With lawmakers facing a Thursday afternoon deadline to reach agreement on outstanding bills, two high-profile proposals dealing with taxes are heading in opposite directions.
Negotiators from the House and Senate reached a deal Wednesday on legislation that would require every city and town to vote on whether to cap local property taxes spent on schools and limit distinct administrative costs. But they have failed to agree on proposals to cut the rate of the state’s business enterprise tax or lift its filing threshold.
Local Tax Cap
Limiting local property taxes and school spending has been a big focus for Republicans in Concord this year, particularly House leaders, who have pursued multiple efforts to rein in local tax and spending growth.
The version of the tax cap the House originally backed aimed to require cities and towns to vote on adopting a cap every two years; the Senate’s version, meanwhile, called for a one-time vote on a cap this November.
Under the compromise proposal, cities and towns will consider tax caps in 2026 and 2028. If adopted, the cap would only allow property taxes tied to school funding to increase based on two things: inflation, and an increase in assessed property value.
That cap wouldn’t apply to school building projects, bond payments or the receipt of federal grants or private donations to public schools.
Three-fifths of voters would need to support the cap for it to go into effect. Once adopted, the cap could be overridden by a two-thirds vote.
Democrats have opposed the caps, saying the state should leave local decisions to local voters during town elections. Governor Kelly Ayotte has largely steered clear of this debate, but last week told reporters that she backs the idea of putting tax caps on a November ballot, because “having people weigh in is a positive," she said.
Business Tax Cut
Republicans in Concord have cut the Business Enterprise Tax four times since 2016. But efforts to drop the tax again this year — from 0.55% to 0.5% beginning in 2028 — fell short due to concern from Senators that the move was irresponsible.
House leaders tried to reach a deal with the Senate, first by pushing off the effective date of any rate reduction, and then conditioning the cut on if business taxes exceeded $200 million of their estimate during the next two years.
“This would be a win-win for the taxpayers,” House Deputy Majority Leader Joe Sweeney said.
But the Senate was wary of tying any rate reduction to a so-called “trigger.”
“Revenues are promising but I am not so encouraged that I want to put this in place yet,” said Sen. Tim Lang, who chairs the Senate Ways and Means Committee.
The Senate meanwhile backed a proposal that would lift the filing threshold for businesses affected by the tax from $300,000 to $375,000, a move Lang said would mean 3000 fewer businesses would have to file.
Sweeney proposed lifting the threshold to $400,000, but only if paired with a rate reduction.
