooms.
More money for Community Colleges, less for USNH
On the higher education front, Ayotte’s budget would cut aid to the state university system by 4%.
That comes on the heels of the announcement by USNH trustees that tuition rates are going up by a projected 2.5% increase for students attending the University of New Hampshire’s Durham campus and Keene State College, and a 3% increase for students at Plymouth State University. Students at UNH Manchester will see a 5% tuition increase.
But Ayotte is also proposing to boost aid to community colleges by 8%, a move she touted as a way to “build the workforce of tomorrow.”
Healthcare, other services
Ayotte’s plan earmarks $1 billion to fund services for people with developmental disabilities, which she said would ensure services can be delivered without delay.
Her budget also sends $10 million to community mental health centers.
“Seeking treatment for mental health challenges is just as important as going to the doctor when you’re sick,” Ayotte said.
She also proposed having the state require Medicaid recipients pay a “nominal” copay for healthcare.
Public Safety
Ayotte ran promising to improve public safety in New Hampshire, in part by making New Hampshire a more attractive employer for police and first responders.
Her budget makes good on that earmarking $33 million to boost pension benefits for police and firefighters.
Her budget also spends $600,000 to fund the Northern Border Alliance, and $3.5 million to fight drug trafficking.
Ayotte also used her speech to urge lawmakers to send her a bill to repeal and replace the state’s current bail system, which Ayotte called a failure.
“I cannot emphasize this enough: Send me legislation to fix this once and for all,” Ayotte said.
Top Democrats said they saw less urgency, noting that multiple bills adopted last year addressed bail issues.
“Democrats in the House would prefer to see how that works before we go ahead and make more changes,” House Democratic Leader Alexis Simpson told reporters, while stressing it will take some time to evaluate the full implications of Ayotte’s budget.
“I’m not sure everything adds up yet, in quick math, but we will really need to get into that,” Simpson said.
