With a state revenue surplus now at about $200 million, some N.H. lawmakers are optimistic about funneling more money to towns and cities to provide relief to property taxpayers saddled with some of the highest rates in the nation.

But, nobody is predicting the average homeowner will see a major reduction in their tax bill anytime soon. As always, the devil is in the details.

“The prospects for returning money to towns are good, but I can’t say that’s going to lower anybody’s property taxes because we don’t control what the town does with the money,” state Sen. Tim Lang, R-Sanbornton, chairman of the Senate Ways and Means Committee, said in an interview Monday.

He said surplus money accrues when revenue gained from taxation exceeds budget predictions, as has been occurring since the last budget was written in 2021.

Surplus money is best used for specific initiatives rather than ongoing operations as it’s not clear if it will be available in the future, Lang said.

Some of this money may be returned to municipalities in the form of further support for capital projects, for example.

“The likelihood of money being available for one-time projects and one-time grants is really high,” Lang said.

Much of the actual legislation to direct this money to towns and cities to help reduce property taxes remains to be written, including the budget bill.

Lang said his committee will examine existing state revenue as well as tax projections to determine how much money can be spent in the two-year budget lawmakers will draw up later this year.

Keene City Manager Elizabeth Dragon said any additional state funding for municipalities is helpful because there are considerable inflationary pressures on local budgets, such as increased labor and material costs for construction projects as well as ongoing expenses.

In other words, more state financial support may not cause property tax bills to drop, but could limit increases, she said.

“We’re all seeing increased costs for everything, including our operating supplies and our capital projects, so, obviously, any additional revenue from the state will help mitigate that,” Dragon said. “It doesn’t mean there’s going to be a drop in the tax rate but it will be lower than it would have been without it.”

She also pointed out that a large portion of the tax rate is tied to school spending, which has been increasing.

N.H. Education Commissioner Frank Edelblut said in a written statement Friday that the state’s average cost per student for the 2021-22 school year was nearly $19,400 about a 5% increase from the prior year and up 78.4% since 2000.

Over that two decade period, annual costs per pupil in Keene increased from $13,487 to $17,766, according to the state education department.

At a Senate Republican Caucus news conference last week, Sen. James Gray, R-Rochester, chairman of the Senate Finance Committee, said the Legislature has passed bills containing more than $500 million for property tax relief over the last two years.

This includes education grants, funding for county nursing homes, money for municipal road and bridge construction, among other things.

Lawmakers also passed a reduction in the statewide education property tax. While property taxes are charged by local government, the state imposes its own property tax for education.

Of course, this $500 million over two years is dwarfed by the $3 billion the N.H. Municipal Association estimates state and local governments collect in property tax annually.

Gray promised no new taxes.

“We will never, ever implement income, sales or capital gains taxes,” he said. “Our fiscal, economic efforts as a caucus have already delivered unprecedented funding back to our New Hampshire communities.”

New Hampshire has the second highest state and local property tax per capita at $3,246, behind only New Jersey at $3,513. But New Hampshire ranks No. 47 nationally in overall tax collections per capita as it lacks some of the taxes other states have, according to the non-profit Tax Foundation.

These articles are being shared by partners in The Granite State News Collaborative. For more information visit collaborativenh.org.

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