As the Valley News reported, the Lebanon City Council voted unanimously to join the Community Coalition of New Hampshire 2.0 in part to avoid a further increase in the city’s property taxes (“Lebanon opposes funding scheme,” Feb. 5). But there’s much more to the story.
The coalition effort is an attempt to address a much larger and long-running issue — the state’s huge dependence on the property tax. And it comes at a time when the House and Senate are considering a bill, HB 20, that would gut Lebanon’s schools, blow up its property tax rates and even force people out of our city, our region and our state. I also discuss the minor impact and high purpose of HB 504, a bill the coalition is currently targeting as dangerous.
The original donor coalition, formed when the statewide property tax was set at $6.60 per $1,000, was made up of wealthy communities advocating only for the removal of the tax. Paul Deschaine of Newmarket, representing Coalition 2.0, made quite clear that its goal now is in two parts: to stop the increase of the statewide property tax to fund a properly defined adequate education, and to identify and advocate for alternate methods of funding that education across the state.
I made clear at the City Council meeting that Lebanon is not now a donor town, and would not be under HB 504. Lebanon would not have to pay extra to the state until and unless the statewide property tax is increased to nearly the level identified as sufficient to provide for the adequate education defined by the Education Funding Commission. The surplus payments from wealthy towns would provide more money to Claremont, Berlin, Manchester and other communities whose children are most shortchanged by the existing situation.
It would be highly unfair if Lebanon were to become a donor town, as Lebanon already has very high property tax rates because of our status as a regional jobs and services center (and some bad decisions in the Selectboard era). It also has the most poverty in our region north of Claremont and the most expensive housing outside Hanover and Lyme.
Yes, our schools are expensive relative to other places, but this results from having to compete with Hanover salaries and the real estate market to keep good teachers and professional staff. Cutting Lebanon’s schools down to an average New Hampshire expense would gut the core of our schools, unless Hanover does the same thing.
HB 504 is designed to fund a major increase in property tax relief for low- to moderate-income homeowners. A struggling homeowner can now get $100 to $200 a year at most — barely worth the paperwork hassle. HB 504 would raise that to $1,000, and also aims to streamline the application process.
It would be paid for by transferring the total $363 million statewide property tax from every town and city to the state’s Education Trust Fund. The fund would return adequacy grants to each school district, leaving the state’s contribution to school budgets untouched. Then it would keep the remainder for the tax relief program. Currently, the wealthiest two dozen or so towns are allowed to keep the excess (about $28 million to $30 million total) as long as they use it in their schools, even for a pool or ballroom.
The statewide property tax rate is now tied to producing an unchanging $363 million statewide, and under the current formula even Hanover is on the edge of no longer being a donor town. HB 504 in itself is not a threat to any town or city in our area, and helps large numbers of homeowners struggling to stay here, including many young working families. There are no bills out there this year that try to raise the statewide property tax.
Coalition 2.0 is correct that the problem is the existing huge dependence on property tax to run our state — nearly two-thirds of all taxation, and over half of the taxes our businesses pay. We should not write off the children who live in property-poor towns and cannot get the education they need to participate fully in our economy and society. Coalition 2.0, unlike the previous donor coalition, is committed to working on that.
The largest immediate threat to Lebanon’s property taxes is HB 20, sponsored by both House and Senate leadership, which would establish an education freedom account program. It would provide $4,603 for all students whose parents, rich or poor, remove them from the public school system. They can be home-schooled or in private academies, schools operated by religious groups, or any other educational alternative.
If the children are taken out of the public school, their school would immediately lose the $4,603 per child. If they do not enroll in the public school at all, the school district loses money it must put on the local property tax.
Most school spending cannot be reduced until the school population shrinks enough to close down classrooms. Even then, the buildings and recreational fields cannot be sold off until the school is gone.
The public school district is obliged to pay for everything that cannot be closed, and has to put the money the state has taken on your property tax. This bill could easily blow up every town’s and city’s public schools, harm the children who are left, and force people out of our state. There are many groups all over the state advocating against it to the Legislature now. But it is a priority bill of the majority and is named after the deceased speaker of the House. It is very likely to pass in some form. The current form is dynamite.
Coalition 2.0 is proposing to do the right thing to get us out of these binds, and Lebanon’s vote to join it means that we will be there to make sure they carry through on both goals. At the same time, the voucher program that is HB 20 is coming from left field and may create chaos. Watch carefully as the legislative process evolves.
Susan Almy represents Lebanon in the New Hampshire House and is the ranking Democrat on the House Ways and Means Committee.