Families across New Hampshire are well acquainted with two truths. First, property taxes are excruciatingly high – and often highest for the least well-off. Second, school funding is inequitable – and, for many towns, insufficient.
Since the early 2000s, our low- and moderate-income neighbors have struggled to make ends meet in the crosswinds of wage stagnation and rising cost of living; many are now flattened by the headwind of the COVID-19 pandemic.
As of July 2020, half of New Hampshire households reported some loss of income from employment and more than one in four households are now struggling to pay basic expenses. From Portsmouth to Pittsfield, Lebanon to Lisbon, we’ve heard rallying cries for transparency and equity in the property tax system. With school budget shortfalls and potential cuts to state education aid looming, families will once again bear the brunt of these twin crises when towns are forced to raise property taxes in order to fund schools already cut to the bone.
Property taxes are regressive in nature and bear no relation to one’s ability to pay them. The poorest 20% of New Hampshire households (those making less than $26,700 per year) paid 6.2% of their income to state and local property taxes in 2018, while the wealthiest 1% (those making above $514,900) paid just 1.9% of their income to state and local property taxes. Though the state pays paltry “adequacy aid” to towns to fund public schools, 73 cents of every dollar spent on school budgets come from local property taxes. Property-wealthy towns with larger taxing bases can better spread this cost amongst their residents, while property-poor towns have no choice but to continue to raise the burden their residents face to fund the bare minimum of a school budget.
The existing Low- and Moderate-Income Homeowners Property Tax Relief program is a welcome aid to those struggling to make ends meet. However, benefits from the program have fallen sharply in recent years, due to changes in the statewide property tax.
For example, in 2003, nearly 27,000 families benefited from this program, while in 2018 that number had fallen to just under 7,000. In that same timeframe, despite rising costs-of-living and wage stagnation, the average rebate amount fell from $275 to $160. Property-tax relief for those in need is crucial to our neighbors’ survival and to our local economic health. When tax bills are fair for working families, households have more dollars to spend at local businesses and the whole community benefits.
We filed HB 504 in response to activists across the state who say low- and moderate-income homeowners in every town are struggling. The bill strengthens the Property Tax Relief program by expanding both the number of households eligible for the program and the amount they can receive. HB 504 would allow single heads of households making under $55,000, and married couples earning a combined $70,000 or less, to take advantage of the program. The bill adjusts income limits to keep up with inflation and provides rebates for both state and local school property tax bills.
Other parts of the bill ensure that it remains fiscally responsible. For instance, the bill places a cap on both the amount of property-tax relief available to each individual household ($1,000) and the total amount of property tax relief collectively available ($25 million). Most critically, though, it restores the statewide education property tax (also known as SWEPT) as a true statewide tax, ending the preferential (and probably unconstitutional) treatment that about 33 property-wealthy cities and towns now receive.
It returns about $25 million of so-called “Excess SWEPT” funds to the state’s Education Trust Fund to support the expanded Property Tax Relief program, and requires the tax use a rate that is effectively uniform across all property owners in the state.
All municipalities would be required to remit, after deducting their reasonable tax collection costs, the full amount of the statewide education property tax to the state. Restoring the SWEPT in this manner rights a nearly decade-old wrong that has forced residents in less affluent cities and towns to contribute toward state education aid at higher rates than their counterparts in well-to-do parts of the state.
The vitality of our whole Granite State community is only as strong as the families who comprise it. Strengthening the Property Tax Relief program is a crucial step in provided much-needed relief to those in need.
House Bill 504 will be heard in the House Ways and Means Committee on Feb. 17 at 1:30 p.m.
(Rep. Dick Ames of Jaffrey serves on the Ways and Means Committee. Rep. Dave Luneau of Hopkinton serves on the Education Committee. Rep. Marjorie Porter of Hillsborough serves on the Municipal and County Government Committee.)