As legislative efforts show, property-tax relief is a tough goal in NH

Jun. 15—Property taxes are like the weather, says longtime New Hampshire Sen. Lou D'Allesandro.

"It's a great thing to complain about, but when it comes to fixing it, it's problematic," D'Allesandro, D-Manchester, said in an interview Tuesday.

While there was significant attention to reducing property taxes this legislative session, the average homeowner may not see much relief in the short term.

New Hampshire is heavily dependent on property taxes, leading to one of the highest rates in the nation.

The first of two property-tax-bill installments is due next month in Keene and other municipalities across the state.

Keene's current tax rate of $31.28 per $1,000 of assessed valuation is one of the highest in New Hampshire. The rate, $14.02 of which goes to fund local education, would result in a yearly bill of $7,820 on a $250,000 house.

In a recent op-ed, Senate President Chuck Morse, R-Salem, and Majority Leader Jeb Bradley, R-Wolfeboro, touted a so-called "property-tax relief package" passed this session totaling more than $130 million.

Funds will go to local highway and bridge projects, water pollution cleanup, police body and dashboard cameras and a state contribution to municipal employee retirement costs next fiscal year.

The idea is that this infusion of cash to towns and cities will reduce local property-tax burdens.

"I think that's baloney," said D'Allesandro, who has been in the Senate since 1998. "That money is one-time money that will be used for specific purposes and will have little effect on your property tax."

Rep. Timothy Lang, R-Sanbornton, said there are other examples of property-tax relief engineered by the N.H. Legislature over the past couple of years, including a $100 million cut to the amount to be raised in statewide education property taxes in the state budget last year.

Lang, a member of the House Ways and Means Committee, said an increase in the state's distribution of the rooms and meals tax from 22 percent to 30 percent last year — an extra $31 million provided to municipalities — could also help lower property taxes.

"If towns applied 100 percent of these funds to offsetting costs, rather than adding new costs, then yes, it would have a dramatic effect on tax rates," Lang said. "However, the state doesn't control that. Municipalities are free to take that extra 10 percent of rooms and meals tax and increase spending by that much money."

But even if all of these funds were used to offset taxes, it's questionable how much that would move the needle. The sheer size of municipal expenses across the state dwarfs incremental steps state lawmakers have taken to ease local property-tax burdens.

According to the N.H. Municipal Association, the total statewide property-tax levy is more than $3 billion annually and, of all state and local tax dollars collected in New Hampshire, about two-thirds are collected through property taxes.

School spending makes up the lion's share of property-tax expenses. Keene's latest school budget alone is more than $70 million.

Meanwhile, municipal retirement expenses have increased, and this drives up property taxes.

In 1977, the N.H. Retirement System paid 35 percent of retirement costs for police, firefighters and teachers. Over the years, the state contribution was reduced to zero. The Legislature this year agreed to a one-time payment to cover 7.5 percent of these costs for municipalities.

There is a trend of the state downshifting expenses to municipalities while not sharing enough tax revenue with them, said D'Allesandro, vice-chairman of the Senate Ways and Means Committee.

For example, for many years, the state has not lived up to its original commitment in the rooms and meals tax, created in 1967, to share 40 percent of tax revenue with cities and towns.

But there is a silver lining to the outsized tax bills homeowners must pay.

While New Hampshire has one of the highest property-tax burdens nationwide, it doesn't have a state or local sales tax and doesn't tax earned wages. That gives it an effective tax rate of 9.6 percent, or 16th best nationally, according to the Tax Foundation, an independent tax policy nonprofit.

Rick Green can be reached at rgreen@keenesentinel.com or 603-355-8567.