About those property taxes…
Like most of you in Nashua, I was stunned at my property reassessment, which showed an increase in the value of my house of 40%! That’s a huge amount. Reassessments reflect the estimated rise in the value of our homes. They do not necessarily mean a rise in your property tax, which will be determined once the city determines the new rate. Why is this happening?
Let’s talk about what our taxes do. All our taxes — Federal, state, and local — pay for the services we use. Schools, pensions, snow removal, park and road maintenance, trash removal, and salaries for the people who do those jobs are some of the things that come out of state and local taxes. Some Federal dollars also go into these services, but not a lot.
New Hampshire has no income tax, so we depend very heavily on property taxes. When state aid drops or remains the same as costs go up, local property taxes rise. When the state doesn’t sufficiently fund services, cities and towns are the only remaining revenue source and must pay more to make up the deficit.
Over the last few years of Republican state leadership, this process, called “downshifting”, has grown. Downshifting occurs when the state lowers the support it provides for localities in order to show an attractive balance sheet for itself. For example, the state receives money from the Federal government, some of which is supposed be distributed to cities and towns. The state may not distribute it, and simultaneously NH Republicans cut support for education and municipal pensions. This makes their budget numbers look good. But our kids and our retired police officers suffer. It’s all just “aggressive accounting” right? Yes, it’s legal, but untruthful. Because of downshifting, New Hampshire now shows a budget surplus of over $400 million while our property taxes keep going up!
But nobody wants to receive fewer or lower-quality services. What happens then? Our municipalities have to increase the only taxes they control, the largest of which is property tax.
A prime example of downshifting is aid to education. New Hampshire, which ranks in the top ten of household incomes in the US (ref 1, ref 2, ref 3) has the lowest per-pupil state support for public education. At the same time, we rank in the top ten in the US for education spending (ref 1, ref 2, ref 3).
How can this be the case? We citizens pay for it ourselves. The difference in those two numbers, state support for schools and overall education spending, comes out of our property taxes.
Why is this a problem? Here are several reasons:
- Everyone’s property taxes are set at a flat rate. Those with lower incomes will likely have a harder time dealing with the increases than those with higher incomes.
- Wealthier communities are able to raise more money than poorer communities. This leads to disparities between the services and service levels in those communities.
- We are pricing people out of the state, leading to a shortage of workers.
What can we do? We can demand that the state increase aid to municipalities. There is no reason to keep a huge surplus when cities and towns are forced to raise property taxes. This hurts our citizens, particularly those with low and/or fixed incomes. We need to remember that the point of state government is to serve the needs of its people, not to show a pretty number on a balance sheet.
