Negotiators from the New Hampshire House and Senate have reached a deal on legislation that would require every city and town in the state to vote on whether to cap local property taxes for schools and limit district administrative costs. They also reached a last-minute agreement on a plan to raise the filing threshold on a key state business tax.
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 (BET) 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.
But as the deadline for legislative deals approached Thursday afternoon, lawmakers reached an agreement that would raise the filing threshold on the tax to $400,000, which negotiators say would exempt 4,500 businesses from the having to pay it.
The deal also creates a mechanism to cut the tax in the future, assuming BET collections far exceed forecasts.
Under the agreement, anytime collections on the tax surpass estimates by $100 million, the BET rate would drop by 0.05%, until the rate of the levy reached 0.25%, equivalent to the BET's rate when the tax was created in 1993.
The deal also send $2.5 million to nursing homes to raise Medicaid reimbursement rates.
