By GARRY RAYNO, InDepthNH.org
CONCORD — Returning the Statewide Education Property Tax to a real statewide property tax would raise $1.4 billion for public education, a House committee was told Wednesday.
Rep. Walter Spilsbury, R-Charlestown, is the prime sponsor of House Bill 1800, which would raise the rate of the statewide tax to $5 per $1,000 of valuation from the current rate just over $1 per $1,000, while providing exemptions for primary residences, for residents with no children enrolled in public schools and for the elderly that could drop the rate to as low as $3 per $1,000.
“The Statewide Education Property Tax was set up in one fashion and progressively corrupted to the point it is now just a sham and does not do at all what it was intended to do,” Spilsbury told the House Ways and Means Committee.
Currently the SWEPT raises $363 million to pay for adequacy aid to school districts, but the money never leaves the community it is raised in.
Property wealthy communities that raise more than they need to cover the adequacy requirement, retain the money and unincorporated places with no or few kids have their local education property tax rate set to a negative number so they do not have to pay any SWEPT.
Spilsbury said under his plan, the money would be paid to the Department of Revenue Administration and then distributed as education aid to school districts.
That way there are no more donor towns. He explained everyone would pay the first $5 dollars of their property taxes to the state to be distributed for education.
Under his plan, a person’s primary residence would receive a 20 percent exemption, residents without children enrolled in school would receive a 10 percent exemption and property owners over 65 years old would receive a 10 percent exemption.
He said the exemption would be cumulative, so if you qualified for all three exemptions the rate would be $3 per $1,000 of valuation.
“This would effectively shift more of the burden of SWEPT towards commercial property, investment property and second homes,” Spilsbury said. “That would occur within a community and across the state.”
The plan would also shift away from the current input system of determining the cost of an adequate education by looking at the average cost of a teacher or janitor, and instead provide state aid of $10,000 per student and $4,000 for students who qualify for free and reduced lunches as a measure of poverty.
He said his proposal would remove special education from the formula and it would be handled separately.
The House Education Funding Committee is working on a plan to overhaul the state’s special education funding system.
“How we fund special education does not have anything to do with the base cost of delivering adequate education,” Spilsbury said. “The funding model for special education is completely broken.”
His model also would not include additional aid for students who are not native English speakers. He noted the aid is small and the number of students is limited outside of Manchester.
“This is the first bill that attempts to bring both sides of the equation into one bill,” Spilsbury said. “I’m trying to develop something that would be a balanced equation.”
If the legislature does not have the will to pass an income tax or a sales tax, he said, “then we need the SWEPT to function the way it was intended to function.”
Spilsbury said he knows his bill needs work and does not expect it to pass this session but instead he intends to start a discussion about solving the education funding problem that has plagued the state for decades.
He urged the committee to look at three spreadsheets: one that lists community property tax rates from the most expensive to the least, the impact of SWEPT at $5, and the allocations on the spending side.
He noted his town Charlestown has the highest property tax rate in the state and after this year’s town and school meetings will be over $40 per $1,000.
He noted the current local school portion of the rate is $23.34, which is more than most towns’ total property tax rate.
Yet he noted at the deliberative session last weekend, the budget for next year and the new teacher contract will add over $3 to the rate and voters also approved two warrant articles that would also raise the rate.
“The current structure sentences communities like mine to a doom loop,” Spilsbury said. “We can’t attract new money, developers won’t come, we have one or two building permits a year.”
While a number of committee members praised Spilsbury for his work, Rep. James Tierney, R-Groveton, said what the bill needs is a cap on local school spending if the statewide property tax goes to $5. He noted that with government, if there is extra money, it will be spent
Spilsbury said there needs to be a local bridge for education costs, noting some communities will want several foreign languages taught in high schools, but another community may want only Spanish.
“You do not want every school district to be run by the state in uniformity,” he said. “You need a local education component.”
Rep. Thomas Opell, D-Canaan, said “we need to solve this problem, it’s been more than 30 years.”
Spilsbury noted when the SWEPT was approved in the 1990s, the rate was $6.80 per $1,000. “We’ve been down this road before,” he said. “But we retreated from it, and we need to go back.”
He said in his community the tax rate amounts to a 4 percent tax on wealth, noting how someone would like a 4 percent scrape on their portfolio annually.
“How does one representative communicate to 399 others how desperately bad this is,” he said, “and how much it needs to change.”
The Department of Education had some technical issues with the bill that need to be corrected as did the Department of Revenue Administration.
The committee is likely to hold a work session on the bill and Spilsbury suggested they hold a joint session with his committee, House Education Funding.
He said his bill does not intend to raise more funding, instead it intended to raise money differently and with greater redistribution.
“At the end of the day, if the legislature does not have the will to make SWEPT a true statewide tax,” Spilbury said. “You should repeal it because it is a joke, it is a deception.”
Garry Rayno may be reached at garry.rayno@yahoo.com.