Given that this is Town meeting month and a major concern of residents is increasing property taxes, we are focusing on the ways that the State Legislature can bring back past funding to reduce property taxes and 2017 State legislation that will reduce or increase property taxes. Also included is how area legislators voted on those proposed bills. Note: ITL means Inexpedient to Legislate and OTP means Ought to Pass.
How the State Can Help
The information in this section is taken from a March 5, 2017 letter written by the town and city Board members of the New Hampshire Municipal Association and sent to all New Hampshire Legislators.
“Since 2008 there has been a significant reduction in virtually every municipal state aid program, reductions of such magnitude that they could never be offset by local spending reductions.”
Share the meals and rooms tax revenues with municipalities at the statutorily required rate of 40%, a percentage set forth when the meals and rooms tax was enacted 50 years ago, in 1967. The 40% was never reached and a catch-up formula was enacted in 1993. That worked well until the catch-up formula was suspended and has resulted in a loss to municipalities of approximately $58 million from 2010 to 2017.
Restore revenue sharing. In 2010, revenue sharing was suspended; it has remained suspended ever since, a cumulative loss of $200 million to date.
Restore the state’s 35% contribution toward the retirement costs of police officers, firefighters, and teachers, all of whom must participate in the NHRS. If the state had continued its 35% contribution, municipalities, school districts, and counties would have paid approximately $80 million less in pension costs in 2016 alone. (See HB 413 below)
Fully fund the state aid grant (SAG) program for municipal water and waste water treatment facility updates, which was suspended in 2008 and remains underfunded. Most disturbing at this point is that there is no funding available for any projects approved locally after December of 2008. As of the end of 2016, there are 50 local wastewater projects that would qualify for $90 million in state aid over the next 10 years if the moratorium were lifted.
Double the funding for municipal red-listed bridges. Bridge aid was supposed to double when the state increased the gas tax in 2014, with a goal to reduce the unreasonable 10-year wait list for state bridge aid. Bridge aid did double in 2015, but the doubling provision was eliminated just one year later. There were 338 municipal red-listed bridges as of June 2016, affecting commerce, citizens, and the state’s economy.
Maintain highway block grant funding. Here, finally, is a program that is working as promised! Municipalities receive 12% of the gas tax revenue and state motor vehicle fees. With the 2014 increase in the gas tax, which NHMA supported, an additional $4 million has been returned annually to cities and towns for the maintenance and improvement of local roads.”
School Building Aid Not included in the letter was the elimination of school building aid which was 37 million per year and had been suspended in 2015 to pay only those projects that had been approved before the suspension. (See SB 192 below).
What has been disturbing in the past two legislative sessions has been the push to decrease or refuse to raise State taxes and the subsequent additional burdens downshifted to towns and cities. Listed below are some of the bills that reduce revenue and some that would restore funding to towns and cities.
Legislation with Significant Impact
In 2015 The legislature voted to lower the Business Profits Tax (BPT) and the Business Enterprise Tax (BET). This was initially vetoed by Gov. Hassan and was later enacted into law with the addition of a rule that would revoke the decrease if specific revenue targets were not met. Note that while New Hampshire has a high corporate and business tax, it is in place of income and sales taxes. New Hampshire is currently ranked 7th in the nation for best business climate. One thing that brings down the ranking is the transportation infrastructure. Tax cuts were to be made as of December 2016 and 2018. Estimated revenue reductions were 63 million by 2019.
2017- SB 2: would lower the BPT and BET even more beginning in 2020. The fiscal note attached to the bill gave new estimates for the above changes and for SB 2 as follows: tax year 2018, 24 million and subsequent years 81 million. Voting in favor of this legislation: Harold French (Andover and Salisbury) and Bob Giuda (Danbury).
Not doing revenue cuts would certainly let the state start to provide the suspended funding to towns and cities.
SB 193: School Vouchers: This was approved by the New Hampshire Senate. A Concord Monitor editorial estimated this bill to have the potential to move 60 million dollars from public school funding, however the fiscal note for the bill states that the Dept. of Education is unable to estimate how many eligible students would participate in this program, and therefore is unable to estimate this bill’s impact on state education trust expenditures or local revenues.
Another Concord Monitor article states “The New Hampshire School Administrators Association has testified against the bill arguing that it would violate the state Constitution both by allowing public dollars to go to private religious schools, and to schools that the state can’t guarantee are providing an adequate education”.
Voting in favor of this bill: Senators Harold French and Bob Giuda
Note: there is a similar bill in the House, which would provide additional vouchers only for children with disabilities.
HB 413: Restores 15% of the retirement costs for fire fighters, police, and teachers that had previously been moved to towns and cities. This is just a portion of the original 35% that had been paid by the state, but is a step in the right direction. The full House voted 267 to 83, Ought to Pass. House votes: Anne Copp not voting, Natalie Wells in favor.
It then moved to the Finance Committee where it is “Retained in Committee”
SB192: This bill brought back school building aid for state fiscal years 2018 and 2019, and provided that there shall be no moratorium on school building aid for the biennium ending June 30, 2019. Amounts totaled 37 million in 2018 and 50 million in 2019.
It was voted ITL by the Senate. Voting to kill this bill were Harold French and Bob Giuda.
SB 244: Increases the exemptions for the Income and Dividend tax which would reduce state revenue by 33.6 million dollars in the first year. The bill was amended to lower the exemption but a new estimate is not available. The Senate vote 13 to 8 OTP. Voting to pass this bill were Harold French and Bob Giuda.
At the same time, House Finance Committee chair, Neal Kurk (R), isn’t optimistic about reinstating the school building aid program:
“The House is very aware of the building aid moratorium, and each session for the past two years we’ve looked to see if we could lift it,” Kurk said. “It’s really a question of balancing all of the needs of the state with the revenue that becomes available.”
Another revenue cut that, if not done, could provide funds for school building aid.
SB 242: David Solomon at the Union Leader wrote “SB 242 calls for two casinos: one category one license and one category two license. The Category 1 license costs $80 million and allows for 80 to 160 table games and 2,000 to 3,500 slot machines, while the Category 2 license costs $40 million and allows for 25 to 80 table games and 750 to 1,500 slot machines.
It cleared the Senate during last Thursday’s marathon session in a bipartisan 13-10 vote. Money would go to the host communities, neighboring towns, the host county, and would enable the state to resume revenue sharing with cities and towns”.
Voting to pass this bill Harold French and Bob Giuda.
SB 83: would have increased the minimum wage to $12 by 2019. It was defeated on March 16 by a 14-9 vote. Voting to kill this legislation (ITL) were Harold French and Bob Giuda
Governor’s Budget: Eliminates 500 million dollars from State agency budgets. The impact on towns and cities is not yet known. Requiring across the board cuts of this magnitude means those requiring a 500 million cut are not accountable to their constituents for the consequences.
The Governor’s budget is now with the house Finance Committee.
So far, it looks like funding for full day kindergarten will be cut, as well as some high school scholarship funding. The good news is that the Committee is looking to add in 25 million dollars to go to towns and cities to offset property taxes, and to provide more funds to towns and cities for infrastructure.
State laws have a direct impact on your property taxes. Make sure to contact your legislators as the passed Senate Bills now move to the House, and passed House Bills move to the Senate.