New Hampshire Municipal Association
New Hampshire Municipal Association

New Hampshire Town And City

State Budget Recap – Twists and Turns

New Hampshire Town and City, September/October 2017

By Barbara T. Reid

The legislative session in each odd numbered year is dominated by the task of developing and adopting an operating budget for the ensuing two-year period beginning July 1.  Each budget session is different from any in the past; with its own twists and turns and a few surprises, which helps keep even seasoned State House observers like ourselves here at NHMA on our toes!  This year’s budget session was no exception, beginning with the Governor’s proposal to create a local infrastructure improvement fund, to the failure of the House to adopt a budget, and to significant municipal aid being provided “off-budget” in separate legislation.   Ultimately, the state biennial budget adopted by the House and Senate, and signed into law by the Governor, along with funding contained in separate bills, provided a mixed bag for municipalities with both favorable outcomes and some disappointments.            

The following recaps the funding provisions of municipal interest included in the biennial state operating budget (Chapter 155, HB 144) and the accompanying trailer bill (Chapter 156, HB 517) which includes statutory changes necessary to implement the budget.  The budget, including all provisions described below, was effective for the two-year period beginning July 1, 2017. 

Section 75 of the trailer bill suspends the statutory “catch-up” formula for both years of the biennium.  The catch-up formula provides that 75% of the year-over-year increase in revenue from the meals and rooms tax (but not more than $5 million in any one year) be added to the previous year’s municipal distribution to gradually reach the statutory apportionment of 40% of the revenue to municipalities and 60% to the state.  Meals and rooms tax revenue has consistently grown over the past decade with the municipal portion reaching a high of 29% in 2010.  However, with suspension of the catch-up formula in 2011-2014, 2016 and now 2018 and 2019, the municipal percentage of the meals and rooms tax revenue continues to decline.  For fiscal year 2018, the municipal share will be 23%, and is estimated to decline to 22% in fiscal year 2019 based on official state revenue estimates.

Municipal bridge aid is funded at $6.8 million each year of the biennium, and is funded from revenue raised from the 4-cent road toll increase enacted in 2014.  This reflects NHMA policy. 

Section 144 of the trailer bill continues the moratorium on environmental grants for projects that received local financing approval after December 2008, and which are not funded through previous legislation.    

This is NHMA policy. 

Section 142 of the trailer bill requires the New Hampshire Department of Justice to undertake every reasonable legal effort to collect all amounts due to the State of New Hampshire from other states under the Merrimack River flood control compact. 

Municipal funding was also contained in legislation separate from the biennial budget as follows: 

The bill also authorizes a $5 million loan from the Drinking Water and Groundwater Trust Fund that was established in Chapter 11, laws of 2016, to extend a water line in Amherst to properties impacted by contamination. 

See 2006-2019 State Aid to Municipalities Graph

A copy of NHMA’s 2017-2018 Legislative Policy Positions is available on our website at https://www.nhmunicipal.org/Advocacy. The full Final Bulletin with a recap of all new laws of municipal interested can be found on our website. Please contact NHMA Government Affairs at Governmentaffairs@nhmunicipal.org with questions related to the biennial state budget or any other legislation.

Barbara T. Reid is the Government Finance Advisor for the New Hampshire Municipal Association.  She can be reached by telephone at 603.230.3308 or by email at breid@nhmunicipal.org.

 

 

 

 

 

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