Opinion: New Hampshire’s growing tax burden

“Recent accounts in the Concord Monitor and many other news venues have shared the pain, anxiety and uncertainty of people who fear that the growing tax burden will force them to sell their homes. Some have already lost their dwellings to the taxman.” File photo
Published: 06-15-2024 8:00 AM |
Ralph Jimenez of Concord served on the Monitor editorial board.
Slim envelopes have been arriving in the mail that, if their exterior betrayed their contents, would be ruddy, glowing and emitting sulfurous fumes. They are June property tax bills. The bills are a reflection of New Hampshire’s unique, and uniquely regressive, tax system, one more dependent on local property taxes to fund government than that of any other state.
Recent accounts in the Concord Monitor and many other news venues have shared the pain, anxiety and uncertainty of people who fear that the growing tax burden will force them to sell their homes. Some have already lost their dwellings to the taxman.
The mad escalation in home values and the sudden decline in the value of commercial buildings has shifted the tax burden to residential property. That’s made the plight of homeowners and renters even worse.
All too often property owners blame local officials for wanton spending with no regard for taxpayers. That blame is misplaced. Local officials pay property taxes too and tend to be frugal when proposing budgets. But they are shackled to a state tax system that dooms efforts to keep property taxes from increasing faster than most household’s incomes.
The pain is greatest in communities with lots of homes but little commercial or industrial real estate or pricey waterfront property — communities like Pembroke and Derry.
Periodically the system’s victims, including schoolchildren, look to the courts for relief. Several school funding cases are before the courts now. The petitioners wait in vain.
It’s been three decades since New Hampshire’s supreme court ruled that the state’s method of funding public education, and the tax scheme it employs to do so, are unconstitutional. Last year, a superior court justice agreed on both counts. The state, as it always does, appealed.
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The current cases, like their predecessors, are unlikely to change things. Why? Because, as a wise jurist said, courts don’t have armies and rarely succeed in forcing legislators to do something they don’t want to do.
New Hampshire lawmakers, and all its recent governors, including Democrats John Lynch and Jeanne Shaheen, fought to protect the state’s unfair and unconstitutional system of taxation.
That system, bizarrely called in some quarters the New Hampshire advantage, ensures that the smaller your income the bigger percentage of it that you are required to pay to fund government.
Most property tax revenue goes to pay for the cost of educating children. That cost is the state’s responsibility, but the state defined its way out of it. It pegs the cost of a so-called “adequate education” at about $4,300. Average per-pupil spending is $20,000 or more. The difference comes from local property taxpayers.
Concord’s property owners are facing an enormous potential tax increase. It would be driven by the cost of a new middle school, new police station, renovations to Memorial Field and other infrastructure improvements. The median list price of a home in Concord now tops a half-million dollars. A tax bill plus homeowners insurance can now add $1,000 per month to a mortgage payment. It’s no wonder the young despair of ever owning a home.
There are remedies that won’t be a cure but may at least stem the fever. No, not necessarily an income tax, though that would be the fairest, longest-lasting solution. Gov. Chris Sununu and GOP lawmakers cut business taxes, a rooms tax paid mostly by out-of-state tourists, and a tax on interest and dividends income paid by the wealthy. Combined it amounts to nearly three-quarters of a billion dollars. If that money had been used to defray local education costs, property taxes would be lower.
They would be lower still, in communities with the highest tax rates, if the state’s education property tax were raised to $5 or $10 per thousand and not unconstitutionally kicked back to property-rich towns. It should be shared to educate all the state’s kids, rich and poor.
Lawmakers have historically been careful not to take votes that could be seen as an up or down on fairly funding public education. But this year’s vote on the late Rep. Arthur Ellison’s bill to raise the household income level of schoolchildren eligible for a free lunch was a litmus test of sorts. The measure failed by one vote along party lines. That vote was cast by Republican Speaker of the House, Sherman Packard.
The solution to ever-higher local property taxes lies not in the courts but in the ballot box. The municipalities that’ve fared the worst under the existing system, like Derry and the original Claremont lawsuit towns, routinely elect Republicans who promise to cut taxes. What they don’t say is that those state tax cuts guarantee that local property tax bills will continue to skyrocket and housing will become ever more unaffordable.
The next chance to change the state’s unconstitutional tax scheme will come at the polls this fall. Voters should insist that every candidate make his or her position on property tax relief perfectly clear and weasel-proof. Then vote for candidates who swear that they will force the state to, at long last, do the right, and constitutional, thing.