By GARRY RAYNO, InDepthNH.org
“Perhaps, if (voters) are unwilling to cap themselves, the state will step in and cap local taxes for them.” House Majority Leader Jason Osborne after Kearsarge Regional School District voters overwhelmingly killed a proposed budget cap in 2025.
CONCORD — Come Tuesday everyone who turns out to vote will have an opportunity to either cripple their local school district or finally bring property taxes under control depending on your viewpoint.
Voters will have the opportunity to weigh in on a ballot question with a history and what is a lesson in the current state of New Hampshire’s politics.
Both sides of the topic have put the pedal to the metal trying to convince undecided voters of their argument’s rationale, with hefty doses of propaganda and political lunacy thrown in.
Question 2 on Tuesday’s general election ballot would cap local school property taxes to the rate of inflation plus new construction and would cap School Administration Unit (SAU) costs to 6 percent of a district’s total school budget without capital bond costs in the prior year counting in both instances.
To pass for a two-year period, the vote needs to be a three-fifth majority or better of all the votes cast on the question in a school district and not in every town of regional or cooperative school districts. (More on this later.)
A district can override the cap with a three-fifth majority vote.
Ten or more voters can petition either the school district clerk or the secretary of the administrative unit for a recount within seven days of the vote, and the recount by the district must be held within five days of the petition’s filing.
The cost will be $10.
Question 2 will not cap a school district’s budget, but will cap what the district can raise in taxes for schools.
It does not cap overall property taxes which also include municipal and county expenses, which are likely to increase each year, nor the statewide education property tax, which isn’t likely to increase.
It will not lower your property taxes, but will cap their rate of increase for public schools, which make up the majority of a property owner’s property tax bill.
The Department of Revenue Administration will need about $100,000 to reconfigure its system to report and set tax rates and raised concerns about how to determine new construction totals that communities need to include to determine the cap.
The bill defines “net new taxable property growth” as new construction, physical expansion or improvement of structures; subdivision or redevelopment of land, conversion from exempt to taxable status, or any physical change that increases taxable market value.
The new taxpayer property growth, under the law, shall not include: market appreciation, revaluation or reassessment; or changes in assessment methodology.
The Department of Revenue Administration must certify each town’s net gain every year.
If a community approves a cap, it will go into effect for the 2027-2028 school year.
School districts that pass the cap must submit documentation to the Department of Revenue Administration that includes: proposed appropriations by the school board and district budget committee, revenues and tax rate; the appropriations approved by the district meeting, and any votes to override the tax or administrative caps.
The DRA must certify the data and if the tax rate exceeds the cap, the school board must reduce the budget to what’s allowable under the caps.
The DRA is also prohibited from certifying any tax rate over that allowed under the caps, according to the law.
The question voters will see Tuesday is the child of Republican lawmakers’ attempts to impose a statewide property tax cap on schools that began in 2024 when the legislature passed a bill allowing 25 district voters or two percent, whichever is less but must be at least 10, to place a per-student budget cap article on a district’s annual warrant.
The first year that could happen was 2025 and eight districts had warrant articles and all were unsuccessful as they were this spring.
After Kearsarge soundly defeated the budget cap in a record turnout, Osborne made his statement, and soon introduced House Bill 675 which would have imposed a statewide school budget cap. The bill was retained by the House and then defeated in January of this year.
Republicans tried again and after fits and starts HB 1300 was finally passed by the House and Senate by almost all-Republican majorities and signed by Gov. Kelly Ayotte under the brand “The Taxpayer Protection Act.”
Other Republicans like Osborne claimed it would be the property taxpayers’ relief act and finally bring property taxes under control as they blamed local officials for the increases.
Opponents say it will handicap school districts that face increasing heating and utilities, transportation, special education and health insurance costs that are greater than the rate of inflation which is set at the federal rate for the urban Northeast region.
Opponents argue the cap will force the elimination of programs, competitive sports and extracurricular activities; increase class sizes, and teacher and staff layoffs.
