There’s no way to sugarcoat it. The property tax as a means of funding government in the Granite State, long unfair and regressive, has become cruel.
Six months from now, the combined impact of Concord’s revaluation of property, the school district’s 12.2% tax increase, and the city’s 4% jump will show up in residents’ December tax bills. The effect on many owners of the city’s most modest homes will be akin to an anvil dropped from a rooftop.
The national housing shortage vastly increased demand for so-called “starter homes,” which have doubled or tripled in value in just the past five years. The value of higher-end homes and especially commercial real estate increased far less. That means a bigger share of the tax burden will shift from the well-off to those with the least ability to pay. According to the New Hampshire Fiscal Policy Institute, property taxes consume 5.9% of the income of the bottom 20% of the state’s earners and just 2% of its top 1%.
In December, many Concord homeowners will see their tax bill increase by $500, $700, $1,000 or more. The hit will come at a time when the personal finance company Bankrate says nearly half the nation’s households couldn’t cover a $1,000 emergency expense.
In Rochester and Exeter, which recently revalued their real estate, the bills for owners of mobile and modular homes jumped by $500 or more. The heaviest burden fell on senior citizens, the disabled and others on a fixed income. For people already scrimping to pay bills, a property tax increase that puts home ownership at risk is an emergency.
Until the municipal tax rate is set and equalized by the state, it’s impossible to say exactly how much any individual bill will increase. A look at the current assessments of two Concord dwellings with very low assessments hint at what could be in store. They are World War II era homes, one of three rooms, one of four. According to the online real estate website Zillow, the value of one increased by more than 100%, the other almost as much. Meanwhile, the estimated value of Concord homes with 8 or 10 rooms and three bathrooms increased by about two-thirds.
Homeowners who can’t pay a big surprise tax bill have few options. If they’re over 65, disabled or a veteran, partial tax exemptions exist, but they are modest at best. Owners who qualify for an exemption can, under state law, request that their tax bill be deferred. Their tax debt will continue to increase year after year, but accrue at an interest rate of 5% rather than at the 8% and 15% rates charged delinquent taxpayers. A deferral can continue until the homeowner dies or sells the property. The home then becomes the city’s property and can be sold to recoup the forgone tax revenue.
Homeowners who are neither elderly nor disabled but simply low income have fewer options. They can sell and move, if cheaper housing can be found, or apply for a poverty abatement, which if granted would similarly allow them to live in the home until they die or sell. Such abatements are not easy to get.
Come Christmas there will be a lot of hand-wringing, groans and panicky calls when the tax bills arrive. It doesn’t have to be this way.
No state is more reliant on property taxes than New Hampshire. That is the state’s disadvantage.
In the December journal of the New Hampshire Municipal Association, Cheshire County Treasurer Jack Wozmak reported on the impact of the state’s downshifting. Over the past decade, by reducing or eliminating revenue sharing and other sources of funding for municipalities, school districts and counties, the state shifted roughly $3 billion of its costs to property taxpayers. Without that shift, Wozmak wrote, local property taxes would be lower than they were a decade ago. The downshifting continued this year.
Why? Blame the vaunted pledge never to enact a broadbase sales or income tax, the blood oath taken by Republicans, libertarians posing as Republicans and most Democrats aspiring to higher office.
Blame the tax cutting mania fueled by the Free Staters who control the House. Most of all blame voters in the majority of the state’s communities who elect candidates who vote to balance the state’s budget on the backs of property owners.
Last year, the residents of Charlestown and Berlin paid the highest tax rates in the state; $36.64 per $1,000 valuation in the former, $33.60 in the latter. Both communities elected Republicans who voted with their party to eliminate the interest and dividends tax and cut business taxes. Those decisions reduced state revenue by more than $1 billion. That’s money the state could have used to increase school funding and slow the rise in property taxes.
New Hampshire is driving away its youth, who can’t afford the rent or buy a home of their own. And it’s taxing low income owners out of their homes, out of the state or onto the street. That is not to anyone’s advantage. This fall, vote for candidates who pledge to stop the downshifting and end the state’s reliance on property taxes.
Ralph Jimenez of Concord served on the Monitor editorial board.