Sometimes those of us who spend a lot of time at the State House forget that some of the words we use are not familiar to everyone. “Downshifting” is one of them.
Downshifting happens when the state government cuts revenue that it used to provide to cities, towns and school districts. Those costs do not disappear — they are shifted to local property tax payers.
In the past, the state provided 35% of retirement costs of teachers, police, firefighters and municipal workers to local governments. It is currently at zero dollars despite repeated attempts by House Democrats to restore funding.
The amounts contributed by the state on behalf of Bradford, Henniker,and Warner for police & fire in 2009, the last year it was funded at the 35% amount, were as follows:
- Bradford: $8,908
- Henniker: $33,920
- Warner: $13,604
The amounts contributed on behalf of the Kearsarge School District, Henniker School District, and John Stark School District in 2009 were as follows:
- Kearsarge: $377,065
- Henniker: $82,017
- John Stark: $158,944
Remember, these numbers are for just one year. The total loss since 2009 is much higher.
The state used to send part of the local Rooms & Meals tax back to towns through a complicated state formula. That sharing is now repealed. Without that money, towns lost revenue that helped pay for services and hold down property taxes.
Prior to its suspension, the amount distributed was approximately $25.2 million per year statewide. The amounts received by Bradford, Henniker and Warner in 2009, before it was suspended, were as follows:
- Bradford: $25,890
- Henniker: $64,434
- Warner: $35,368
If the state had kept revenue sharing at $25.2 million statewide, each town would have received the same annual amount for 18 years, from fiscal year 2010 to fiscal year 2027.
For each of the three towns, that total amount would have been as follows:
- Bradford: $466,020
- Henniker: $1,159,812
- Warner: $636,624
State law sets a cap of $50 million annually in School Building Aid. However, actual funding is determined in the operating budget. In the budget for 2026 and 2027, the state appropriated $14.8 million and $12 million, respectively — enough only to cover previously approved projects. No funding was provided for new projects.
If the Kearsarge School District received state School Building Aid, we might not be facing drastic steps like school closings that are being discussed now. State aid would also help reduce the impact on local property taxpayers from those decisions.
Of all the downshifting, nothing hits harder than the state’s failure to sufficiently fund our public schools. New Hampshire relies on property taxes for 70% of public school funding — the highest rate in the country. According to the New Hampshire Fiscal Policy Institute, we rank 50th in the nation for the share of school funding that comes from the state. That puts us dead last for state investment in public schools, and it runs directly counter to decades of court rulings requiring the state to provide more funding. This level of dependence on property taxes is not sustainable for New Hampshire.
Beginning in 2023, Republican lawmakers in Concord repealed the Interest and Dividends tax. Since then, New Hampshire has lost more than $150 million in state revenue. A nonpartisan analysis from the NH Fiscal Policy Institute found that eliminating the tax gave the biggest benefits to high-income individuals and households, while cutting the money available for public services.
A separate Institute study found that New Hampshire’s business tax cuts cost the state between $795 million and $1.17 billion, with no measurable gains in jobs or economic growth compared to other states. While revenues rose, New Hampshire lagged behind the national average and our neighbors. Most of the benefit went to large, out-of-state corporations and their shareholders, not to New Hampshire workers or small businesses.
That is money that could have funded schools, town services, and other priorities — instead it is being shifted onto local property taxpayers. Fewer state dollars means we do not have enough to fund the schools, roads and services our communities need.
Downshifting is not a budget term — it is a choice, and until Republican law makers stop cutting state revenue, it will keep landing on your property tax bill.
Rep. Eileen Kelly represents Merrimack County District 8, serving Bradford, Henniker and Warner, and serves on the NH House Finance Committee.