Five ways defined contribution retirement plans would benefit N.H.

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In 2025, the public appetite for cutting unnecessary government expenses, improving efficiency and reducing taxpayer liabilities is enormous. Inflation put tremendous stress on household finances as COVID-era regulatory and spending decisions tanked Americans’ trust in government management. In New Hampshire, policymakers are looking for new ways to deliver core services at lower costs. 

One reform that would lower taxpayer liabilities while improving services is switching from a traditional defined benefit (DB) pension to a defined contribution (DC) retirement plan for new state employees. This would be a responsible way to create long-term savings without cutting state services. DB plans obligate taxpayers to finance specific payouts to public employee retirees even if the state failed to fully fund those payouts. DC retirement plans, which most private-sector employees (thus, most taxpayers) have, can provide retirement benefits at lower costs and lower risk.

This policy brief offers five reasons to consider creating a DC retirement plan for new state employees.

1. A DC plan avoids future unfunded pension liabilities

The New Hampshire Retirement System is a defined benefit pension plan in which employees are promised specific payouts after retirement. The state must pay these obligations even if it failed to fully fund them or the plan’s investments didn’t generate enough revenue to meet them. Currently the retirement system’s unfunded liabilities are about $5.6 billion. The design of this system creates future unfunded obligations that must be paid (if the state keeps its word). In other words, debt. That debt obligation falls on taxpayers. This chart from the Reason Foundation’s Annual Pension Solvency and Performance Report shows the steady gap between New Hampshire’s pension assets and liabilities.  

Instead of obligating taxpayers to finance a fixed annual payment decades in the future, DC plans create investment accounts into which the state deposits fixed amounts. The taxpayer is obligated to make an investment up front, rather than a determined payment at the end. Because the taxpayer obligation comes from the initial investment, DC plans don’t have unfunded liabilities. 

2. Pension liabilities crowd out other needs

Government pension benefits are typically treated lavishly in contract negotiations, but not fully funded later. That creates debt obligations that crowd out other services as governments divert funds to pension obligations. A 2024 University of Texas study of the effects of pension liabilities on California cities found that to free up money for pensions, cities “primarily reduce non-current expenses, specifically capital investment.” They also “cut payrolls and employment, with police employment declines specifically. Further, there are accompanying increases in crime rates. These estimates imply that pension pressure impairs local public service provision, with contributions displacing other spending.” During testimony this year on a bill to allow open enrollment in K-12 public schools, the president of the N.H. chapter of American Federation of Teachers underscored the point made in the study above. She opposed the bill, she said, because districts had to maintain enrollment to fund pension obligations. A pension system that discourages innovation is one that serves neither taxpayers nor citizens well.

3. DC plans offer portability & earlier vesting

The old-fashioned public-employee pension plan is not designed for today’s mobile workforce. It’s not even designed well for older workers. A U.S. Bureau of Labor Statistics study of Americans born between  1957-1964 found that they averaged 12.7 jobs over their careers. Members of Gen. Z are expected to have an average of 18 jobs over their careers. A BLS study last year found that wage and salary workers spent a median of 3.9 years with their current employer. Few employees, public or private, stay in one job for even a decade, much less their entire careers. 

It takes 10 years for state employee pensions to vest, but most state employees don’t last that long. A 2024 Reason Foundation study of public pension plans in 12 states found that 62% of public workers leave before their pensions vest. Many people believe it’s compassionate to offer public employees a generous DB pension. But a pension system designed so that the large majority of public employees will never vest in it is not a good deal for most public employees. DC plans vest much earlier, usually within a few years, and could vest immediately. DC plans also are heritable if an employee dies, unlike DB plans. 

4. Pensions are more costly and less safe than assumed

Defenders of DB pensions claim that traditional pensions are safer than DC plans. State Employee Association President Rich Gulla testified in January that New Hampshire shouldn’t adopt a DC plan for state employees because such a plan would be invested in stocks, which risk losses. Asked if the New Hampshire Retirement System invested in the stock market, he said he didn’t know. It does. In the 2024 fiscal year, 51.3% of NHRS funds were invested in equities.

How did those investments do? According to the system’s annual report, the 8.8% return on total investments “underperformed the total fund custom index (a blended composition of major market indices in proportion to the NHRS’ asset allocation), which returned 11.9%.” The equities portion of the NHRS portfolio underperformed the market in FY 2024 as well. “Domestic Equity generated a return of 19.0%, underperforming the Russell 3000 Index return of 23.1% by 420 basis points. The non-U.S. equity portfolio returned 11.3% during fiscal year 2024, underperforming the MSCI All Country World (ex U.S.) index return of 11.6% by 30 basis points,” the annual report stated.

Trading lower returns for a guaranteed payout isn’t necessarily a great deal, especially for younger employees. The NHRS was just 68.6% funded in FY 2024. A January study by the Equable Institute had our funded ratio slightly higher, yet still ranking just 41st in the country. Contrary to the messaging of public employee union leaders, state pensions are far from secure, and New Hampshire’s is one of the least well-funded in the country. A Pew Charitable Trusts analysis concluded that New Hampshire had to dedicate 9.4% of the state’s own-source revenue ($512 million) annually to cover pension obligations. 

And that’s if our liability estimates are correct. A 2024 Stanford University study of public pensions concluded that they were in far worse financial shape than official data suggest because “future pension obligations are being grossly undervalued.” 

The problem is structural, the study concluded, and the lead author recommended that “states and cities could move to defined contribution plans similar to those offered by private employers. Employer contributions could still be quite generous, but the plans would be much less expensive to run because they would not guarantee a preset lifetime benefit.”

5. DC plans can lower costs and achieve solvency

The average N.H. state employee pay is $65,360, which is just $750 less than the average for the state as a whole ($66,110). It’s hard, then, to justify making taxpayers shoulder the burden of financing expensive guaranteed pensions they don’t enjoy themselves. With a DC plan for new state employees, this discrepancy would end, and the plan would be easier to fully fund.

In 2010, the Oklahoma Public Employees Retirement System was in a similar position to New Hampshire’s. Oklahoma’s system was only 66% funded. Legislators made two critical reforms that changed the trajectory of the system, the Reason Foundation reported. They ended future cost-of-living adjustment (COLA) benefit increases that weren’t fully funded in advance. And in 2015 they shifted new employees to a DC plan. (In addition, they kept the state contribution to both plans at 16.5%.)

The Reason Foundation’s Pension Integrity Project charted the effects of these changes to Oklahoma’s system (shared below). 

Conclusion

New Hampshire’s state pension system is a relic of a bygone era. As Oklahoma took its system from 66% funded to fully funded by making critical reforms that featured creating a DC plan for new hires, New Hampshire’s has limped along with no substantial improvement in its funded ratio. Taxpayers remain on the hook for $5.6 million in unfunded liabilities while state employees have to put in a decade of service to vest in a plan that doesn’t generate great returns. 

