Tax cap has few fans in council
Possible ballot item generates skepticism
The Concord Monitor
April 30, 2008
A proposal that would cap Concord's property taxes is misguided in its focus on city spending and could potentially harm the city's economy in the long term, city councilors said yesterday.
The tax cap is being proposed by the New Hampshire Advantage Coalition, which filed papers to put the measure on ballots in Concord, Manchester, Merrimack and Rochester in November. The group hopes to expand its efforts to seven other communities. The cap in property tax increases would be tied to the increase in the Consumer Price Index, the national measure of inflation.
To get the cap on the ballot in Concord, the group needs to submit a petition with voter signatures equal to 20 percent of the total votes cast in the last regular municipal election. City councilors would not need to approve the petition, but if the cap is passed, they would be among those most directly affected.
Of nine city councilors reached yesterday, most said they had not yet formed a definitive opinion on the proposal. They said they needed more information about specific details of the cap and about the group proposing it. But only one councilor said he was leaning toward supporting it, and five seemed likely to oppose it. Others were undecided.
"The cities that have adopted the tax cap have experienced, ironically, harder economic times than those that have not," said Councilor Dan St. Hilaire. "When you take into account an increase in retirement costs and health benefits, even just the population increase if you're a thriving community, that basically eats up the entire portion of the tax cap. It doesn't allow investment for infrastructure, open space or rebuilding roads."
Most councilors said they understand the feelings behind the effort to cap taxes. "Can I understand people? Absolutely," said Councilor Liz Blanchard, who has not yet taken a position. "People are upset, they're having trouble feeding their families, putting gas in their cars."
But several councilors said they are concerned that in the long term, a tax cap would cripple the economy. St. Hilaire said it would become more difficult to bond long-term projects, which could eventually lead to economic stagnation.
Councilor Steve Shurtleff worried that a cap could affect the city's ability to negotiate with its employees or pay out future retirement benefits. Before supporting a cap, he said he would also need to make sure that if an unusual situation arose, the city would be able to go beyond the cap. "I know everybody is concerned about taxes going up, especially in tough economic times, but I'd be concerned about the unforeseen consequences of a tax cap," Shurtleff said.
Councilor Fred Keach called the cap a "shotgun approach."
"It will certainly lower or stabilize people's taxes," he said. "But what's not given consideration and due diligence is what services are affected, what's the long-term cost to the city in terms of economic development, quality-of-life issues."
A tax cap would also take decision-making power away from elected officials, some said. Councilor Mark Coen said the tax cap would "eliminate a lot of gnashing and grinding of teeth for councilors that have to make decisions on spending." But because of that, Coen opposes the idea. "People elect me and the other councilors as a voice on how they would like to proceed, as far as upgrading everything from the library to parks to roads. This limits what we can do as a city council. . . . To me it's almost a cop-out," he said.
Organizers of the effort to promote the tax cap say power will still rest with city officials, who can override the cap if necessary. And the cap, if instituted, will reflect the will of a majority of voters. "It will be a strong message sent from people, and people should have a right to tell elected officials how they want government to run," said Mike Biundo, chairman of the New Hampshire Advantage Coalition.
Biundo said the cap would simply force government to do "what we have to do at kitchen tables in households across New Hampshire every day": examining priorities, looking at money and figuring out how to spend it.
Some councilors said the cap was misguided because of its sole focus on the municipal budget. Less than half of residents' tax bills goes to city expenses. The rest is for the schools and the county, which city government has no control over.
"People always look at the city side as the out-of-control spending side, and the county and school side of things don't always get as much scrutiny," Keach said. "It's a bit of a mystery to me."
Many city expenditures are also mandated by the state and federal government, added Councilor Allen Bennett.
"We're not a home-rule state," Bennett said. "We're at the beck and call, for all intents and purposes, of the Legislature." Costs that the city has little control of include payments to the state retirement system and rising health care costs.
Biundo said the tax cap would not affect the school portion of taxes. That would take a separate amendment and is not something the coalition is working on. The county portion of the tax rate would be included in the cap so that the higher the county portion, the more the city would have to cut back. "It's incumbent on the city to work with state representatives in Concord to control the county budget to help keep it low," Biundo said.
One councilor who said he may potentially support the cap is Dick Patten. "You're going to have to have some kind of cap to keep things affordable for everyone," he said. "I'd hate to see us lose business, housing, people who can't afford to live here anymore move to a community that seems to be cheaper."
Patten said as long as there is a condition allowing the council to override it, the cap could be an effective way to keep taxes stable. Department heads propose budgets and "wish lists," and the council cannot afford to approve all of them, he said. If the council turns down requests, Patten said, "I'm sure some will be distraught at the council for not granting every wish they have, but hopefully they'll realize we're in tough times right now."
But Keach suggested there are other ways to lower taxes. He suggested looking at principles that are used in the private market - for example, giving department heads a bonus based on the percentage of money left unspent at the end of the year.
And St. Hilaire said the city already tries to keep its tax increase near the Consumer Price Index. This year, he said, city departments will see cuts in an attempt to keep the tax rate down. "We're always trying to be responsible and to be mindful of taxpayers . . . whether there's a cap in place or not," he said.
