New Hampshire faces rising adult poverty as federal aid impacts fade

The New Hampshire House Ways and Means Committee convened on January 14, 2025, to discuss significant trends in state revenues and the impact of federal aid on poverty levels. The meeting highlighted the ongoing effects of the COVID-19 pandemic on both financial assistance programs and state tax revenues.

One of the primary topics was the increase in poverty rates among older adults, particularly those aged 65 and over. Data from the U.S. Census Bureau indicated that nearly one in three New Hampshire adults faced difficulties affording household expenses in the first nine months of 2024, a rise from one in four in 2020 and 2021. This increase was attributed to the expiration of expanded federal aid, including the child tax credit, which had provided substantial support during the pandemic.

The committee also reviewed state revenue trends, noting a significant decline in tax revenues compared to previous years. After a period of growth following the Great Recession and a spike due to the federal Tax Cuts and Jobs Act in 2017, New Hampshire's tax revenues have recently shown a downward trend. The business profits tax, a major revenue source, has seen a decrease of 3.3% from fiscal year 2023 to 2024. In contrast, the meals and rentals tax increased by 3.8%, while the real estate transfer tax dropped by 14%.

The discussion included a breakdown of the state's revenue surplus for fiscal year 2023, which exceeded $500 million, primarily driven by business taxes and lottery revenues. However, projections for fiscal year 2024 indicate a much smaller surplus of $126 million, raising concerns about the sustainability of these revenue sources moving forward.

The committee emphasized the importance of understanding the volatility of corporate tax revenues, which are influenced by national corporate profit trends. As New Hampshire prepares for future fiscal challenges, the committee's findings underscore the need for careful monitoring of both poverty levels and state revenue sources to ensure economic stability for residents.