New Hampshire state aid to local governments was a much debated topic in the recently completed State budget negotiations. The Governor proposed cutting state revenue sharing in February, but increasing state aid to schools, as part of the adequate education funding. School building aid was cut out of the House budget altogether, but then restored by the Senate and the Committee of Conference. What do these changes mean for the balance of appropriations between the state and local governments?
As the House passed their budget on to the Senate, the House Finance Committee asked the Legislative Budget Office to publish an online a tabulation of the all the funds that state government sends to local governments and school. The final version of that schedule is available here.
The schedule shows that total state aid to local governments and schools will be about $1.2 billion in each year of the upcoming biennium (2010 and 2011), about the same as in recent history. Most of local aid is tied to adequate education funding.
However, as a share of total local spending, the figure below shows state aid has been on the decline. In 2001 total spending by municipal and county governments and local school districts amounted to about $3.4 billion, and increased to $5.1 billion by 2008. State aid (including the statewide property tax, which is a pass through of locally generated property tax) increased from $990 million in 2001 to $1.1 billion in 2008.
After seeing a signfiicant increase as a result of education finance reform in 2000, state aid as a percent of local government spending has dropped from 29 percent in 2001 to about 23 percent in 2008. Assuming local expenditures for schools, municipal and county services continue to increase at 5 percent per year (the historical average) and state aid remains constant, state aid will drop to 20 percent of local spending by the year 2011.
More information of state and local spending can be found at: http://www.nhpolicy.org/topic.php?sub=34
Comments