A petitioned warrant article has been submitted for the purpose of “seeing what action the Town will take with regards to semi-annual property tax bills in accordance with New Hampshire RSA 76:15-b II.” This is somewhat confusing, because it references semi-annual tax billing in the text, but RSA 76:15-b II (cited in the warrant article) pertains to quarterly tax billing.
The law cited provides that a majority of the legislative body (the voters at Town Meeting) has the authority to adopt quarterly tax billing. The voters do not have the authority to impose (or discontinue) semi-annual tax billing, since the governing body (the Board of Selectmen) is the only body charged with that authority.
An article appeared in the December/January issue of the Beacon explaining the Board of Selectmen’s vote in November to change from annual to semi-annual tax billing.
The Board of Selectmen (the governing body), using the authority given to them by RSA 76:15-a, voted to change to semi-annual billing to avoid the annual cost of borrowing and to improve the Town’s cash flow throughout the year.
The reason the Selectmen, as the governing body, are given this authority is to prevent the possibility of a change in billing schedules from one year to the next by the voters (the legislative body) at Town Meeting, which would be disruptive to the budgeting process.
Why Change?
Analysis shows that the cost to the Town of borrowing money is not insignificant. From 2006 to 2012, the Town has paid $79,602.70 in interest to borrow money in order to pay our bills.
Our financial year begins on January 1, but our tax bills for that financial year don’t go out until the following November. The Town begins to run out of money in June, requiring us to borrow from the bank. Semi-annual billing will give the Town better cash flow and will reduce the need for the Town to borrow.
Analysis of the costs versus savings shows that with an average cost of $11,000 per year in interest payments on the money we borrow versus $2,532 to cover the cost of issuing a second tax bill, the savings to the town would be an average of $8,468 per year.
How Does it Work?
Instead of receiving one bill in late November of this year for your entire 2014 property tax obligation, you’ll receive one bill in June of this year for half of your 2014 property tax, and a second bill in late November for the other half. Payment for each of the two bills will be due 30 days after the bill is mailed, and the usual interest and penalties will accrue after the due date of each bill.
Because the tax rate is set in November by the New Hampshire Department of Revenue Administration (DRA), the June tax bill is an “estimated” tax bill based on half of the previous year’s amount. The November bill makes up the difference between the June bill and the new, actual rate set by DRA in November.
Andover’s representative from the DRA has been telling us we’re one of the last towns in New Hampshire to still be on an annual billing schedule, as most other towns have recognized and realized the benefits of not having to borrow money to pay their bills. The Andover Board of Selectmen voted unanimously to begin semi-annual tax billing in 2014.