Creating a DC plan for new state employee hires is a financially sound way to lower state costs, stop crowding out other government programs, reduce taxpayer obligations and create a fully funded, portable retirement plan that doesn’t take a decade to vest. 

Download this policy brief here: JBC Brief DC Retirement Plans March 25

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Analysis of governor’s & House EFA bills shows small state costs, bigger local savings

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The Josiah Bartlett Center for Public Policy, in partnership with EdChoice, has released an analysis of the fiscal effects of two Education Freedom Account expansion proposals, one presented by Gov. Kelly Ayotte in her budget and the other in House Bill 115, representing the House leadership plan.

At the state level, the fiscal effects range in year 2 from a savings of $5.6 million to a cost of $5 million. At the local level, the effects range in year 2 from a savings of $21 million to $22.7 million.

The analysis covers the first two years of each proposal and looks at the fiscal effects of EFA expansion only. It does not attempt to predict the fiscal impact of natural enrollment changes in the existing EFA program. 

It’s important to note that the governor’s plan takes effect a year later than the House plan, so it would have no fiscal impact in the first year of the 2026-27 budget. 

Because the governor’s proposal limits expansion to students who have spent the prior year enrolled in a New Hampshire public school, it produces only savings. Every student who switches from a public school to the EFA program saves money for both state and local taxpayers. The estimated savings for the state are $2.3 million in the first year and $5.6 million in the second year. The estimated savings for local taxpayers are $8.6 million in the first year and $21 million in the second year. 

Because the House plan includes students not currently enrolled in public schools, there are small additional costs for the state. Those costs are estimated at $360,000 in the first year and $5 million in the second year. Savings to local taxpayers from the House plan are estimated at $824,000 in the first year and $22.7 million in the second year.

Key findings for the two plans are as follows:

 Governor’s proposal:

·      In year 1, EFA expansion would generate an estimated $2.3 million in net savings for state taxpayers.

·      In year 2, EFA expansion would generate an estimated $5.6 million in net savings for state taxpayers.

·      The fiscal effect on local taxpayers is an estimated $8.6 million in short-run net fiscal benefits in year 1 and $21.0 million in short-run net fiscal benefits in year 2.

Universal House Plan:

·      In year 1, EFA expansion would generate an estimated $360,000 in net costs for state taxpayers.

·      In year 2, EFA expansion would generate an estimated $5.0 million in net costs for state taxpayers. This cost represents 0.1% of total state expenditures on all public services.

·      The fiscal effect on local taxpayers is an estimated $824,000 in short-run net fiscal benefits in year 1 and $22.7 million in short-run net fiscal benefits in year 2.

Download the full report here: NH EFA Expansion Fiscal Brief Final

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House Bill 123 creates an income tax disguised as a property tax

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New Hampshire legislators have devised various schemes over the years to protect the logging industry from market forces. The latest scheme comes in House Bill 123, as amended. Promoted as “closing a loophole” in the state’s Timber Tax, HB 123 in fact creates a new tax on revenues generated from sales of carbon credits. The new tax blends features of property taxation and income taxation. Though it gives the appearance of using assessed value as its base, it is a tax on net revenue earned in the prior year, which makes it an income tax. And because it has no offsets, it would be an unconstitutional double tax.

Background

The privately owned Connecticut Lakes Headwaters Forest in Coos County has produced varying amounts of lumber for more than 150 years. The logging business supported by harvests on that land has always ebbed and flowed along with changing demand for the region’s wood. The last three decades, however, have seen declining production. Industry data show that the forest’s timber harvest peaked in 1994 at about 150,000 cords. The next year’s harvest fell to 80,000 cords, and annual production has been below 60,000 (frequently below 40,000) ever since.

In 2003, the property owner agreed to put the 145,872 acres under a conservation easement that encourages continued forest management, including logging. The property has been managed for carbon sequestration since 2013. Carbon sequestration involves maximizing tree growth and selling credits based on the amount of carbon trees absorb annually. Trees are still harvested to maintain forest health and maximize returns on healthy trees. 

Though logging continues in the forest, recent yields have been lower on average in the last decade than in the decade prior. The number of cords harvested in 2022 fell below 20,000 for the first time since the early 1970s. Though the yield in 2023 rebounded to 28,000 cords, loggers fear that the land’s use as a carbon sink threatens the long-term survival of their industry. 

Annual harvests of fewer than 40,000 cords are not new for this property and have occurred for long intervals in the past, specifically from 1930 through the end of World War II, from the late 1950s to the early 1970s, and regularly since the mid-1990s. The harvest was below 40,000 cords for 14 of the 21 years from 2003-2023, or 2/3 of the time. Fearing a reduction in logging industry jobs and local tax revenues that come from the state’s Timber Tax, legislators amended HB 123 to encourage more logging and discourage the use of forestland for carbon sequestration programs. 

The loophole myth

HB 123 uses a stick (taxation) in the hope of increasing timber harvests in the North Country. The bill’s committee report says it applies the existing Timber Tax (yield tax) to a new forestry practice. It asserts that “landowners are not paying the timber yield tax on the sale of standing wood and timber associated with carbon offset credits due to a loophole in the law.”

But there is no loophole. The Timber Tax is a 10% ad valorem tax on the assessed value of timber at the time of harvest. Trees enrolled in a carbon sequestration program do not escape this tax. They will be cut eventually, at which point their owner must pay the Timber Tax. Trees in carbon sequestration programs are cut, as they have been every year since the Connecticut Headwaters Forest was put into a carbon sequestration program in 2013. 

Though the committee report represents the bill as “providing for the assessment of the 10% yield tax on the metric tonnage of carbon sequestered from the timber enrolled in forest carbon programs,” that is not what the bill does. 

It creates a new tax not on carbon tonnage, but on net revenues from carbon credit sales.

Reversing, not extending, the Timber Tax

Before New Hampshire’s Timber Tax was created, trees were assessed and taxed annually along with the land on which they grew. This created an incentive for landowners to cut trees to avoid taxation. Concerned about deforestation, lawmakers created the Timber Tax to reverse this incentive. 

“By taxing timber when cut—and only when cut—lawmakers sought to disincentivize the cutting of trees and clearing of land simply to avoid higher property taxes,” the Department of Revenue Administration explains in its Timber Tax Guide.

HB 123 by design would reverse the Timber Tax incentive for trees enrolled in a carbon sequestration program. By creating a new tax on the value of carbon credits sold, it replaces the incentive not to cut trees with an incentive to cut them. 

Were the tax in HB 123 an extension of the Timber Tax, it could run into conflict with Part II, Article 5 of the state constitution, which allows special timber taxes for one purpose:

“For the purpose of encouraging conservation of the forest resources of the state, the general court may provide for special assessments, rates and taxes on growing wood and timber.”

