A new analysis released by the Pew Charitable Trusts affirms a well-established fiscal reality here in the Granite State: New Hampshire relies considerably less on taxes to finance public services than most states. In fact, according to Pew, taxes now make up a smaller share of state revenues in New Hampshire than in all but four states.
Pew finds that taxes comprised just 38.3 percent of state revenue in New Hampshire in FY 2013. (Pew’s analysis utilizes data from the US Census Bureau’s State and Local Government Finance survey; FY 2013 is the most recent year for which such data are available.) That share is considerably below the national average of 49.5 percent and lower than almost any other state. Only Louisiana, New Mexico, South Dakota, and Wyoming relied on tax revenue to support state services to a lesser degree that year.
A key commonality among those four states is the extent to which they draw upon federal funds as a state revenue source. In all four cases, federal aid makes up more than 35 percent of all revenue used for statewide public services, such as health care or transportation. Louisiana and South Dakota are among the top five states in terms of their reliance upon federal dollars; federal funds comprise 41.9 percent of revenues in the former and 39.0 percent in the latter. By comparison, federal funds constituted 27.1 percent of state revenues in New Hampshire in FY 2013, just below the fifty state average of 30.0 percent.
New Hampshire compensates for relatively small shares of tax revenue and federal aid by relying more heavily upon service charges and sharing greater responsibilities with local governments in providing certain services. More specifically, service charges (such as fees and university tuitions) make up 15.2 percent of state revenues by Pew’s accounting, the 8th highest level among the fifty states, while local funds make up 3.6 percent, the third highest nationwide.
View the Pew report, Where States Get Their Money, and a graph illustrating revenue sources for all 50 states.