Property taxes vary hugely among towns and cities in New Hampshire, the state that depends the most on local taxes to pay for government, to the point that the bill for similar homes can vary widely.
A new analysis shows just how widely: A $500,000 house would pay $1,310 in taxes in Hart’s Location and $18,270 in Charlestown.
But why, exactly? Spending is certainly the main driver, especially spending on schools, balanced in small part by the ability to attract some revenue from grants and donations. But there’s another major factor affecting a community’s tax rate, highlighted in a report from the N.H. Fiscal Policy Institute: The amount of taxable property inside your community’s borders.
The report, carrying the dry title “Property Tax in New Hampshire,” lists what is known as Equalized Value Per Capita or EVPC for each town and city in the state. The more property value in a community per resident, the lower the tax rate needs to be in order to collect enough money to pay for services.
That’s the theory, anyway. And the report shows that it’s mostly true.
The eight communities in the state with the highest total tax rates, which includes Concord, all have below-average amounts of taxable property for each resident compared to the state as a whole. Concord, for example, has $195,117 worth of assessed property — industrial, commercial, residential — per resident compared to the state average of about $250,000.
That list includes some small cities and towns that contain few high-income areas or businesses, such as Berlin and Charlestown, but also includes Keene, where Keene State University occupies a large part of downtown but doesn’t pay property taxes, and Concord, where city officials have long bemoaned the amount of tax-exempt state property.
By contrast, the 12 communities with the lowest total tax rate all have higher than average amounts of taxable property for each resident, often much higher. Many of them border Lake Winnipesaukee and are known for large second homes, which have very high assessed value but aren’t occupied part of the year.
Moultonborough, for example, has $1.38 million worth of taxable property per resident and New Castle has a whopping $1.6 million.
Such discrepancies in property values aren’t unique to New Hampshire, of course, but it hits particularly hard here because of our dependence on local taxes to pay for things.
Property taxes account for about 63 percent of all state and local tax revenue in New Hampshire, the report said, adding that “property taxes account for a greater share of state and local government revenue than in any other state.” Recent cutbacks on some state taxes — eliminating the income and dividends tax and reducing the business profits tax — have increased the pressure on local property tax rates by reducing help that comes from the State House.
The connection between property value and tax rates isn’t exactly secret, of course. Trying to lure businesses to increase the tax base is standard municipal planning, and it often comes up in discussions over housing, since new housing adds to the tax base but also can add to the cost of services, especially if it attracts school-age children.
And the connection isn’t absolute and linear. Tilton has $270,000 in property per capita, but its total tax rate of $11.29 is half that of Hopkinton, which has only slightly less total value ($237,00 per person). Local spending, driven often by the structure of the local school system, remains important.
But the report reminds us that depending heavily on the value of land and buildings within a community to pay for basic services makes it hard to control tax rates.
The entire report can be seen at https://nhfpi.org/resource/property-taxes-in-new-hampshire-how-they-work-and-how-they-compare/
