Your Tax Bill…and what you can do

If there is one thing that New Hampshire property owners have in common, it’s the puzzled (and sometimes angry) face we make most times when you open that invoice from city hall that comes in the mail every six months. This is usually followed by the thought of “why did it go up so much?”
It’s complicated. We New Hampshire-ites feel proud that we have no personal income tax, no general sales tax, no gambling casinos and more recently, our legislature (not the people) decided to prohibit retail sales of marijuana. Refusing to consider some or all of these potential income sources creates a huge impact on your property tax bill.
If you don’t have time or interest in a lengthy read, go here for my conclusions.

Our attitude of taking the moral high ground seems a bit hypocritical. After all, we have State run liquor stores and we had the first in the nation state run lottery, the old 50/50 sweeps program that was “for education”……but we don’t call it “gambling”. Due to a lack of a broad based sales tax, our economy has been partially built on stealing sales of consumer products from other states. Our State run liquor stores could easily include marijuana items and reap immense profits from it.

Bordering states have already taken advantage of some of these additional revenue streams and it’s just a short drive away for New Hampshire residents who want to indulge. The genie is out of the bottle folks. And worst of all, the people of our state don’t get to vote on referendum issues like marijuana legalization or casinos. Those types of decisions are all kept under the tight control of our State government in Concord which is often heavily influenced by outside political forces.

Refusing to exploit all these other available revenue streams shifts the cost of government, especially education, to the backs of the local property tax payer. The details of how this happens are fairly simple. The State of NH will provide (as something called an “adequacy grant”–should be called IN-adequacy grant) $3708 per each student in 2020. Because the actual average cost of education now has surpassed $15,000 per child, the rest of the bill goes to our towns who must raise it through property taxation. The result is that it is a very unfair tax system. Towns who have small taxable valuations and many students have very high tax rates.

The most extreme example is Claremont, NH. They have about $750,000,000 of taxable property evaluation but need to provide funding for 1800 students. Their 2019 tax rate was $40.26 with $20.64 of that number for local education. On the other hand Wakefield has about $1.1 Billion of taxable property evaluation and 676 students to provide funding for. Our 2019 tax rate is $12.47 with $6.24 being collected for local education. This shows how unfair our current tax structure is and how it can affect our students.

Let me be clear. Wakefield’s low tax rate is NOT because of inadequate budgeting! Those that use our low tax rate as an excuse to tax us more are blowing smoke and shifting mirrors. Our average expenditure per pupil is well within the state average but our kids are testing below average.

This unfair method of funding education is wrong you say? The State Constitution actually requires that the State provide equal education for all? That’s true. We should sue them you say? We have….again and again….beginning in the 90’s. And we have won! Judges have repeatedly called for the State to address this problem. Here are some quotes from the decisions: “…We hold that part II, article 83 [of the New Hampshire Constitution] imposes a duty on the State to provide a constitutionally adequate education to every educable child in the public schools in New Hampshire and to guarantee adequate funding….” “…We do not construe the terms “shall be the duty … to cherish” in our constitution as merely a Statement of aspiration. The language commands, in no uncertain terms, that the State provide an education to all its citizens and that it support all public schools….”

Not a whole lot of change has occurred to address the school funding problem. There has been a lot of talk and very little additional money while the can keeps getting kicked down the road. When Republicans control the legislature, they have a history of cutting taxes (for some, like corporations) while trimming school funding. Anyone remember in 2011 when the Republican controlled legislature cut the tax on cigarettes by 10 cents a pack? The result was 20 million dollars lost to the state budget! What the hell?

In 2018, the Democrats were given control of the New Hampshire House and Senate by the voters. Call them spenders if you want, but during the 2020-21 budget process, they attempted to begin the process of addressing the school funding issue by providing an additional $138 million in State education aid to towns. This additional funding could have helped reduce property tax bills, especially in disadvantaged towns. Republican Governor Sununu vetoed that budget, saying that it was “unsustainable”. The State aid was later reduced to about half the initial amount. FYI- Sununu vetoed 57 bills (a State record) that the Democrats tried to pass in 2019. Most of them were designed to help people who are at the bottom of the food chain, like increasing the minimum wage, which Sununu also vetoed.

Let’s look at some information I found. I have no way to confirm its accuracy. New Hampshire boasts that it has one of the lowest tax burdens in the country. It’s mostly true. We’re actually number 46 out of 50 states according to this web site. However, If you look more closely at the chart the bad news is that we are number ONE in the country for having the highest property tax burden. This is due to how our tax system is currently structured….and it needs some fixing.

People with fixed incomes and those who work for low wages are rapidly being forced out of the one place that is not optional, a roof over their heads. Their yearly minimal income increases are dwarfed by their property tax increases, ultimately taking food off the table as they struggle to keep up. It’s pay up or get out. On the State level, wouldn’t it be prudent to take a hard look at some of the revenue streams we now refuse to embrace?
Many of them are what I call optional taxes. Just like our current rooms and meals tax, we do have some measure of control over how much we pay because we can limit our participation. We can choose to stay away from a casino. We are not required to buy booze, cigarettes or pot. If we had a sales tax, those who have the money for more expensive items will also pay more tax on the higher ticket items. Even an income tax would help those with less. Some of these ideas will make folks bristle, but it’s a fact that other states have lower property taxes partly because they have chosen some of these alternative ways to generate income. In some ways, this seems to be a bit fairer. About all you can do to help make changes in Concord is be careful who you vote for. A lot of what goes on there is out of our hands, but you can still write to your reps. It’s as easy as an e-mail.
New Hampshire Senators and New Hampshire House of Representatives.

