On Tuesday, Governor Sununu gave legislators a short address to highlight his budget priorities for the biennium. Much of his proposal focused on investments in school funding, raises for state employees, housing, infrastructure, and licensing reforms. 

On the school front, the governor said that his intent in changing the education funding formula is to allow cities and towns to reduce property tax rates. The proposal would increase both base aid and free and reduced lunch by approximately 25% and 30% over the course of this biennium for a total of $200 million in additional funding. (The changes would also have the effect of increasing funding to charter schools and Education Freedom Accounts.)

With respect to housing, the governor spoke at length about the InvestNH Housing Program, proposing the use of state surplus to fund an additional $30 million to help meet housing demand. The governor also called for a $25 million increase in the Affordable Housing Fund to help build homes for low- and moderate-income families. The ideas behind these proposals appear to line up with some of the proposals in SB 145, which had a hearing this week, and SB 231. An additional proposed program would encourage restoration and reuse of historic housing through a preservation tax credit. Contributors who invest in an eligible property would receive a tax credit equal to 65% of their contribution to the project that could be used against their business taxes. The program proposal is capped at $5 million in tax credits annually. 

The governor’s address included an additional investment in water infrastructure by calling for $27.9 million in state surplus to be used to fund wastewater state aid grants to municipalities. This proposal not only aligns with proposed SB 230 and HB 311, but also increases funding for the State Aid Grant (SAG) program. Sufficient funding for the grants has not been included in the state budget in recent years—thus the need for separate legislation. As an NHMA Policy, this proposal would address the much-needed funding associated with these critical wastewater projects and honor the state’s partnership with its political subdivisions to protect the health of its residents and promote state and municipal economic growth. 

On Tuesday, the Senate Commerce Committee heard testimony on SB 145, the Housing Champions Bill supported by NHMA and the Housing Champions Coalition. We wrote about the bill last week and we were pleased to see that all those who testified at the committee supported the bill. 

Those supporting the bill came from as far away as Littleton, the Seacoast, and the Upper Valley. Representing the business community, housing development, housing advocates, private persons, and, of course, municipalities, supporters emphasized the importance of providing carrots to encourage the development of housing, and repeatedly testified that the most valuable “carrot” is funding for infrastructure that will support more housing and help drive economic development across the state. 

The Senate, unlike the House, does not traditionally publish when their committees will hold an executive session to make a recommendation on a bill. As such, an executive session could occur at any future meeting of the Commerce Committee, but we assume that the strong showing by advocates—and the lack of any opposition—during the public hearing will put SB 145 on the path to passage. We hope to see an Ought to Pass recommendation out of committee soon.

This week, the Senate introduced a late bill, LSR 23-1059, which would make a non-lapsing appropriation of $40 million to the Department of Transportation. The language of the bill is not yet public, but we understand that the bill would use the same distribution formula as SB 401 from last session, proposing to appropriate $20 million for the repair and maintenance of municipally-owned bridges and $20 million in municipal highway grants. Municipalities would be able to accept and expend these funds as “unanticipated revenue” under the provisions of RSA 31:95-b, II-IV, whether or not a municipality has adopted that statute. 

The appropriation for bridges would be based on a 50/50 formula, where $10 million will be distributed based on a municipality’s deck area proportional to the total deck area for municipally-owned bridges, and $10 million will be distributed based on a municipality’s total share of the state population. The $20 million allocated for roads will follow the Department of Transportation “Apportionment A” formula used when calculating the annual highway block grant each municipality receives. Therefore, funds will be distributed among the municipalities based on their population in proportion to the entire state’s population, and the other half is disbursed based on a municipality’s Class IV and V road mileage in proportion to the total statewide Class IV and V mileage.