The point of HB 123 is to discourage conservation of forest resources through taxation. Because the bill does not tax timber, it likely avoids conflict with this constitutional provision. If it were, as its supporters claim, an extension of the Timber Tax, however, a constitutional challenge could arise.

HB 123 taxes net revenues (income), not property

Instead of extending the Timber Tax, HB 123 creates an entirely new tax. The bill’s language explains it this way:

“The owner of a property that has been enrolled or registered for the purpose of sequestering carbon dioxide and/or generating carbon offset credits shall annually pay a yield tax of 10 percent of the estimated net value of the carbon offset credits issued and sold in the previous calendar year.”

The bill draws from property taxation a requirement that the value of carbon credits be assessed by local tax officials. It then draws from income taxation the requirement that taxes are paid on the net value of credits “sold in the previous calendar year.”

So is it a property tax or an income tax?

The Timber Tax is triggered when timber is cut, regardless of whether it is sold. It is an ad valorem property tax on assessed value. The tax created by HB 123 is not like this. It is triggered by sales and applied to the net value of property sold. 

The committee report states that “the timber yield tax shall be assessed on the sale of standing wood and timber enrolled in a forest carbon program for the purpose of providing carbon offset credits to a buyer.”

That is confusing because the timber itself isn’t sold, only the carbon credits are sold. But it states clearly that the “tax shall be assessed on the sale….” 

The next sentence provides additional clarity. 

“Importantly, this bill as amended provides for the assessment of the timber yield tax related to this new type of timber sale,” it states.

The committee report emphasizes that the sale of carbon credits is a taxable event that triggers a 10% tax on the net value of credits sold in the prior year. This is clearly a new tax. Its purpose, substance and form are not at all like the Timber Tax.

The game is given up by checking the Official New Hampshire Assessing Reference Manual published by the Department of Revenue Administration. The manual’s definitions of ad valorem tax and income are as follows: 

  • Ad Valorem Tax: A tax levied in proportion to the value of the thing(s) being taxed. Exclusive of exemptions, use-value assessment provisions, and the like, the property tax is an ad valorem tax.
  • Income: The payments to its owner that a property is able to produce in a given time span, usually a year, and usually net of certain expenses of the property.

Despite the fig leaf of an assessment, HB 123 taxes payments that a property produces annually. Requiring a local assessment doesn’t transform the tax into a property tax. It is a tax on income.

The bill requires the carbon credits “issued and sold” in the previous year to be assessed, and a 10% tax to be levied on their net value. This assessment creates the appearance of a property tax. Section IV of the bill attempts to explain the valuation process. It’s confusing, but it does state that the value is determined by the “average price-per-metric ton paid” minus the developer’s and land owner’s costs. How else would assessors determine the value of property sold in the prior year if not by using actual prices paid? Any valuation that differs from actual revenues would be easily challenged in court. 

If you’re taxing net revenue generated from the prior year’s sales, what else are you taxing besides income?

Additional problems

Because the bill does not create an offset against the Business Profits Tax (BPT) or Business Enterprise Tax (BET), it creates a double tax on business income if the carbon credits are sold by a business. That violates the state constitution’s provision that taxes be proportional. 

HB 123 also does not allow a credit against the Timber Tax, which eventually will be paid on trees taxed through this new levy. Instead of paying one tax when a tree is cut, owners of trees that generate carbon credits will pay annually on income from the tree, then again on the tree’s assessed value when cut. 

If the tax were just the timber tax applied to trees not yet cut, then the same trees shouldn’t be hit with the Timber Tax again when cut. The bill has no provision to avoid piling a cumulative property tax on top of annual property taxes because it isn’t an extension of the Timber Tax, but a new tax on revenues generated from carbon credit sales.  

Conclusion

Many advocates of HB 123 as amended seem to genuinely believe that it is a simple extension of the Timber Tax. In their defense, the bill’s language is confusing and initially creates the appearance of conforming with the statutory process of determining a yield tax. That’s likely why it received an endorsement from the New Hampshire Union Leader, which has an editorial policy of opposing income taxes. Be that as it may, the bill as written creates a new tax on income generated by carbon credit sales. Elected officials who have pledged to oppose new taxes, especially an income tax, would violate those pledges by voting for this bill.  

Download this policy brief here: JBC Brief HB 123 Tax

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Ending mandatory vehicle inspections would save Granite Staters tens of millions a year

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In a cost-cutting move, New Jersey ended its annual auto safety inspections in 2010. State officials cited a lack of evidence that inspections improved public safety. 

“If we’re going to invest millions of taxpayer dollars year after year in a program, then it is essential that we be able to justify the expense and effectiveness of said program,” then-Motor Vehicle Commission Chief Administrator Raymond Martinez said. “With a lack of conclusive data, and the current fiscal crisis, we cannot justify this expense.”

Eight years later, the journal Contemporary Economic Policy published a study on the effects of ending New Jersey’s inspections. It concluded that “discontinuing the law resulted in no significant increase in either fatalities due to car failure or the percentage of accidents due to car failure.”

The lead author, a professor of health economics, noted that technological advancements in the seven decades since the passage of New Jersey’s inspection law had produced enormous gains in auto reliability. With cars dramatically safer than in past decades, states have been rethinking their safety inspection requirements. 

New Hampshire is one of a dwindling number of states that requires an annual safety inspection, which makes New Hampshire’s law one of the most burdensome in the country. 

Lawmakers have tried for years to abolish the mandate, citing the cost burden on drivers and the shortage of evidence that inspections improve public safety. But in years past, auto dealers and independent mechanics have persuaded legislators to continue mandating what is a lucrative income stream for them. 

That could change this year. The House on Thursday approved by a wide margin (212-143) House Bill 649, which would lift the safety and emissions inspection mandates from state law. 

The rising quality of automobiles is reflected in vehicle fatality data. Motor vehicle fatalities per 100,000 people peaked in 1937, according to data compiled by the National Safety Council. By raw numbers, U.S. motor vehicle fatalities peaked in 1972. 

Research on the effectiveness of auto safety inspections is mixed but predominantly finds that inspections do not produce significant improvements in safety.

  • A study just last year of Danish auto inspections and crashes published in the journal Traffic Safety Research “found no association between periodic inspections and crash risk in separate analyses of each vehicle type. There were no specific effects of inspections of older vehicles aged 10 years or more.” It also noted that “based on previous research, the positive effects on crash risk are questionable.”
  • A 2021 Spanish study reviewed existing research on inspections and crashes, finding only one study producing “a significant association between road crashes and the absence of a valid vehicle inspection certificate,” while “the other studies showed either a small reduction in crash rates (around 9%), no association, or a higher crash rate in vehicles with more inspections.”
  • A 2015 Government Accountability Office report could find no causal relationship between safety inspections and accidents. “Despite the consensus among the state inspection program officials we interviewed that these programs improve vehicle condition, research remains inconclusive about the effect of safety inspection programs on crash rates. There is little recent empirical research on the relationship between vehicle safety inspection programs and whether these programs reduce crash rates. What is available has generally been unable to establish any causal relationship.”
  • North Carolina commissioned a study of its annual auto inspection program, and the 2008 report concluded that “no evidence exists showing the safety inspection program is effective” despite North Carolinians spending $141 million a year on inspections.
  • A 1999 study in the Southern Economic Journal “found no evidence that inspections significantly reduce fatality or injury rates.”
  • A 2023 study published in the Journal of Transportation Engineering did find 5.5% fewer highway fatalities in states that had safety inspections, but this result stands out as strikingly different from the norm. 

