A group calling itself the “New Hampshire Advantage Coalition” is petitioning 11 communities to cap local property tax rates.
Coalition officials say caps are needed to control fast escalating local taxes.
But critics say the caps can unduly constrict spending, to the point that they do more harm than good.
New Hampshire Public Radio’s David Darman has more.
There is no question that local tax rates are going up.
A recent study by the New Hampshire Center for Public Policy says they are increasing by an average of nearly 5 percent a year.
Mike Biundo of the New Hampshire Advantage Coalition says that annual increase is too much for most local taxpayers to bear.
The average voter, uh, the average citizen is looking at their budgets every day. They’re trying to figure out what to cut, what they need to move out because they’re having to make hard financial decisions. I think it’s important that government make those same kind of decisions with the taxpayer in mind. And I don’t think they’ve been doing that.
The coalition is targeting eleven communities for caps, including the cities of Manchester, Portsmouth, and Keene, as well as towns like Merrimack and Bedford.
A petition to cap taxes has also been filed in Londonderry, where town administrator
David Caron is weighing the potential consequences.
If you have this cap and you have some certain segments of your business operations such as gasoline and retirement costs increase significantly year after year, then there is going to be pressure obviously, to streamline and reduce costs in other areas to meet that cap which would obviously impact services.
Londonderry’s citizens have already voted this year to hold the line on their budget, even without a cap.
Derry, right next door, has been living with spending ceilings put in place two years ago.
Town Councilor Rick Metts says the town has so far kept things going without any major disruptions.
But he is anxious about what might happen down the road.
There’s a limit to how long it will work….unless you keep rolling over staff and get lower priced employees. And you also know the state, the state retirement system is in a mess, so whatever they decide up there is going to, you know, decide whether we have the staff we have this year next year.
Derry is generally residential in character, without industrial parks or major retail centers.
And there is no major development on the horizon.
A 2007 study of property tax caps around the country found that communities like Derry might have to cut staff or programs as a cap takes hold.
Iris Lav of the Center on Budget and Policy Priorities in Washington, D.C. co authored the report.
She says that’s because of the way caps typically work.
In addition to allowing growth with inflation, they allow the growth that’s associated with new construction…in which case if you have a growing community, the cap is eased….if you have a community that’s stagnant or shrinking, then the cap can be more of a problem.
The city of Franklin may well be New Hampshire’s poster boy for how a cap can best function.
It has had a tax cap in place for 19 years, the longest of any community in the state.
Mayor Ken Merrifield says in all that time, there has never been a need to lay off staff.
He says that’s mainly because the city has attracted development that has broadened Franklin’s tax base.
Just this past year the assessed value of our buildings downtown climbed dramatically. So as we develop economically and redevelop our mill district in the downtown we gain from that on the revenue side in the city budget, without impacting property taxes for our residents.
Property tax advocates say development isn’t the only way budgets can grow.
All cities and towns with caps get allowances each year for budget increases tied to the rate of inflation.
If that’s not enough, citizens can also vote for an override, but it would take a supermajority of more than 60 percent to get it passed.
The study by the Center on Budget and Policy Priorities looked at overrides in several states.
Co author Iris Lav says what they found was that overrides were more likely to pass in some communities than others.
What happens is that wealthier communities override more often and with larger amounts of money and poorer communities don’t because you know, they’re feeling pinched so you get even more disparities in whether you have good public services between communities.
The city of Laconia is another New Hampshire community that has only recently implemented a property tax cap.
Theirs has been in place for three years.
City manager Eileen Cabanal says the cap has been valuable in negotiating labor contracts, since there is only so much the city can spend.
But Cabanal says surprise costs, like an increase in county spending this year, can put an unexpected strain on the city.
The county budget which is also part of the city budget increased over approximately a hundred and sixty thousand dollars more than the tax cap would allow. And so you have to pay that bill anyway so we ended up splitting between the school district and the city we each had to cut 80,000 dollars out of our budgets kind of like at the last minute.
New Hampshire Advantage Coalition is aiming to have the tax cap proposals before the voters in the eleven targeted communities this November.
They have filed the paperwork in several places already.
And they’re planning to get to the rest in coming weeks.
