Concord Monitor: Current education funding model subsidizes wealthy communities

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New Hampshire’s education funding model is subsidizing the state’s wealthiest communities by allowing them to retain the excess state taxes that they raise, according to the Concord Monitor Editorial Board:

There are many troubling side stories to the way New Hampshire pays for education. Rep. Paul Henle, a Concord Democrat, is trying to address one of them with House Bill 1802, which would alter one aspect of the statewide property tax.

More than 40 towns collected more than they are due to receive from the state in education adequacy aid, for a total surplus of $29.7 million. For example, New London collected $2,555,036 through the tax but required only $1,161,073 for adequacy aid, leaving an excess of $1,393,963 that, under current law, the town is allowed to keep. Henle points out that the money collected is a state tax, and therefore any surplus belongs in the state’s education trust fund, not in the bank account of the town that collected the tax on the state’s behalf. And he’s correct.

HB 1802 would end the practice during a four-year phase-in period. In year one, the towns would remit 25 percent of the surplus, followed by 50 percent in year two, 75 percent in year three and 100 percent in year four and beyond.

The bottom line is that these 40-plus towns, with a median property tax rate of $13.19, are collecting aid above and beyond the amount established by lawmakers. The money should not be theirs to keep. Unfortunately, the House Ways and Means Committee didn’t see it that way last month when it voted, 15-6, to kill the bill as inexpedient to legislate. In a letter to the committee, the town of Newington wrote: “Each community should be carrying their own education cost, and cutting other budget items as necessary, to ensure a proper education for their school children. Each town and city should be responsible for their own expenses or home rule no longer exists.”

We understand that argument, but New Hampshire is not a home rule state. Cities and towns have only the power granted to them by the Legislature and governor. Education is a state responsibility and the tax is a state tax, not a local tax. By allowing some communities to retain the surplus, the state is essentially subsidizing a select group of towns, which leaves taxpayers in other communities to make up the difference. And with the state facing so many challenges that require more funding, that $30 million or so could do a lot more good in the state coffers.

When the full House takes up HB 1802 next week, we urge lawmakers to do what is best for all the people of New Hampshire and move the legislation forward. The statewide property tax is a state tax, so the state ought to collect it.

Source: Editorial: A fix to the statewide property tax | Concord Monitor

Learn more about how the state funds our education system by watching Reaching Higher NH’s webinar, Public Education Funding: A-Z