As many researchers have noted, cars today are very different from those made in the 1930s, ‘50s, ‘70s, or even ‘90s. Fifty years ago, it was common to see broken down cars along U.S. roadsides every day. In 2025, a disabled vehicle is a fairly uncommon sight. 

The massive advances in automobile reliability and safety have rendered state safety inspections difficult to justify. The National Highway Traffic Safety Administration lists vehicles as the critical factor in just 2 percent of motor vehicle accidents. And even then it takes care to note that “none of these reasons implied a vehicle causing the crash.” 

There were 1,383,700 vehicles registered in New Hampshire in 2023, according to the U.S. Department of Energy, which collects vehicle data. At between $30-$50 per vehicle, inspections alone likely cost Granite Staters approximately $41.5 million to $69.2 million a year. That doesn’t count any repair work required to pass inspection.

All of this is to comply with a law that has not been shown with confidence to produce measurable improvements in motorist safety.  

Given the massive expenses imposed on motorists and the negligible gains, if any, ending mandatory inspections could be expected to generate a significant financial savings for New Hampshire motorists.  

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Addressing excessive residential lot size regulations

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Imagine that you’ve just graduated high school or college, you’ve landed an entry-level job, and you need a car. What’s on your car shopping list?

It’s your first job, so you’re probably looking for a cheap car, and smaller cars are cheaper to buy and maintain than larger ones.

So you start shopping. To your surprise, you find zero small cars for sale. It’s all full-size SUVs and pickups as far as the eye can see. You ask a salesman where to find the coups and sedan.  

Oh, he’d love to sell you a small car, he says, but he can’t. Every town in the area has a “minimum chassis size” ordinance. They require every vehicle to be at least 16 feet long by 6.5 feet wide. 

But you don’t want a Chevy Tahoe, you protest. You don’t need a big SUV. You don’t have a big family, or even a dog. You just want a small hatchback that’s good on gas. Why would the town make you buy a larger car than you need?

Oh, that’s easy, he says. Town character. 

It’s a family community. If the town let dealers sell small cars, why, young, single people might move there. The character of the town could change. People like the town just the way it was when they moved in. So, no small cars.  

Absurd, right?

Well, replace automobiles with housing in that tale, and you’ve got the status quo throughout New Hampshire. 

To quote the New Hampshire Zoning Atlas created by St. Anselm College, “it is hard to find land to build small homes or starter homes in an economically viable way.” Only 15.7% of the buildable area in New Hampshire allows homes to be built on less than one acre of land with less than 200 feet of frontage.

These mandated large lots are rarely directly related to public health or safety, which makes them legally suspect.

RSA 674:16 grants local governments the power to use zoning “for the purpose of promoting the health, safety, or the general welfare of the community….” 

“General welfare” is vague, but surely it doesn’t include raising the cost of buying a home in town.

When creating a minimum lot size mandate, there are two questions to ask.

  1. What public health, safety or welfare problem does this solve?
  2. How much land does a home require?

The answer to the first question most often is: none. This is especially true in municipalities served by water and sewer infrastructure. A tiny home on a tiny lot harms no one. Small house lots harm no one. 

Large lot size mandates do harm people. They raise the cost of land and homes, pricing many people out of the housing market.

The answer to the second question is: not much.

Two bills in the Legislature would fix lot size inflation by prohibiting local governments from mandating large lot sizes that aren’t directly connected to public health or safety metrics. House Bill 459 and Senate Bill 84 vary in the details, but both would tie minimum lot sizes to legally justifiable standards.

SB 84, facing a Senate vote this week, would cap minimum lot sizes at 1.5 acres in areas with no municipal water or sewer service, one acre in areas with municipal water, and 0.5 acres in areas with municipal sewer service. 

Minimum lot sizes that are larger than 0.5 acres for properties with water and sewer hookups, or larger than basic environmental standards for single-family homes based on soil conditions, serve only one purpose: to raise housing costs. And in that they are extraordinarily successful. 

Large minimum lot sizes have been shown to increase lot sizes, home sizes and home prices. And these government-created price increases spill over into neighboring jurisdictions. 

Tighter regulations spread through adjacent municipalities in a zoning arms race that reduces home construction and raises prices throughout states and regions. That’s a big reason why legislators are intervening. The cumulative effect of these local restrictions is a statewide housing shortage.

Maine has roughly the same population as New Hampshire (1.405 million vs. 1.409 million). Yet Maine has almost 106,000 more housing units than New Hampshire does. As a consequence, its median home value from 2019-2023 was $100,000 lower than New Hampshire’s. As of this January, the median sale price for a home in Maine was $412,200 vs. $493,800 in New Hampshire. 

The median size of a home in New Hampshire is 1,869 square feet, according to Federal Reserve data. The median size in Maine is 1,669 square feet. 

It shouldn’t be harder to buy a smaller, more affordable home in New Hampshire than in Maine. Ending the abuse of lot size ordinances would be an effective way to begin fixing this disparity. 

There is huge market demand for smaller homes on smaller lots. In places where these options are legal, developers have responded. Census data show a decline in new home sizes since 2022, as the chart below from real estate website Keeping Current Matters shows.

In 2013, 36% of new homes in the United States were built on a lot of 7,000 square feet or less. By 2023, it had risen to 46%, according to U.S. Census figures. 

The average size of a newly built home is slowly shrinking. It has fallen from 2,535 square feet in the second quarter of 2022 to 2,375 square feet in the second quarter of 2024. 

The demand for smaller homes is clear, and the market is trying to respond. But municipalities are slowing the transition, particularly in the Northeast. 

In the South, 53% of homes sold in 2023 were smaller than 2,400 square feet. In the West and Midwest it was 60%. In the Northeast it was just 46%. That’s not entirely caused by zoning, but zoning is a factor. 

Nationally, 26% of home buyers want a home less than1,600 square feet, but only 16% of single-family homes started in 2023 were that small, according to the National Association of Home Builders. 

There’s a mismatch between demand and supply, and that mismatch is driven in large part by minimum lot size requirements. Smaller legal lot sizes would facilitate the creation of the smaller homes that consumers demand. 

