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Legislature passes one-time fix for Newfound Area School District’s tax cap

The Newfound Area School District got a one-time fix for its new tax cap yesterday when the Legislature rushed through a bill that was signed by Gov. John Lynch on his last day in office.

The emergency legislation passed by voice votes in the Democratic-controlled House and the Republican-controlled Senate yesterday morning on the first day of the 2013 legislative session. As the House prepared to adjourn in the afternoon, Speaker Terie Norelli announced to applause that Lynch had signed the bill into law, a day before Gov.-elect Maggie Hassan took the oath of office.

The Newfound district includes seven towns: Alexandria, Bridgewater, Bristol, Danbury, Groton, Hebron and New Hampton. Last March, it became the first school district in the state to enact a tax cap, limiting the district’s budget to a 2 percent annual increase.

The budget for 2012-13 approved by voters last year included $11.6 million to be raised in taxes, so the 2 percent cap would limit the 2013-14 budget that will go before voters this spring to $11.85 million in taxes.

But district officials ran into a problem. The state Department of Revenue Administration ruled that under the tax-cap law passed in 2011, the cap applies to the amount of taxes actually raised, not the amount approved in the budget.

Because the district used $700,000 in surplus money from the 2011-12 budget year to reduce the amount raised in taxes last year to $10.9 million, the 2 percent cap would require the 2013-14 budget to include no more than $11.1 million in taxes. That’s a reduction of at least 4.3 percent from the current year.

“We aren’t going to find that in paper and pencils,” said Phil McCormack, Newfound’s interim superintendent, at a House special committee hearing last month.

Sen. David Boutin, a Hooksett Republican, is preparing legislation that would fix the underlying problem in state law. But Newfound officials asked for a one-time fix for the next budget, as they face a Jan. 28 deadline to finalize their budget ahead of the district’s Feb. 2 deliberative session.

So Democratic Rep. Suzanne Smith of Hebron and Republican Sen. Jeanie Forrester of Meredith introduced a bill that, for the coming year only, states that the tax cap applies to “the amount of local taxes raised . . . without reduction for any lapsed balances.”

A special House committee reviewed the bill last month and voted 9-0 to recommend passing it, which both chambers of the Legislature did yesterday with little debate.

Norelli, a Portsmouth Democrat, thanked lawmakers for their work on the legislation. House Minority Leader Gene Chandler, a Bartlett Republican, said in a statement that “the House has done the right thing to pass this bill and untie the hands of the district.”

And Senate Minority Leader Sylvia Larsen, a Concord Democrat, hailed the bill’s bipartisan backing.

“I hope this first action of the Legislature sets the tone for the rest of the session,” Larsen said in a statement. “Senate Democrats are committed to working with Senate Republicans to solve the problems that face our great state with common-sense solutions.”

(Ben Leubsdorf can be reached at 369-3307 or or on Twitter @BenLeubsdorf.)

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