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  • Telegraph file photo
    Hollis Town Hall will stay white while $230,000 worth of repair work is done. Some in town sought darker colors, reflecting an earlier appearance.
Sunday, February 19, 2012

Reliance on property taxes varies greatly among Greater Nashua communities

When it comes to municipal spending, neighboring towns Hollis and Milford paint two very different pictures of where the dollars come from.

In Hollis, 82 percent of total town spending comes from revenue generated by local property taxes. In Milford, only 55 percent of money spent at the local level comes from property taxes.

It's a contrast that has local officials puzzled.

"I was looking for a pattern, and I didn't really see one," said Peter Bragdon, whose long-term dual roles as a School Board member in Milford and state senator give him a view from both sides of the issue of local funding versus state funding.

So, what does this all mean for taxpayers?

Spending that doesn't come from property taxes is paid for through state and federal money, grants and local fees.

With pressure on all sources of government funding likely to continue, the question of how much should be handled by property taxes could come to a head, with several local officials already raising red flags about Concord downshifting costs to local communities.

If the Legislature cuts more deeply into aid for cities and towns, those relying more heavily on state revenue to balance their budgets could find themselves forced to decide between cutting services or making up for the difference themselves.

The data comes from a report released last week, "Financing New Hampshire Cities and Towns," authored by the New Hampshire Center for Public Policy Studies.

Comparing your towns

Local control requires local revenue, which explains why property taxes cover, on average, roughly two-thirds of spending by Greater Nashua towns and schools.

But why does reliance on local property taxes vary so greatly from town to town?

Bragdon, who founded and then sold a computer company in years past, is no slouch at poring through masses of data, but he couldn't find an obvious explanation for the Hollis-Milford difference.

Eric Horton, business administrator for SAU 41, which includes Hollis and Brookline, was equally puzzled after studying the report.

"There's no 'silver bullet' in the data here," he said.

These percentages are the extreme range in the area, but the figures varied widely among communities. Most local towns were above the state average of 61 percent, which correlates with property taxes covering three-fifths of local spending. The rest comes from state aid for schools, highway funding, aid for special education, federal money and grants, and local fees collected, such as car and dog licenses.

Patterns are hard to spot.

Neighboring Merrimack and Amherst differed by 5 percentage points, and similar-size Litchfield and Brookline differed by almost 10 percentage points, but tiny Lyndeborough and midsize Windham had roughly the same percentage.

Several local officials chose not to weigh in on the deeper question: Which is a better approach?

Is it better to be a community like Milford, using a relatively large amount of non-property-tax income? It lowers pressure on the local tax burden but leaves you more vulnerable to cuts in aid threatened by a parsimonious Concord Statehouse and Washington Congress.

Or is it better to use less non-property-tax money, like Hollis? That gives you more control over your budgeting but increases pressure on the most obvious tax burden.

That's another good question, it seems, without an obvious answer.

One thing is certain, however. For virtually all communities in New Hampshire, property tax has become more and more important to pay for spending on schools, roads, parks, police, fire, the county jail - the whole variety of services that make up life.

The Center for Public Policy Studies report found that in 2010, property taxes covered 60 percent of local spending, compared with 56 percent a decade earlier.

Searching for the cause

The report's results can be a little hard to grasp, because they don't reflect total spending or total tax rate, the usual measurements studied for local spending.

The Center for Public Policy Studies tallied the total property tax receipts reported by communities, as well as the total spending on school, town and county services in each community. Comparing one to the other gives the percentage of spending covered by property taxes.

It's a function both of how much is spent by a community on its town, school and county expenses, and how much it collects in taxes.

An analysis by The Telegraph on figures for 2010 tried unsuccessfully to find a correlation between this percentage and some obvious characteristics, such as:

Population. Maybe smaller communities get overlooked when it's time for outside aid?

However, there isn't that much difference in population between Hollis and Milford. Further, the four local towns that spend less than the state average are Amherst, Hudson, Litchfield and Milford, which are neither at the small end nor the big end of the area's population curve.

Income. Hollis is pretty well off: The 2010 census said it has the highest median household income in Greater Nashua, at $116,168, compared with $69,788 for Milford. Maybe rich towns get less outside help?

However, Amherst is just slightly behind Hollis in median household income, at $104,475, and yet its local-spending percentage is quite low.

Further, Milford and Nashua have similar median incomes ($64,219 for Nashua), and yet their local-spending percentages differ by almost 9 points.

Tax rate. Maybe high property tax rates lead to less outside help, or are caused by less outside help.

Well, Hollis does have a much higher raw tax rate than Milford: In 2010, it was $21.47, compared with $19.34.

But Mont Vernon's tax rate of $25.49 in 2010 was the area's highest, and its local-spending percentage isn't notably high, whereas Pelham, with a relatively low tax rate of $19.53, had a very high local-spending percentage.

Other demographic factors. Milford has the region's highest percentage of multifamily housing, which might affect grants and other funding. But the local town with the next lowest local-spending percentage is Litchfield, which has little multifamily housing. There's no correlation there.

Questioning the data

The apparent conclusion is that for this measurement, as for so many, the devil is in the details.

Horton, with the Hollis school system, pointed to two possibilities.

One is that the report may have undercounted state school aid for Hollis, perhaps missing some that came to the town via the Hollis-Brookline Cooperative School District; he said the figure appeared to be low.

"That looks very close to the number that would just be for the Hollis elementary schools," he said.

Another is that the report gave a wide difference for other local revenue sources, such as licenses and fees. It said Hollis received about $408 such revenue per resident and Milford $785 per resident - a potential difference of millions of dollars a year.

Milford Town Administrator Guy Scaife notes, however, that this income stream has been hit hard by the recession.

For "our largest non-tax revenue, vehicle registration, there were over three years when it went down each year," he said. "Only in the second half of last year were we finally seeing an uptick."

David Brooks can be reached at 594-6531 or dbrooks@nashuatelegraph.com.

Taxes by the Numbers

Here’s a look at how much municipalities bring in in property taxes versus how much they spend

Town

Property Tax Revenue

Total spending

Property tax %

STATE

$3,062,726,003

$5,023,824,930

60.96%

Nashua

$171,661,579

$267,175,565

64.25%

Amherst

$38,010,448

$64,228,135

59.18%

Brookline

$14,385,271

$21,008,728

68.47%

Hollis

$26,635,757

$32,507,793

81.94%

Hudson

$46,644,535

$74,594,819

62.53%

Litchfield

$15,335,413

$26,090,870

58.78%

Lyndeborough

$3,521,084

$4,518,339

77.93%

Merrimack

$62,963,531

$97,615,993

64.50%

Milford

$30,677,761

$55,387,509

55.39%

Mont Vernon

$6,424,799

$9,831,825

65.35%

Pelham

$27,792,020

$38,392,441

72.39%

Wilton

$8,646,166

$12,522,602

78.21%

Windham

$43,861,471

$56,081,828

78.21%

Source: New Hampshire Center for Public Policy Studies