Everything you want to know about your property tax
CONCORD – Every property owner knows New Hampshire is more dependent on property taxes to fund governmental subdivision than just about any other state.
And many make the case property taxes are an outmoded form of taxation. When property taxes were instituted, property equaled wealth but that is not true today.
Today property taxes are one of the most regressive taxes in the litany of revenue raisers meaning the greatest impact is on those least able to pay.
Yet for whatever reason, lawmakers every year find new ways to make property taxes more expensive for property owners with an eye toward “the greater good.”
For example the current use program was established in 1973 with the intent to preserve open space.
Developers were buying farms and woodlots and subdividing them for house lots, changing views and local character forever.
Voters approved a constitutional amendment in 1968 that allowed land to be taxed on the value of its current use, not its market value.
At the time, some municipalities were taxing open space on its potential as building lots forcing farmers and timberland owners to reassess their livelihoods.
The argument was and is farmland, animals and forests do not use town services so it is a fair trade.
Today more than half of the state’s land is in current use, which has a far greater impact on rural communities than cities.
In essence, the current-use program shifted the tax burden from large landowners to the other property owners in their communities. A University of New Hampshire professor estimates the shift to other property owners is about $120 million annually.
Although it is a state program, the effects are felt at the local level in higher property taxes, and in some communities that have a high percentage of land in current use like Claremont and Berlin, for example, the shift exacerbates the property tax problems they face paying to educate their children.
Another property tax giveaway by lawmakers that significantly affects local property tax rates is water and air pollution control facilities.
Back when lawmakers wanted to encourage towns and cities to stop dumping their sewage into rivers or burning garbage at the local dump, they passed a law granting an exemption for air and water pollution facilities.
While privately owned landfills were excluded, over time they were included as they took municipal trash and that could pave the way for lengthy litigation, and the same for fossil-fuel burning generating plants.
So, while Eversource spent over $400 million on a mercury scrubber at its coal-fired power plant in Bow, the town’s tax base did not increase by $400 million.
Current use and pollution control facilities are big numbers for the communities impacted, but every town and city has a lengthy list of exemptions and property tax breaks that may not be large – elderly, disability and veterans – but shift the cost of property taxes.
Lawmakers have introduced more than a dozen bills this year that would impact property taxes in any number of ways both to the good and the not so good.
For example, the Senate will vote on Senate Bill 511 Thursday when it meets in session.
The Ways and Means Committee is recommending the bill pass on a 5-0 vote.
The bill would require the Department of Revenue Administration and Current Use Board to make public the formula used to determine current-use tax rates instead of keeping it confidential.
The formula determines what percent of fair market value such things as farmland, hardwood forests, or wetlands to set the current use tax rates.
Several lawmakers have introduced House Bill 1661, which would prohibit electric generating plants burning fossil fuels or that generate high levels of radioactive waste (Seabrook Station) from qualifying for the pollution-control exemption.
The bill will have a public hearing at 1:30 p.m. Tuesday before the House Science, Technology and Energy Committee.
Another bill, House Bill 1631, would require taxes collected on hydro-electric generating facilities to go to the communities where they are located.
The House Municipal and County Government Committee meets Wednesday afternoon to decide what recommendation to make on the bill.
There is an old adage that if you want to encourage something you subsidize it, but if you want to discourage an activity tax it.
With property taxes, if you want to encourage an activity or reward those who serve the community, etc. you grant exemptions.
Several bills this session would encourage the use of alternative sources for electricity.
House Bill 1210 would provide a tax exemption for a residence with an electricity storage system equal to the value of 1,000 megawatt hours.
The public hearing on the bill is Wednesday at 9:30 a.m. before the House Municipal and County Government Committee.
Another bill, House Bill 1406, would restrict any property tax exemption for a solar energy system.
In order to qualify for the exemption, the system would have to be used on-site for heating, cooling or generating electricity.
The public hearing on HB 1406 is at 10:30 a.m. Wednesday before the same committee.
Another proposed exemption would encourage first responders to live in town and be close to their jobs improving response time.
House Bill 1125 would grant a property tax exemption to volunteer firefighters and volunteer emergency medical personnel.
The city or town that adopts the exemption would determine the value of the exemption up to the total property value.
It could be a slippery slope for additional exemptions as you have to ask who is next, police, selectmen, planning board members?
The public hearing on the exemption for volunteer firefighters and emergency medical personnel is Tuesday at 1 p.m. before Municipal and County Government.
House Bill 1197 would provide a 100 percent exemption for a totally and permanently disabled veteran under the Veterans Administration’s definition.
The public hearing at 10:30 a.m. Tuesday before the same committee.
And House Bill 1533 would limit the property tax increase under an exemption for those over 67 years old, the disabled, and totally and permanently disabled veterans to 1 percent a year. A public hearing date has yet to be set on the bill.
House Bill 1139 would establish a study committee to look at eligibility for property tax credits, exemptions, and deferrals available to persons with limited income and their effect on municipalities.
The public hearing on HB 1139 is 11 a.m. Wednesday before Municipal and County Government.
House Bill 1154 would allow communities to exclude the principal in retirement and pension accounts from personal assets in determining eligibility for property tax exemptions.
The public hearing is 9:30 a.m. Tuesday before the same committee.
And there are several bills before the legislature this year to use property tax incentives to make affordable housing more attractive to cities and towns.
Under the state constitution, taxes have to be reasonable and proportional, a key to the state Supreme Court’s Claremont education funding decision that widely varying property tax rates to pay for education is unconstitutional.
A proposal before the House Municipal and County Government Committee may butt up against that provision.
House Bill 1467 would allow communities to have two different property tax rates, one for residences and another for commercial and industrial property.
No public hearing has been set for the bill.
If you are a student of how the state uses property taxes to reward and discourage those who pay or don’t, this coming week will provide many learning opportunities.
Garry Rayno may be reached at firstname.lastname@example.org. Distant Dome by veteran journalist Garry Rayno explores a broader perspective on the State House and state happenings for InDepthNH.org. Over his three-decade career, Rayno covered the NH State House for the New Hampshire Union Leader and Foster’s Daily Democrat. During his career, his coverage spanned the news spectrum, from local planning, school and select boards, to national issues such as electric industry deregulation and Presidential primaries. Rayno lives with his wife Carolyn in New London.