They also argue it is an assault on the state’s long tradition of local control.
The language voters will see on their ballots Tuesday will be: “Shall (Your Community) limit property tax growth for (Your School District) under RSA 32:5-i? If adopted for a two-year period: (1) the local property tax levy may not grow beyond the prior year’s amount, adjusted for inflation and new construction; (2) SAU central office spending may not exceed 6 percent of total school district appropriations; and (3) bonded capital costs are excluded from both limits. These caps apply only to administrative operations of the SAU central office and do not affect classroom instruction, school-based services, or other municipal expenditures. These limits may be overridden as provided in RSA 32:5-i. Adoption requires a three-fifths (3/5) majority vote.”
Unlike most warrant articles which traditionally have only one question for voters to decide, this has two separate questions, capping property taxes and capping administrative costs. If you want one but not both, your only option is to vote “yes” on both, or if you don’t want one, your only option is to vote “no” on both.
The statement that the caps “do not affect classroom instruction, school-based services” may be part of the question but is not state law, so school boards would continue to determine what is cut or eliminated in school budgets, not lawmakers in Concord.
Two parents sought to prevent the question being placed on the general election ballot, saying it was likely unconstitutional, contains misleading information and is confusing for voters.
The suit failed and the Supreme Court upheld the superior court decision without ruling on the merits.
Every property owner in the state knows property taxes have been increasing, but who is to blame is often more a question of who’s propaganda you believe.
For years, lawmakers in Concord have been downshifting costs to local property taxpayers, from retirement costs to county nursing homes.
The single biggest cost for school districts is personnel, teachers, administrators, para educators, custodians, etc.
Personnel costs represent 80 percent of the average school district’s budget and they include both retirement costs required by the state’s retirement system and health insurance.
During the last major recession in 2011, the state legislature eliminated the 35 percent it paid for the retirement of aoo public workers including educators. One year when the federal COVID rescue and relief money was flowing into the state, lawmakers approved a one-time 7.5 percent contribution of $28 million, but have never funded it again.
Schools generally have the largest number of public employees compared to town or city workers so the impact on the school portion of the tax rate is substantial.
Since 2011, local property taxes have been picking up the 35 percent the state no longer pays, which has amounted to hundreds of millions of dollars.
The state and federal government have never fully funded their share of special education costs, and those services have grown more and more expensive for school districts with again local property taxes picking up the difference.
The state legislature also eliminated its requirement to share revenue with cities and towns and instead set it at 30 percent of the Meals and Rooms tax and distributes it on a per-capita basis.
The other factor is the state’s share of public education, which is 19 percent, the lowest in the country. The national average is 47 percent.
Question 2 does nothing to address the state’s share of public education costs, but this year the legislature passed and Ayotte signed a bill saying public education is a shared responsibility between the state and local communities.
That is contrary to the Supreme Court’s Claremont I decision that said it is the state’s responsibility to provide each child with an adequate education and to pay for it.
Supporters of HB 1300 argued that the reason all the proposed budget caps failed is because of special interests like teachers and parents, who turn out in large numbers at school district meetings, while more voters ought to have their say on school budgets.
Question 2 needs a three-fifth majority to pass in any school district or 60 percent of the vote, which is not the supermajority needed to pass a school bond or a constitutional amendment.
Recent guidance by the Attorney General’s Office will make it easier to pass the caps.
A recent Saint Anselm College poll indicates about 57 percent of respondents favor question 2, while 32 percent oppose it and 19 percent are undecided.
The Attorney General’s Office’s guidance is that the percentage for the question will be determined by those voting for or against the question only and will not include the number of voters who left the question blank.
If that is the case, the Saint Anselm poll would be 64 percent in favor and 36 percent opposed.
The Attorney General’s Office said the same method is used to determine if constitutional amendments pass and is included in the tax cap law.
Garry Rayno may be reached at garry.rayno@yahoo.com.