Liquor Commission warns HB 2 changes could cut net transfers as commission defends enforcement division

The New Hampshire Liquor Commission told the Senate Ways and Means Committee on Wednesday that recent national trends and changes in state transfer language would affect commission revenues and program transfers under House-passed HB 2.

The commission chair, Joseph Malika, and Chief Financial Officer Tina Demers presented sales, enforcement and transfer data and said enforcement cuts and transfer changes in HB 2 would materially change the fund balance and operations. "In 2024, the Liquor Commission generated $744,400,000," Demers said, citing FY24 figures and noting the commission is governed by RSA 176.3. She told the committee that House language removing two transfers would reclassify amounts that previously went to the Alcohol Abuse Prevention Fund and Granite Advantage (Medicaid expansion) as general-fund revenue, changing the pattern of transfers in the coming biennium.

The commission described several elements the committee should weigh. Demers said section 2 67–2 79 of HB 2 would eliminate the enforcement division, currently 19 full-time and 15 part-time positions, producing an estimated $3,000,000 in annual payroll savings in the House plan. "The impact in enforcement plays a key role in promoting public safety," Demers warned, saying the enforcement division supports more than 6,000 licensees. She added that the enforcement division brought in about $18,000,000 in revenue and that removing sworn enforcement personnel could delay licensing, audits and inspections, which the commission argues would reduce overall sales and transfers over time.

Committee members pressed the commission on specifics. Senator Lang and others asked why the governor's revenue estimate differed from the commission's earlier projection; Malika said the governor's estimate reflected trends before a recent decline in alcohol sales and that the commission revised its estimates after seeing more recent data. The commission also identified one-time and ongoing cost drivers: a 10% pay raise that added roughly $9.5 million in FY24 and a $5 million depreciation charge tied to the NextGen retail/ERP rollout.

Demers provided additional program numbers: about 6,281 licensees overall; roughly 2,100 on-premise licenses and 2,100 off-premise licenses; 1,369 direct-ship licensees; curbside and in-store pickup accounted for about $12.2 million annually since 2020; and the commission reported 25,000 unique monthly website visitors. She said net profit margins, which historically ran about 19–21 percent, fell to about 17 percent in FY24, driven by higher personnel and system costs.

Committee members also questioned transfers tied to the Granite Advantage (Medicaid expansion). The commission said statutory language gives the Department of Health and Human Services a role in the transfer calculation and that prior changes shifted how the Liquor Commission's funds interact with HHS funding flows. Demers noted two transfers specifically called out in HB 2: roughly $10.7 million to the Alcohol Abuse and Prevention Fund and about $12.6 million that had been flowing toward Granite Advantage; the House draft would instead treat some of those amounts as general-fund revenue.

Members asked about the federal American Rescue Plan Act (ARPA) funds mentioned earlier in the hearing. A treasury witness explained agencies have contracts and obligations for ARPA funds and must spend or reallocate them within federal deadlines or return unused money, noting there is no financial penalty for returning funds but the preference is to avoid refunds to the federal government.

Ending: The committee did not vote on HB 2 language during this hearing but heard repeated warnings from the Liquor Commission that eliminating enforcement positions and changing transfer language would lower the commission's net contributions and could increase licensing delays and litigation risk. The commission asked the committee to consider restoring enforcement funding or accommodating the operational impacts before finalizing transfer language.