In many places, including most of New Hampshire, it’s literally illegal for builders to construct a home on a lot smaller than an acre.

Minimum lot sizes that exceed basic public health and safety standards artificially reduce the supply of housing, drive up home prices, separate families by forcing the elderly and young to move out of town, worsen sprawl and traffic congestion, and encourage overdevelopment by forcing builders to develop much larger footprints to house people who could live comfortably on smaller lots.

Smaller lots allow for smaller, more affordable homes. Municipalities have shown that if they have the power to use minimum lot sizes to prohibit small homes on small lots, they will. The abuse of this power has created numerous economic problems for New Hampshire and has helped to put the classic American starter home out of reach of young Granite Staters. 

If the state wants to prevent these abuses from continuing, the quickest option is to limit the power of local governments to commit them.

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The Medicaid alarm is ringing

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Two years ago this week, we warned legislators that a day of reckoning was coming for Medicaid. 

“Any discussion of expanding Medicaid coverage or eligibility should start with the understanding that current spending levels are unsustainable, and increasing those levels just accelerates the date of reckoning,” we wrote.

With Congress looking to make $2 trillion in spending reductions, that day is suddenly closer, if it has not yet arrived.

U.S. House Republicans want to trim $880 billion from funding overseen by the Energy and Commerce Committee, which controls Medicaid and Medicare spending, among other appropriations. Medicaid is the most likely source of most of these savings. As The New York Times put it on Tuesday: “What can House Republicans cut instead of Medicaid? Not much.”

Even if immediate reductions in the rate of growth of Medicaid spending survive the current budget negotiations, changes have to come. The Congressional Budget Office (CBO) projected last year that federal spending on Medicaid and the Children’s Health Insurance Program (CHIP) would increase from $571 billion in 2023 to $858 billion in 2034 despite falling Medicaid enrollments. 

The federal deficit in Fiscal Year 2024 was $1.8 trillion. The federal debt surpasses $36 trillion. Washington’s deficit spending is driven primarily by entitlement programs. Last fiscal year, Washington spent more on interest payments than defense. Congress, at last, is starting to pay attention.

The CBO recommended in December that Congress cap Medicaid spending and reduce federal matching rates as a way of reducing federal deficit spending. House Speaker Mike Johnson this week rejected those options for the current stopgap spending bill, but they remain on the table going forward.

Looming federal reductions, even in just the rate of growth of the program, are not the only reason for legislators seek savings in Medicaid. 

Medicaid now consumes 29.6% of New Hampshire spending, according to the National Association of State Budget Officers. That’s 10 percentage points higher than K-12 education spending (19.6%).

Despite having the lowest poverty rate in the nation, New Hampshire devotes a higher share of its state spending to Medicaid than all other New England states except Maine. To the extent that Medicaid funds health insurance coverage for able-bodied adults who could purchase insurance on the private market or obtain it from an employer, these are wasted dollars that could fund other state priorities or be returned to taxpayers.

Activists and some legislators have expressed alarm that Gov. Kelly Ayotte has proposed a premium payment for some Medicaid recipients. Given the size of the Medicaid spending problem, Ayotte’s proposal is extremely modest and should meet with zero opposition. Maine, Massachusetts, Connecticut and New York charge premiums to some Medicaid recipients. New Hampshire should have been doing this all along. 

Though a premium is a good start, it can’t be the end of the conversation. A more serious reconsideration of Medicaid spending should follow. Long-time assumptions about the federal government’s ability to continue borrowing to pay for this program are no longer operable, and the state’s own contribution is straining other budget priorities. 

It is not financially sustainable for Medicaid to continue consuming more and more of the state budget. If lawmakers are not reconsidering current levels of Medicaid eligibility and spending, particularly for the population that received expanded Medicaid coverage after the Affordable Care Act, they are setting the state up for a nasty fiscal surprise in the not-too-distant future.

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Why NH might make limited social drinking legal in some public places

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The American Prohibition Museum is not in Chicago, but tucked into an old brick building in Savannah, Ga., just off Congress Street. A $29.91 ticket to the museum comes with a drink at the adjacent speakeasy. In most American cities, that would be a perfect finish to a trip through the Prohibition era. Not in Savannah. The garnish on the cocktail is what you can do with that drink after it’s poured. 

Old fashioned or martini in hand, you can legally step outside and stroll through the historic district. Not even Elliot Ness can stop you.

Savannah allows outdoor drinking in its historic district, provided the drinks are in 16-oz. plastic cups. The city promotes this social perk. It’s an attraction for tourists, including Granite Staters who can pop down on a cheap flight. 

Like the rest of the original 13 colonies, New Hampshire has plenty of historic districts and beautiful downtowns. But it doesn’t have a single social district where outdoor drinking is allowed. 

That could change this year. 

Since the pandemic, unreasonable alcohol regulations have been lifted in states across the country. The changes helped boost local economies and keep bars and restaurants open. These deregulation efforts were so popular that states have looked for other laws to relax. The hottest trend is to allow local governments the option of creating social districts where drinking in public is allowed under certain tightly regulated conditions. 

Rep. Bill Boyd, R-Merrimack, has introduced House Bill 467 to let local governments create social districts in New Hampshire. Boyd modeled his bill on legislation that North Carolina passed in 2021.

Before North Carolina adopted its social district law, the foothills city of Hickory was working to attract more business to its downtown core by legalizing outdoor drinking just in that zone. In 2019, the city applied for and got what was called a common area entertainment permit. It was not quite what city leaders had in mind.

The city had to get a state liquor license, which meant that city staff had to pass background checks and get fingerprinted. The city had to be the license holder. When the city hosted its own events, drinking was restricted to the roped-off footprint of the event space. 

This tiny alcohol containment zone reduced the economic benefits of the event. The whole point was to draw people downtown to patronize businesses. But because people couldn’t carry their drinks across the square, they’d often stay in the roped-off area the entire time, then go home, city Business Development Director Dave Leonetti said in an interview.  

After the social district law passed, Hickory created one for its downtown in 2023. Traffic to the downtown core is up 16.8 percent over the last three years, Leonetti said. The social district has helped turn downtown into a regional magnet for shoppers and diners. 

With the social district, people come downtown to hang out, not just to shop. Locals come just to sit outside and play cards or meet friends and pop into local shops and restaurants. The creation of the social district itself has changed the way people interact with the downtown area. It’s increased foot traffic, sociability and business. 

In fact, business activity is expanding beyond the old downtown district. Restaurants have opened in warehouse buildings just outside of the traditional business area, increasing economic activity and tax revenue for the city.

“It’s been a great boon for downtown,” Leonetti said.

And the city has seen no increase in trash or crime downtown since the district’s creation, according to Leonetti. 

A few hours up I-40, Raleigh’s nightlife and entertainment district attracts a lot of visitors. But city leaders wanted more foot traffic in its downtown core. So the city created a social district there, like Hickory did. 