Possible ballot item generates skepticism
The Concord Monitor
April 30, 2008
A proposal that would cap Concord's property taxes is misguided in its focus on city spending and could potentially harm the city's economy in the long term, city councilors said yesterday.
The tax cap is being proposed by the New Hampshire Advantage Coalition, which filed papers to put the measure on ballots in Concord, Manchester, Merrimack and Rochester in November. The group hopes to expand its efforts to seven other communities. The cap in property tax increases would be tied to the increase in the Consumer Price Index, the national measure of inflation.
To get the cap on the ballot in Concord, the group needs to submit a petition with voter signatures equal to 20 percent of the total votes cast in the last regular municipal election. City councilors would not need to approve the petition, but if the cap is passed, they would be among those most directly affected.
Of nine city councilors reached yesterday, most said they had not yet formed a definitive opinion on the proposal. They said they needed more information about specific details of the cap and about the group proposing it. But only one councilor said he was leaning toward supporting it, and five seemed likely to oppose it. Others were undecided.
"The cities that have adopted the tax cap have experienced, ironically, harder economic times than those that have not," said Councilor Dan St. Hilaire. "When you take into account an increase in retirement costs and health benefits, even just the population increase if you're a thriving community, that basically eats up the entire portion of the tax cap. It doesn't allow investment for infrastructure, open space or rebuilding roads."
Most councilors said they understand the feelings behind the effort to cap taxes. "Can I understand people? Absolutely," said Councilor Liz Blanchard, who has not yet taken a position. "People are upset, they're having trouble feeding their families, putting gas in their cars."
But several councilors said they are concerned that in the long term, a tax cap would cripple the economy. St. Hilaire said it would become more difficult to bond long-term projects, which could eventually lead to economic stagnation.
Councilor Steve Shurtleff worried that a cap could affect the city's ability to negotiate with its employees or pay out future retirement benefits. Before supporting a cap, he said he would also need to make sure that if an unusual situation arose, the city would be able to go beyond the cap. "I know everybody is concerned about taxes going up, especially in tough economic times, but I'd be concerned about the unforeseen consequences of a tax cap," Shurtleff said.
Councilor Fred Keach called the cap a "shotgun approach."
"It will certainly lower or stabilize people's taxes," he said. "But what's not given consideration and due diligence is what services are affected, what's the long-term cost to the city in terms of economic development, quality-of-life issues."
A tax cap would also take decision-making power away from elected officials, some said. Councilor Mark Coen said the tax cap would "eliminate a lot of gnashing and grinding of teeth for councilors that have to make decisions on spending." But because of that, Coen opposes the idea. "People elect me and the other councilors as a voice on how they would like to proceed, as far as upgrading everything from the library to parks to roads. This limits what we can do as a city council. . . . To me it's almost a cop-out," he said.
Organizers of the effort to promote the tax cap say power will still rest with city officials, who can override the cap if necessary. And the cap, if instituted, will reflect the will of a majority of voters. "It will be a strong message sent from people, and people should have a right to tell elected officials how they want government to run," said Mike Biundo, chairman of the New Hampshire Advantage Coalition.
Biundo said the cap would simply force government to do "what we have to do at kitchen tables in households across New Hampshire every day": examining priorities, looking at money and figuring out how to spend it.
Some councilors said the cap was misguided because of its sole focus on the municipal budget. Less than half of residents' tax bills goes to city expenses. The rest is for the schools and the county, which city government has no control over.
"People always look at the city side as the out-of-control spending side, and the county and school side of things don't always get as much scrutiny," Keach said. "It's a bit of a mystery to me."
Many city expenditures are also mandated by the state and federal government, added Councilor Allen Bennett.
"We're not a home-rule state," Bennett said. "We're at the beck and call, for all intents and purposes, of the Legislature." Costs that the city has little control of include payments to the state retirement system and rising health care costs.
Biundo said the tax cap would not affect the school portion of taxes. That would take a separate amendment and is not something the coalition is working on. The county portion of the tax rate would be included in the cap so that the higher the county portion, the more the city would have to cut back. "It's incumbent on the city to work with state representatives in Concord to control the county budget to help keep it low," Biundo said.
One councilor who said he may potentially support the cap is Dick Patten. "You're going to have to have some kind of cap to keep things affordable for everyone," he said. "I'd hate to see us lose business, housing, people who can't afford to live here anymore move to a community that seems to be cheaper."
Patten said as long as there is a condition allowing the council to override it, the cap could be an effective way to keep taxes stable. Department heads propose budgets and "wish lists," and the council cannot afford to approve all of them, he said. If the council turns down requests, Patten said, "I'm sure some will be distraught at the council for not granting every wish they have, but hopefully they'll realize we're in tough times right now."
But Keach suggested there are other ways to lower taxes. He suggested looking at principles that are used in the private market - for example, giving department heads a bonus based on the percentage of money left unspent at the end of the year.
And St. Hilaire said the city already tries to keep its tax increase near the Consumer Price Index. This year, he said, city departments will see cuts in an attempt to keep the tax rate down. "We're always trying to be responsible and to be mindful of taxpayers . . . whether there's a cap in place or not," he said.