On the local level, you have a lot more control than most think. There are multiple meetings as the budget process moves along. We have a Budget Committee that scrutinizes line by line of our Town and School budgets. All meetings are filmed and made available for viewing. So why are we still getting these big tax increases year after year? The truth is that we have no one to blame but ourselves for what is happening. Our general lack of involvement has enabled our government to get off its leash. And this is occurring despite the fact that we have a beautifully designed system of checks and balances that include the participation of the people in every instance.

I confess that like so many, I really didn’t have a good understanding of how our local budget process works. I have always voted. I thought that was my sole obligation as a citizen and left the operation of the government to our elected officials. They can be trusted to represent us, right? Well….how’s that working for us? Not very well at the moment. By the time we get to voting day, it’s too late. It’s all or nothing. We give them what they want or nothing more. We know costs go up, so we often give in and give up more than we are comfortable with. We throw our hands in the air and say “I don’t like it, but there’s nothing more I can do.” It’s no surprise that so many have given up. Sadly, giving up actually enables the process of unbridled spending to continue year after year.

Because I am responsible for getting the many Town and School public meetings filmed, I get to watch each meeting in real time. I see the back and forth between those who are trying to do their job well, while asking for the funding to accomplish that, and those who we elect to sift down through the data presented and separate the needs from the wants. These are all good people that join in this dance, year after year, with the same result of increasing taxes at a higher percentage rate than many can afford. After much observance, I’ve come to my own conclusion that, over time, our system is at the point where it’s running backwards! Before you write me off as a wackadoodle consider this: Why can’t we tell them in advance how much percentage of increase we are comfortable with and ask them to try and create a budget with that amount in mind?
It won’t be perfect. There will be exceptions but it could increase public support because people would feel heard. Many towns have actually done this by passing a tax cap. It’s true that tax caps are often overridden but it still sends a signal to administrators. Percentage increases that exceed comfort levels may have difficulty getting approved by the voters.

The current process goes like this: The Administrators meet with department heads and project what funding is needed for the coming year based on previous years. A large document (over 100 pages for the school) is generated for public and Budget Committee review. It has many lines telling where each penny will be spent including increases requested. The Budget Committee meets with administrators and goes over each line even though the majority of these good, well meaning, elected budget officials have neither the expertise, experience nor education to even know what they are looking at. As they move down each individual line, they say “that’s not too bad of an increase” and vote to approve it. The problem is that the BOTTOM line adds up to a 6% increase for the current school operating budget request. It was 9% last year for the school portion and your December tax bill reflected that.

The backwards part of this lengthy process is that we are kept focused on the nickels and dimes while ignoring how quickly the bottom line is adding up. The final twist is that once we have approved that bottom number on voting day, all those expense lines can easily be changed. The School Board (or Town) can spend the money nearly any way they want. And they have been. It’s called a bottom line budget. When it comes to government, most folks have thrown their hands in the air while muttering: “it doesn’t matter what I do , it doesn’t make any difference”! Despite the fact that we have a wonderfully designed system that allows the public to participate throughout the whole process, it’s the same few people advocating for the taxpayer year after year.
The result is that we have enabled this process of big tax increases to continue.

You may not have time to go to meetings or even watch them online. You may vote so you can tell yourself: “I did my part”. You know that costs go up and you want to help address the needs of the school and Town. But in the voting booth the numbers that you are voting on are a bit uncomfortable to you. You vote “yes” anyway because you fear that a “no” vote might somehow take away from legitimate needs. There are two simple steps that you can take that can give you much more control over your tax bill and allow you to vote yes in March while feeling good about it.
1: Whether it’s Town or School, find out how much money they got voted last year followed by how much they want to receive in the coming year including warrant articles. You can view the ballot totals at the town clerk’s office. The increase will affect next year’s property tax bill.
Currently, every $100,000 increase in their budget and warrant totals will increase the tax rate about nine cents.
2: The single most important event that gives the smallest number of people the most power to make changes is the Town and School deliberative session. This year it will be held on Saturday, February 1st at 9am. I estimate that if 150 (maybe even 100) like minded people showed up, we could change the numbers to reflect tolerable increases, take back a measure of control over our government, and feel good about voting “yes” for these reasonable increases on voting day. This feels like a win-win to me. Maybe it’s time that WE played the game backwards. And our system will once again work as intended because more people have become involved in the process. I hope to see you on Feb 1!

J.M.

Here’s a little information:
1: Regarding the Town portion of your next tax bill, it is estimated that if everything passes in March, including warrant articles, the potential increase to our tax rate could be fourteen cents.
2: The School increase portion is still in limbo. Originally, the School operating budget amount for 2020-21 increased about $600,000 (about 50 cents in the tax rate) and the warrant articles were increased above last year. But the budget Committee has voted to “not recommend” one warrant article in the amount of $200,000. It still will be on the ballot and could pass. As of 1-1-20, the teachers contract has not been made available to the public, so we don’t know the additional cost of that.