The Raleigh Downtown Alliance did a survey to gauge the popularity of the social district. Rachel Bain, hospitality and nightlife planner for the City of Raleigh, said “it was the best survey response they’d ever received. It got a higher rating than the Christmas tree lighting.”

The social district has helped to increase in foot traffic and business to the downtown, but it’s led to no increase in crime, intoxication or littering, Bain said.

At least eight states have adopted statutes allowing municipalities to create districts where it’s legal to drink alcoholic beverages in public spaces. The laws typically restrict open containers to materials other than glass, usually plastic cups. Stickers or other labels are required, and drink limits are enforced. Drinks cannot be carried outside of social district boundaries, which are marked with prominent signs. Maps of the district boundaries are posted online, and businesses can decide whether they allow customers to enter with outside drinks. 

Concerns about trash and public intoxication have not materialized, Leonetti said, because the regulations discourage both and the crowd that is attracted to a social district is not the crowd that wants to stumble down Bourbon Street at 3 a.m. 

“Before the social district, it was illegal to brown bag your bottle of liquor, to throw everything in a Yeti cup, to be drunk in public,” he said. “All of those things that were illegal are still illegal. This just gives the people who want to follow the rules a way to do it.”

Among the rules that municipalities get to set are drinking hours. Raleigh sets hours from 10 a.m. to 10 p.m. so they’re consistent every day and they cover Sunday brunch. Raleigh also excludes city parks from its district.

Michigan adopted a social district law in 2020. The Detroit News reported last August that municipalities have adopted 128 social districts, inducing 27 in Detroit alone. Detroit’s social districts were part of the appeal when the city hosted the NFL draft last year.

“Business owners inside several districts said they’ve seen nothing but positive effects, and it has encouraged new customers to come to their communities, serve patrons even when their dining rooms are full and encourage people to stay awhile,” the newspaper reported. “Some said these districts are even playing a role in revitalizing downtowns that may not have gotten as much foot traffic before.”

In Clawson, Michigan, officials credit the social district with reviving their downtown.

“Eight years ago, you might not see anybody walking downtown,” Joan Horton, director of Claswson’s downtown development authority, told the News. “People drove through Clawson to get somewhere else. But now we’re a drive-to destination. We really have become a dining mecca.”

HB 467 would enable New Hampshire municipalities to use social districts as targeted economic development tools. No New England state has a social district law. But Boston officials last year began discussing social districts for the city. 

That puts New Hampshire lawmakers in the position of deciding in coming weeks whether they want New Hampshire or Massachusetts to become the first New England state to notch another small win for personal and economic freedom by legalizing small districts where responsible adults can be trusted to drink and socialize like responsible adults. 

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Gov. Ayotte proposes education freedom for public school students starting in 2026

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In her proposed budget, Gov. Kelly Ayotte opens New Hampshire’s Education Freedom Account program to all students who’ve been enrolled in a New Hampshire public school (including chartered public schools) for at least a full academic year, the Josiah Bartlett Center has confirmed. The expansion would take effect July 1, 2026.

Students who currently have an EFA would remain in the program. Starting on July 1, 2026, the income cap at 350% of the federal poverty level would stay in place only for non-public school students. 

Ayotte’s proposal would make approximately 98,000 public school students eligible for an EFA starting in the 2026-27 school year. There are currently fewer than 6,000 students enrolled in the program, which would make Ayotte’s plan a 17-fold expansion of the program.

That’s a huge win for school choice supporters and for students who have struggled to succeed in their government-assigned public school. 

New Hampshire’s own state test scores show majorities of students failing to reach proficiency in science and math, and bare majorities performing at a proficient level in English, despite massive increases in school spending in the past quarter century. 

 New Hampshire public schools spend about $4 billion a year on K-12 public education, breaking down to an average of $26,320 per student in total spending. In addition, thousands of students experience bullying and other negative social interactions in schools that they don’t choose but are assigned to by their local governments. While most parents report being satisfied with their local public schools, many families want other options.

Ayotte’s budget would give most public school students the option of spending their state adequate education grant on an alternative education to the one provided by the school district in which they happen to live. 

Because it excludes students who did not spend the full prior academic year in a public school, kindergarteners presumably would not be eligible. 

The prior-year public school enrollment requirement poses some other potential problems. 

It raises the question of whether a student has to be enrolled in the same school for the entire time. Do students whose families move from one district to another still qualify?

In addition, students who are bullied, mistreated by staff or experience a significant decline in academic performance during a school year would have to suffer through the entire year before getting an EFA ticket out. 

Those issues should be addressed by legislators.

Ayotte’s position differs from the positions taken by the EFA expansion bills in the House and Senate. Both of those offer EFA access to all students eligible to enroll in a K-12 school. Yet Ayotte’s budget has given legislators a path to full universal eligibility. 

Her line-item budget raises EFA spending from $29 million in the first year to $44 million in the second year. That $15 million increase would generally cover the cost of universal expansion in that year. 

EFA students who switch from a public school to an EFA save the state money. The average EFA cost is $5,204 this year. Public school students cost the state an average of $6,177 in the 2023-24 school year, according to state data.

We published a study on Tuesday in partnership with EdChoice estimating that making all school-age students eligible for the EFA program would cost the state just $6.5 million in the first year and $11 million in the second year. That’s just a bit above the $15 million increase Ayotte built into her budget for the EFA program in 2027. But because the state spends more on public school students than EFA students, every student who switches from a public school to an EFA saves the state additional money. So legislators could pass universal expansion within the general scope of Ayotte’s proposed budget.

The language in Gov. Ayotte’s budget trailer bill is as follows:

VI. “Eligible student” means any student that is eligible to enroll in a public elementary or secondary school pursuant to RSA 189:1-a, is a New Hampshire resident under the provisions of 193:12, and meets one or more of the following conditions: 

  • Income eligibility.

Any student whose annual household income at the time the student applies for the program is less than or equal to 350 percent of the federal poverty guidelines as updated annually in the Federal Register by the United States Department of Health and Human Services under 42 U.S.C. section 9902(2). No income threshold need be met in subsequent years, provided the student otherwise qualifies. Students in the special school district within the department of corrections established in RSA 194:60 shall not be eligible students. 

Any student full-time enrolled in a district or a chartered public school in grades kindergarten through 12 for the preceding academic year from the first day to last day of the school year as reported to the department.

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Universal EFAs’ cost from new private & homeschool students likely less than $20 million in Years 1 & 2

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New Hampshire’s Education Freedom Account (EFA) program is restricted to families that make no more than 350% of the federal poverty level. (That’s $90,370 for a family of three and $112,525 for a family of four.) Republicans in the state Legislature have proposed removing the income cap and allowing all students to participate in the program. Opponents of expansion have incorrectly asserted that taking EFAs universal would cost the state more than $100 million in Year 1. But to reach that number, they included thousands of ineligible pre-school students, out-of-state students and current EFA students. They also assumed without evidence that every eligible student would take an EFA. No school choice program in the country has a 100% take-up rate among eligible students outside the public school system, and no program has a take-up rate that’s even in the same ballpark. 

