Budget committee of conference reaches compromise on major items including retirement funding, corrections and VLT split

CONCORD, N.H. — Conferees for House Bill 1 and House Bill 2 reached a negotiated agreement June 17 on a wide-ranging state budget package, resolving several high-profile disputes over retirement funding, agency restorations and how to handle new revenue streams such as video lottery terminal (VLT) receipts.

The Committee of Conference adopted a package of technical and policy compromises intended to leave the biennial budget balanced while protecting municipalities from bearing the initial costs of a retirement benefit change. Among the largest items, conferees added a multi‑biennium plan of direct appropriations tied to retirement funding and accepted language intended to prevent the state from shifting those costs to local governments.

Why it matters: The committee’s decisions affect pension contributions, agency budgets across state government and how newly identified revenue (including VLT and renewable energy fund receipts) will be treated. Those choices will influence tax and program decisions for the next biennium and set the outline for follow‑up legislation.

What conferees agreed to and why

- Retirement funding and municipal protections: Conferees accepted an amendment that provides recurring appropriations to the retirement system over multiple future biennia and includes a policy protection so that any increase in the normal‑cost contribution attributable to the retirement changes will not be shifted to municipalities without further legislative action. Mark Kavanaugh, deputy counsel and compliance officer for the retirement system, warned conferees in the meeting that “if you were to cut the budget, that money stays in the trust constitutionally,” arguing the system needed funding to implement deferred IT and investment projects and that appropriations affect actuarial assumptions.

- Multi‑biennium appropriations: The committee agreed to add recurring appropriations of $30 million per biennium for a defined period (four future biennia was discussed in the meeting) to smooth actuarial assumptions and reduce rate pressure in future employer contributions. The conferees instructed legislative budget staff to capture the exact schedule in the final draft.

- Protections for municipalities: Members stressed the committee’s intent that any incremental normal‑cost increases caused by benefit changes would be covered at the state level rather than automatically “pushed down” to towns and cities. Margaret Burns of the New Hampshire Municipal Association asked for “clarity that the state will appropriate the full dollar amount needed to cover the increase in normal costs,” and conferees tasked staff to produce drafting that ties appropriations to the specific HB 2 changes.

- Corrections and back‑of‑budget adjustments: The committee confirmed a negotiated compromise for the Department of Corrections in which specific offices and three administrative positions were restored while directing a $10 million “back‑of‑the‑budget” reduction overall. Conferees agreed that part of that $10 million would be targeted to specified accounting units, leaving agencies flexibility to meet the reduction while avoiding immediate targeted layoffs.

- Governor’s addiction/behavioral health commission funding (opiate/abatement fund): Conferees accepted an approach that replaces the statutory automatic 5% transfer of liquor profits with an annual general‑fund appropriation. Under the compromise, the commission will receive $9.5 million per year from general fund appropriations in the operating budget rather than an automatic liquor‑funded percentage. That change was adopted by amendment after discussion about predictability and legislative oversight.

- VLT revenue and education trust fund: The bodies debated how to allocate newly realized VLT revenue. The House had proposed directing most VLT money to the Education Trust Fund; the Senate had proposed a larger share to the general fund. Conferees did not adopt a single uniform reallocation of all VLT splits during the session; instead the conference instructed budget staff to revise related revenue splits in the final draft consistent with the package decisions and the committee’s intent. Conferees also adopted an explicit “sweep” rule for the Education Trust Fund: any remaining balance over $20,000,000 at the end of the biennium will revert to the general fund.

- Renewable Energy Fund: Conferees adopted technical corrections that preserve a modest, targeted reserve for residential solar (roughly $1 million) and move the remaining ongoing portion identified by the Senate toward the general fund for this biennium. Conferees left some related policy questions — including whether any portion should be returned to ratepayers — on hold for separate consideration; staff were directed to consolidate language and show final revenue impacts.

- Education and higher education: The committee maintained earlier choices on the Education Trust Fund sweep and agreed to the conference position on several higher education restorations; conferees also agreed to preserve the option to make a supplemental appropriation to the University of New Hampshire (UNH) if revenues permit.

- Health and human services priorities: Conferees accepted several health‑related appropriations discussed in both bodies. The Choose Love social‑emotional program was funded at a lower level than the governor requested but was continued, with DHHS testimony that the line supports a single statewide position that provides training and partnership services. The committee also approved funding for rural maternal/EMS maternal‑health projects and created a small pilot/training appropriation for child‑care scholarship work.

What remains on hold or for follow‑up

- Pending agency rule or statutory changes: The conference left several technical and policy items on hold for post‑conference drafting, including certain net‑metering and VLT distribution details and some fee authority items that require cross‑chapter revenue adjustments. Staff were authorized to make technical, mechanical and single‑intent edits to reconcile cross‑references and revenue splits (LBA/OLS drafting authority captured in the committee action).

- Actuarial follow‑up: Conferees asked the retirement system actuary and staff to provide definitive cost calculations so the Legislature can finalize the precise dollar value of the state appropriation needed to prevent costs from shifting to municipalities; the committee’s language keeps the appropriation mechanism available for action in a future session if numbers require adjustment.

Quotes from the meeting

"Choose Love is a program that is based on a model that started after the Sandy Hook shootings in Connecticut, and it provides, support for schools and adult programs," said Patricia Tilley, associate commissioner at the Department of Health and Human Services, describing the program the agency seeks to sustain.

"If you were to cut the budget, that money stays in the trust constitutionally," said Mark Kavanaugh, deputy counsel and compliance officer for the state retirement system, urging conferees to weigh implementation needs for IT and investment work before trimming trust‑fund appropriations.

"Our issue has been needing clarity that the state will appropriate the full dollar amount needed to cover the increase in normal costs associated with the increase in benefits," said Margaret Burns of the New Hampshire Municipal Association, asking for explicit protections to avoid unintended local tax impacts.

How the committee recorded decisions

Conferees adopted amendment packages and accepted or held specific sections across the HB1/HB2 side‑by‑side. The committee recorded the package outcome and authorized legislative staff to assemble final HB1/HB2 conference text and a surplus/revenue reconciliation for presentation to conferees the following day. No roll‑call or public tally vote was recorded in the transcript; conferees used voice acceptance and recorded “accept” for adopted amendments.

Next steps

Legislative Budget Assistant and Office of Legislative Services staff will consolidate the conference language and produce the final draft of HB1 and HB2, including a consolidated surplus statement reflecting the conferees’ revenue splits and appropriations. Conferees scheduled a follow‑up meeting to review the final assembly and sign the draft; staff were authorized to make mechanical edits necessary to reflect the committee’s intent.

Ending note

The committee’s package maintains the overall balanced budget target while creating follow‑up work to convert policy compromises into precise dollar language (notably for retirement actuarial calculations and some VLT/renewable revenue allocations). Conferees repeatedly emphasized a preference for follow‑up statutory or budgetary fixes rather than immediate targeted layoffs or municipal cost shifts.