Decades ago, the state of New Hampshire made a promise to its cities and towns based on the ideals of shared responsibility. Today, as our state works to overcome unprecedented challenges, we must work together to fulfill that promise.
In the 1970s, then-Gov. Meldrim Thomson Jr. made a deal with the cities and towns – the state would pay a flat rate of 35% toward the employer contributions put into the state retirement system. This subsidy acted as a way to encourage cities and towns to join the state pension system, thereby broadening its base and ensuring sustainability without making the joining prohibitively expensive for local budgets.
Over the past decade, that contribution quickly declined until its complete elimination in 2011. The elimination of the subsidy led to the highest property tax increase in the history of the state.
This legislative session, I am proud to bring forward the Taxpayer Rescue Act of 2021. This legislation requires the state pay 15% of the employer cost for participating in the retirement system for teachers, police, and firefighters. It is a critical first step in alleviating some of the pressure our cities, towns, and school districts face in providing essential services while maintaining participation in the state retirement system.
A strong economy and a welcoming environment for residents of all ages cannot be sustained by a deadly choice between ever increasing property taxes or declining services. We cannot continue to force New Hampshire property-tax payers to bear the full burden passed down to them by the state.
This month, New Hampshire mayors and school board chairs sent a letter to Gov. Chris Sununu expressing their concern that the state’s failure to contribute would lead to budget shortfalls and possible reduction in essential services. Without making this change, property-tax payers will be facing $53 million in property taxes in fiscal year 2022 that they never signed up for. These increases are unsustainable. In Nashua alone, the state’s failure to share in the financial burden has led to an annual impact of over $10 million. However, by coming together to partially reinstate the promise made by the state over 40 years ago, we can reverse course and instead provide New Hampshire property tax payers with $53 million of relief.
The health of our retirement system is incumbent upon broad participation among other parameters. Cities, towns, and school districts have been handed an unsustainable financial burden to provide for their communities without a state subsidy. They face a terrible choice between cutting services or raising property taxes past affordability.
Some may argue that the state cannot afford the cost. It is an understandable sentiment given the economic uncertainty that we have faced as a state and as a nation over the course of the past year. However, this argument assumes that local property-tax payers can afford to pick up the state’s responsibility just because the state no longer wants to keep its promise.
We are a state that values hard work, commitment, and follow through. Throughout the pandemic, we have repeated the idea that we are stronger together. It is long past time that we re-establish the state’s responsibility in helping to maintain the health of our retirement system for the promise it made long ago to teachers, police and firefighters.
(Cindy Rosenwald of Nashua represents District 13 in the N.H. Senate.)