After removing ineligible students and using more realistic take-up rates based on actual program experience in New Hampshire and other states, we estimate that only 1,479 students not currently enrolled in a public school are likely to take an expanded EFA in Year 1, and 2,501 are likely to take one in Year 2. Because this new population of eligible students comes from households with incomes above 350% of the federal poverty level (FPL), the average EFA grant will be smaller than in the early years of the program in which eligibility was restricted to lower-income students, about 40% of whom received additional aid for having incomes lower than 185% of the FPL. We project a per-pupil EFA grant of $4,410 for newly eligible students above 350% of FPL vs. $5,204 in the current school year. That leads to an estimated fiscal impact on the state budget of $6,522,390 in Year 1 and $11,029,410 in Year 2. 

This report was prepared by the Josiah Bartlett Center for Public Policy and EdChoice.

Accounting for Ineligible Non-Public School Students

State Education Department (NHED) data show 17,670 students currently enrolled in non-public schools in New Hampshire. That number includes more than 9,000 students not eligible for an Education Freedom Account. Using state data, we subtracted 1,516 pre-school students and 4,990 non-residents. New Hampshire has several famous boarding schools as well as smaller private schools within a short drive of our neighboring states. These schools attract thousands of non-residents who are ineligible for EFAs.

In addition, students who currently receive an EFA and use it to attend a non-public school are included in the total non-public school enrollment numbers published by NHED. Because they have an EFA, they are not eligible to receive another one. Therefore, they should be subtracted from the total. We conservatively estimated that half of current EFA students attend a non-public school. The percentage is likely higher. To avoid double counting, we removed these current EFA students from the non-public school student total.

Home-Schooled Students

When a home-schooled student takes an EFA, the state classifies that student as an EFA student, and not as a home-schooled student. Therefore, we cannot subtract the remaining home-schooled EFA students from the list of registered home schoolers. The state does not keep statistics on the total number of home schoolers. We used the state-reported figure of 3,499 home schoolers this fall and counted all of them as eligible for an EFA.

Accounting for Household Income

Families earning 350% of the FPL or less are currently eligible for an EFA, so making the program universal does not make them newly eligible. Census data show that 65.8% of New Hampshire households with children earn more than 350% of the FPL. So we multiplied the total population of eligible state-resident non-public school and home-school students by 65.8% to estimate how many would be eligible if the income cap is lifted. 

Take-Up Rates Among Eligible Non-Public School Students

Opponents of school choice commonly make the mistake of assuming that every eligible student will take advantage of school choice programs. That is not the case. No school choice program in any state has a 100% take-up rate among eligible students outside the public school system, and no program has a take-up rate that’s even in the same ballpark. 

To estimate take-up rates for expanded EFAs, we looked at New Hampshire, Arizona, which has a universal education savings account program, and Indiana, which expanded eligibility for its program from 370% of the FPL to 740% from 2021-2024. Annual take-up rates among eligible non-public school students in Arizona and Indiana ranged from 15.9% to 29.5%. New Hampshire’s take-up rates among non-public school students eligible for the EFA were 19.1% in 2021 and 32.3% in 2022. Since the other state rates were lower, we applied New Hampshire’s higher take-up rates to be more cautious.

Estimating EFA Spending Per-Student

Because the EFA program has been limited to lower-income families, a significant percentage of participants has received additional state aid for students who participate in the free-and-reduced-price lunch program. Thirty-seven percent of EFA students in the 2024-25 school year received this aid, which was $2,346 per-student. To be eligible, a family’s income must not exceed 185% of the FPL. Because every family that qualifies for this aid is already eligible for an EFA, we removed this aid when calculating the cost of expanding eligibility above 350% of the FPL. We estimate that the average per-student EFA cost for newly eligible students will fall from $5,204 to $4,410. 

Final Estimated Cost

After making these calculations, we estimate that 1,479 students newly eligible after making EFAs universal would enroll in the program in the first year, and 2,501 in the second year. At an average per-student cost to the state budget of $4,410, this would lead to a Year 1 cost of $6,522,362 and a Year 2 cost of $11,029,962.

For comparison, we also calculated the cost if the average per-student EFA grant remained at the current amount of $5,204. Using this per-student average, we get a Year 1 cost of $7,696,716 in Year 1 and $13,015,204 in Year 2. 

Even if we were to increase by 50% our estimated number of EFA enrollees in each year, using our more realistic $4,410 as the average per-student EFA grant, the total cost to the state would come to only $9,785,790 in Year 1 and $16,546,320. These projection are miles below the $100 million cost of EFA expansion that some opponents project.

Conclusion

It’s important to note that these numbers do not include cost savings to taxpayers from EFAs. It costs taxpayers an average of $26,320 in total state, federal and local spending to educate a single student in the public schools. But EFAs have averaged a cost of only $5,204 so far. Universal eligibility would lower the average per-student EFA cost even further. Even at the state level, the per-pupil cost would shrink, as EFA students receive only adequacy grant funds, while school districts receive some additional funding. State Education Department data show that the average per-student state adequate education grant in the 2023-24 school year was $6,177. For EFAs, the grant average was $5,204.

Opponents have claimed that making EFAs accessible to all students would cost the state more than $100 million in the next fiscal year, as every home-schooler and every student attending a non-public school would enroll in the program immediately. This is not only unrealistic. It’s impossible. The student figures used to reach the alarming $100 million number included more than 9,000 students who are not legally eligible for an EFA. 

When ineligible and already eligible students are removed, a more realistic picture of expansion’s affect on the state budget emerges. In our estimates, the fiscal impact on the state budget would be minimal, ranging from $6.5 million in Year 1 to $11 million in Year 2. Even if we increase our enrollment estimates by 50%, the fiscal effect rises to only $9.8 million in Year 1 and $16.5 million in Year 2. 

K-12 district public school enrollment has fallen by more than 54,000 students since 2001, as spending increased from $2.8 billion to $4 billion. Though the state has increased both total spending and per-pupil spending, the Education Trust Fund remains flush, with an estimated balance of $158.4 million at the end of the 2024 Fiscal Year, according to the preliminary Annual Comprehensive Financial Report for 2024. The modest fiscal effect of making EFAs universal is not only manageable, but it would allow the state to purchase a quality education at a lower per-pupil amount going forward.

Download this report here: JBC Brief Universal EFA Fiscal Impact

 

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The first four housing reform bills of 2025

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New Hampshire’s housing shortage, and the price spike that it created, has made housing the No. 1 problem facing the state, according to University of New Hampshire polling. Fixing the state’s housing shortage is such a priority for voters that a 2024 UNH poll found more than 1/3 of voters rating it as the top problem, with the No. 2 problem a full 29 points behind. In response, the state House of Representatives has created a standing Committee on Housing to deal with the issue. 

