Republican lawmakers are advancing legislation that would prohibit “diversity, equity and inclusion” clauses in state contracts, adding the measure to the state budget as Democrats object to the late notice.

In an amendment added to the budget trailer bill, House Bill 2, Republicans on the House Finance Committee voted to block state agencies, towns and school districts from entering into contracts that have provisions relating to DEI.

According to the proposed law, DEI includes any program or policy “that classifies individuals based on race, sex, ethnicity, or other group characteristics for the purpose of achieving democratic outcomes.”

The law would prevent any public entity from taking action to “implement, promote, or otherwise engage” any programs or policies related to DEI, and it would block state funds from being spent on them.

It would also bar state agencies from entering into contracts with vendors that include any DEI-related provisions, and would require state agencies to submit a report by October of any current contracts it has that include those provisions.

Public schools would be prevented from DEI programs, including implicit bias training, and race-based hiring, and public schools would also need to conduct a review of all contracts that might contain those programs by October, according to the bill.

The bill emerged Monday as a last-minute amendment to the budget. The House Finance Committee is expected to vote Thursday on its final recommended version of the budget, which must be voted on by the full House on April 10. The two budget bills, House Bill 1 and House Bill 2, will then move on to the Senate.

Democrats objected that the anti-DEI amendment, brought by Reps. Rich Nalevanko, of Alstead, and Joe Sweeney, of Salem, came too late in the process and should have received a full hearing in a policy committee.

“I simply want to point out that if the public has not said already that they want input on big decisions such as this one, and they see again that this committee is going to go ahead and jam through on literally the last day something like this without proper notice, proper discussion, and input from the community, I think they are going to lose their confidence in this body,” said Rep. Laura Telerski, a Nashua Democrat.

Democrats also said the language was overly vague and would likely be challenged in court, which they said would cost the state in legal fees. They argued the phrase “other group characteristics” is confusing and could be read to exclude contracts and programs meant to help people with disabilities.

A similar law, known by some as the “divisive concepts law,” was passed in 2021 and was also the subject of a lawsuit. That law was struck down by the U.S. District Court of New Hampshire in May 2024 for being unconstitutionally vague; the state has appealed the decision to the First Circuit Court of Appeals in Boston.

“Good attorneys will argue on their interpretations of the words, and then a judge will determine the outcome. And the last time we took that gamble, it cost the state of New Hampshire $3 million,” said Rep. Mary Hakken-Phillips, a Hanover Democrat, referring to the litigation costs brought by the divisive concepts law. “Are we going to do that again?”

The amendment nearly didn’t pass. In an earlier vote Tuesday afternoon, the committee voted down the amendment after two Republican representatives, Jess Edwards, of Auburn, and Brian Seaworth, of Pembroke, broke with their party to oppose it.

At the time, Edwards said he was voting against the amendment on principle, since the amendment was introduced late and did not receive a proper hearing. But later in the day, Edwards and Seaworth reversed their votes and the committee passed the amendment. Neither explained their decision publicly, but Edwards said he supports the aim of the amendment.

Edwards criticized Southern New Hampshire University, a private institution, for a course that delves in part into why white-majority neighborhoods have better health outcomes than minority-dominant neighborhoods.

“It’s that calling out of a demographic to assign a group characteristic that doesn’t make any sense when you put it back into individual terms,” he said. “It causes one to think, ‘Aren’t we supposed to be judged by the content of our character and not of our skin?’ ” he said.