{"id":9715,"date":"2024-05-15T16:11:07","date_gmt":"2024-05-15T20:11:07","guid":{"rendered":"https:\/\/granitestatetaxpayers.org\/gst\/?p=9715"},"modified":"2024-05-15T16:14:46","modified_gmt":"2024-05-15T20:14:46","slug":"a-consequential-tax-cap-bill-quietly-passes","status":"publish","type":"post","link":"https:\/\/granitestatetaxpayers.org\/gst\/a-consequential-tax-cap-bill-quietly-passes\/","title":{"rendered":"A Consequential Tax Cap Bill Passed"},"content":{"rendered":"

Legislators vote to strengthen local tax caps, especially for school districts! <\/strong>
\nBy Andrew Cline of Josiah Bartlett Center.<\/p>\n

While crime stories, campus protests and political drama captured much of the media attention this week, a bill with tremendous potential consequences for taxpayers quietly passed the House on Thursday May 8, 2024.<\/p>\n

Senate Bill 383<\/a>, which has passed both chambers in slightly different versions, would strengthen local tax caps and allow school district caps to be tied to enrollment. <\/p>\n

Under current state law, town and school district tax caps can apply to estimated taxes \u201cas shown on the budget.\u201d That excludes off-budget warrant articles that might also have a tax impact. SB 383 would cover the budget and \u201call other warrant articles with a tax impact.\u201d<\/p>\n

RSA 32:5-b II mandates that a town or district \u201ctax cap shall be either a fixed dollar amount or a fixed percentage applied to the amount of local taxes raised by the town or district for the prior fiscal year\u2026\u201d<\/p>\n

SB 383 authorizes voters to use \u201ca multiplication factor\u201d that would cap tax increases at the inflation rate times population growth. That\u2019s been the general idea behind tax caps from the start. The bill lets towns use this more precise formula rather than a fixed amount or rate. Those fixed numbers were always basically a proxy for the multiplier anyway.<\/p>\n

Perhaps most consequentially, SB 383 creates a new formula for school district tax caps. The school district formula would be a combination of inflation times enrollment, rather than municipal population growth. That\u2019s an important change. School budgets can be the largest portion of local budgets and the largest driver of local spending and tax increases.<\/p>\n

Our 2023 analysis of district school spending in New Hampshire<\/a> found that there generally wasn\u2019t a strong correlation between school enrollments and local school spending. New Hampshire public school districts lost 29,946 students from 2001-2019, but increased spending by an inflation-adjusted $937 million. School district budgets tend to grow faster than the inflation rate, and faster than all other areas of government spending, even when enrollment is falling, we found. <\/p>\n

In Manchester, for example, school district enrollment fell by 13% from 1995-2018. During those same years, city school district spending grew by a remarkable 68%. <\/p>\n

This year, the Manchester school district\u2019s proposed budget was 7.9% higher than the 2020-21 school budget<\/a>–after adjusting for inflation\u2014though enrollment was 4.3% lower than in the 2020-21 school year.<\/p>\n

Now, Manchester has a tax cap<\/a>, and that cap applies to the school district\u2019s proposed budget. Neither the city nor the school district is allowed to propose a budget that exceeds the average inflation rate of the prior three years. <\/p>\n

(City tax caps are regulated in a separate section of state law (RSA 49) than are town tax caps. Manchester\u2019s cap, like Nashua\u2019s, is tied to the inflation rate.)<\/p>\n

Though SB 383 doesn\u2019t apply to cities, and thus wouldn\u2019t affect Manchester\u2019s school district tax cap, Manchester\u2019s experience shows how the formula in the bill would put a further constraint on spending.<\/p>\n

Manchester\u2019s school district taxes have been restrained by this cap for more than a decade, but spending still grew rapidly despite falling enrollment. The formula Manchester uses does not take into account district enrollment. If it had, the cap would\u2019ve been lower, and therefore might have prompted some efficiencies in district budgeting.<\/p>\n

The city school district accounts for about 52% of Manchester\u2019s budget<\/a>, which shows how consequential the new caps allowed in SB 383 could be. <\/p>\n

The formulas allowed in SB 383 are more flexible than the fixed number or rate caps towns and districts can adopt now. That could weaken some of the opposition to tax caps, leading to their more widespread adoption. At the same time, the bill lets voters strengthen caps by covering warrant articles that have tax impacts and by tying school district tax changes to enrollment. On the whole, the bill would turn tax caps into a more powerful and more appealing tool for taxpayers.<\/p>\n

By Andrew Cline
\nAndrew Cline is president of the Josiah Bartlett Center for Public Policy<\/a> and host of the WFEA Morning Update<\/a> on 99.9FM and 1370AM. He wrote this for NHJournal.com.<\/p>\n

<\/a>Click here to link to the Josiah Bartlett Center blog post.<\/a><\/p>\n

Posted by GST Chairman Ray Chadwick<\/p>\n","protected":false},"excerpt":{"rendered":"

Legislators vote to strengthen local tax caps, especially for school districts! By Andrew Cline of Josiah Bartlett Center. While crime stories, campus protests and political drama captured much of the media attention this week, a bill with tremendous potential consequences for taxpayers quietly passed the House on Thursday May 8, 2024. Senate Bill 383, which […]<\/p>\n","protected":false},"author":2,"featured_media":9720,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[6,7],"tags":[18,25],"class_list":["post-9715","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legislation","category-secial-alerts","tag-tax-reform","tag-taxes"],"yoast_head":"\nA Consequential Tax Cap Bill Passed - Granite State Taxpayers<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/granitestatetaxpayers.org\/gst\/a-consequential-tax-cap-bill-quietly-passes\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"A Consequential Tax Cap Bill Passed - Granite State Taxpayers\" \/>\n<meta property=\"og:description\" content=\"Legislators vote to strengthen local tax caps, especially for school districts! By Andrew Cline of Josiah Bartlett Center. While crime stories, campus protests and political drama captured much of the media attention this week, a bill with tremendous potential consequences for taxpayers quietly passed the House on Thursday May 8, 2024. 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