Of the 22 bills referred to the committee, four have been reported out and face a full House vote on Feb. 6. The Josiah Bartlett Center for Public Policy will analyze all 22 bills during this legislative session. Below is our brief analysis of the first four bills to be released for House consideration.

  • House Bill 60, an act relative to the termination of tenancy at the expiration of the tenancy or lease term.

Under current state law (RSA 540:2), a landlord may not terminate a tenant’s lease, even at the lease’s expiration, without cause. The statute lists several causes, including non-payment of rent, substantial property damage, failure to comply with a material term of the lease, behavior that risks health or safety, refusal to vacate for lead paint abatement, or “other good cause.” 

In effect, RSA 540:2 nullifies the time limits on all residential rental contracts. Instead of a one-year lease, the law locks both parties into a permanent lease that can be broken only by bad behavior on the part of the tenant or some other “good cause” that exists outside the terms of the lease and that neither party can predict. 

A lease is a short-term contract in which both parties agree to abide by all stated provisions between the start and end dates. By nullifying the end date of residential leases, RSA 540:2 transfers the use of one person’s private property to another indefinitely, then creates a very limited set of conditions under which the owner can reclaim the use of that property.

This discourages the creation of additional rental housing, particularly duplexes and triplexes. Though the law is a problem for all owners of rental property, it’s particularly tough on individuals and families interested in investing in small-scale rental property. Owners and potential owners of smaller properties that could be put on the market to increase the state’s severely low rental supply are correctly wary of leasing their homes or small investment properties for fear of becoming locked into permanent leases. 

HB 60 fixes this problem simply by recognizing as legally binding the end dates of residential leases. This is a restoration of private property rights that encourage investment in additional rental units.  

  • House Bill 399, establishing a commission to study the New Hampshire zoning enabling act.

HB 399 is probably the most important housing reform legislation of 2025. It establishes “a commission to study the historical evolution of New Hampshire’s zoning enabling act, currently codified at RSA 674:16. The legislative intent is to study the evolution of the New Hampshire Zoning Enabling Act as it turns 100 this year. The goal is to see how the New Hampshire Zoning Enabling Act has changed over time and to consider and make recommendations for future legislation on the balance of zoning powers between the state and municipalities.”

Among the commission’s tasks is to determine whether “the listed powers are still appropriate and/or applicable today, and if any could be removed or if any not present should be added.”

It also would be charged with examining whether the listed purposes of statute that creates local zoning powers are still appropriate or whether any could be removed, and identifying any alternatives to the zoning enabling act.

The Standard State Zoning Enabling Act dates from 1925, and it’s clear that during the last half of its existence, at least, municipalities have used its powers for purposes not strictly aligned with its core purposes of protecting public health or safety and the general welfare. 

The web of regulations spawned by the act has throttled economic growth and left New Hampshire poorer and less vibrant than it would be if not for misguided government interventions, particularly in the housing market. 

The complexity of the problem is a big reason why so little progress has been made despite overwhelming public demand for change. Rather than continue to address each discrete issue one at a time, HB 399 would authorize a comprehensive review, one that is long overdue. A top-to-bottom study of how zoning contributed to the state’s housing crisis, along with recommendations for how to untangle the regulatory web, is likely the only way to achieve comprehensive reform. 

  • House Bill 444, an act relative to a tenant’s right to notification prior to the sale of a multi-family home.

HB 444 would forbid owners of restricted multi-family residential property from closing a final sale or transfer of the property without first giving “60 days’ notice and the opportunity to make an offer to each tenant in the same manner and according to the same procedures required of a manufactured housing park owner in RSA 205-A:21.” 

In short, owners of apartment buildings with five or more units, and owners of more than three single-family rental homes, would be prohibited from selling their rental properties without first giving every renter two months in which to make a purchase offer. 

Owners of mobile home parks face the same restriction under RSA 205-A:21. But there’s a huge difference between apartment renters and mobile home park residents. Mobile home park residents own their homes. They typically rent the land. And they often have associations through which they handle property rental issues. 

RSA 205-A:21 is designed to regulate property sales that involve multiple property owners. That’s not the case with apartment renters. Applying the regulations governing mobile home park sales to apartment building sales would only create confusion and delay. Unlike mobile home owners, renters do not have collective associations, do not have a long-term financial investment in the property, and typically do not have the financial resources to purchase even a small home, much less an apartment building.

HB 444 does not fix any of the regulatory problems that contribute to New Hampshire’s housing shortage, but instead would create another one. 

  • House Bill 623, relative to prohibiting corporations from purchasing single-family homes for a certain amount of time.

It’s not clear what problem HB 623 is trying to address. Institutional investors are not heavily engaged in the single-family home rental market in New Hampshire. In fact, a General Accounting Office study in 2023 found that institutional investors accounted for only 3% of the national single-family home rental market, predominantly in the South, Midwest and West. 

That study concluded that the huge and sudden increase in institutional investor purchases of single-family homes was driven by the 2007-09 financial crisis and federal policies that followed it.

Fannie Mae’s 2012 REO-to-Rental Initiative bulk auctioned thousands of single-family homes for the purpose of converting these homes to rentals. In 2017, “Fannie Mae backed a 10-year, $1 billion loan to Invitation Homes (one of the largest investors in single-family rental housing) to purchase and manage single-family rental homes,” the GAO report explained. “Freddie Mac subsequently launched a pilot program designed to provide liquidity and stability for mid-sized investors (generally those with 50–2,000 properties) and uniform credit standards on loans for single-family rental properties.”

Rather than emerging as a predator, institutional investors answered the federal government’s call to rapidly increase the supply of rental homes by buying and converting foreclosed properties. They later moved into building their own rental homes, expanding the nation’s supply of rental housing. 

The GAO report found that the rental homes run by institutional investors are concentrated in the South and Midwest, with some presence in the West, all areas hit hardest by large-scale home foreclosures following the financial crisis. Most New Hampshire homes owned by businesses “can be attributed to individuals or small investors using an LLC to buy the home,” according to the New Hampshire Association of Realtors. 

There simply isn’t a problem with institutional investors buying up homes in New Hampshire. So HB 623 offers a solution to a problem that doesn’t exist. Yet its passage could still harm New Hampshire. The bill prohibits the purchase of single-family homes by “non-natural persons” (businesses) “until the property has been on the market for 90 days.” It contains a few exceptions. The first allows the purchase of residential housing by businesses for the purpose of converting it to a non-residential use. This, perversely, would encourage businesses to remove existing stock from the state’s housing inventory. 

Like HB 444, not only does HB 623 address a non-existent problem, but it would create a real one. 

Download this policy brief here: First Four Housing Reform Bills 2025.

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