Revision: Jan. 16, 2019, 12:39 p.m.
HB 676-FN-A-LOCAL - AS INTRODUCED
2019 SESSION
19-0481
10/03
HOUSE BILL 676-FN-A-LOCAL
AN ACT repealing the collection of the state education property tax.
SPONSORS: Rep. Schamberg, Merr. 4; Rep. Merchant, Sull. 4
COMMITTEE: Ways and Means
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ANALYSIS
This bill repeals the statewide education property tax and transfers that funding of adequate education costs to state general funds. The bill also repeals the low and moderate income homeowners property tax relief program for relief from the statewide education property tax.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
19-0481
10/03
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Nineteen
AN ACT repealing the collection of the state education property tax.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Repeal of Statewide Education Property Tax. RSA 76:3, relative to the education tax, is repealed.
2 Education Trust Fund. Amend RSA 198:39, I to read as follows:
I. The state treasurer shall establish an education trust fund in the treasury. Moneys in such fund shall not be used for any purpose other than to distribute adequate education grants to municipalities' school districts and to approved charter schools pursuant to RSA 198:42, [to provide low and moderate income homeowners property tax relief under RSA 198:56-198:61,] and to fund kindergarten programs as may be determined by the general court. The state treasurer shall deposit into this fund immediately upon receipt:
(a) Funds certified to the state treasurer by the commissioner of revenue administration pursuant to RSA 77-A:20-a, relative to business profits taxes.
(b) Funds certified to the state treasurer by the commissioner of revenue administration pursuant to RSA 77-E:14, relative to business enterprise tax.
(c) Funds collected and paid over to the state treasurer by the commissioner of revenue administration pursuant to RSA 78-A:26, III relative to the tax on motor vehicle rentals.
(d) Funds collected and paid over to the state treasurer by the department of revenue administration pursuant to RSA 78:32, relative to tobacco taxes.
(e) Funds certified to the state treasurer by the commissioner of revenue administration pursuant to RSA 78-B:13, relative to real estate transfer taxes.
(f) Funds collected and paid over to the state treasurer by the department of revenue administration pursuant to RSA 83-F:7, I, relative to the utility property tax.
(g) [Repealed.]
(h) All moneys due the fund in accordance with RSA 284:21-j, relative to sweepstakes and the lottery.
(i) Tobacco settlement funds in the amount of $40,000,000 annually.
(j) The school portion of any revenue sharing funds distributed pursuant to RSA 31-A:4 which were apportioned to school districts in the property tax rate calculations in 1998.
(k) Funds collected and paid over to the state treasurer by the lottery commission pursuant to RSA 284:44 and RSA 284:47.
(l) State general funds in the amount of $363,000,000 annually.
(m) Any other moneys appropriated from the general fund.
3 Local Property Taxes RSA 76:8 is repealed and reenacted to read as follows:
76:8 Local School Taxes; Warrant. Municipalities are authorized to assess local property taxes under RSA 198:5 necessary to fund school district appropriations not funded by distributions from the education trust fund under RSA 198:39, or by other revenue sources.
4 Determination of Education Grants. Amend RSA 198:41 to read as follows:
198:41 Determination of Education Grants.
I. Except for municipalities where all school districts therein provide education to all of their pupils by paying tuition to other institutions, the department of education shall determine the total education grant for the municipality[ as follows:
(a) Add] by adding the per pupil cost of providing the opportunity for an adequate education for which each pupil is eligible pursuant to RSA 198:40-a, I-III[, and from such amount;
(b) Subtract the amount of the education tax warrant to be issued by the commissioner of revenue administration for such municipality reported pursuant to RSA 76:8 for the next tax year].
II. For municipalities where all school districts therein provide education to all of their pupils by paying tuition to other institutions, the department of education shall determine the total education grant for each municipality as the lesser of the 2 following calculations:
(a) The amount calculated in accordance with paragraph I of this section; or
(b) The total amount paid for items of current education expense as determined by the department of education [minus the amount of the education tax warrant to be issued by the commissioner of revenue administration for such municipality reported pursuant to RSA 76:8 for the next tax year].
III.(a) For the biennium ending June 30, 2013, the department of education shall not distribute a total education grant on behalf of all pupils who reside in a municipality that exceeds that municipality's total education grant in the second year of the previous biennium.
(b) [Repealed.]
IV.(a) For fiscal year 2012, the department of education shall identify all municipalities in which the fiscal year 2012 total education grant will be less than the fiscal year 2011 total education grant. The department shall distribute a stabilization grant to each of those municipalities equal to 100 percent of the decrease.
(b) For fiscal year 2013, the department of education shall identify all municipalities in which the fiscal year 2013 total education grant, including any stabilization grant distributed pursuant to subparagraph (a), will be less than the fiscal year 2011 total education grant. The department shall distribute funds to each of those municipalities equal to 100 percent of the decrease.
(c) For fiscal year 2014 through fiscal year 2016, the department of education shall distribute a total education grant to each municipality in an amount equal to the total education grant for the fiscal year in which the grant is calculated plus the amount of the fiscal year 2012 stabilization grant, if any, distributed to the municipality.
(d) For fiscal year 2017 and each fiscal year thereafter, the department of education shall distribute a total education grant to each municipality in an amount equal to the total education grant for the fiscal year in which the grant is calculated plus a percentage of the municipality's fiscal year 2012 stabilization grant, if any, distributed to the municipality; the percentage shall be 96 percent for fiscal year 2017, and shall be reduced by 4 percent of the amount of the 2012 education grant for each fiscal year thereafter. No stabilization grant shall be distributed to any municipality for any fiscal year [in which the municipality's education property tax revenue collected pursuant to RSA 76 exceeds the total cost of an adequate education or to any municipality for any fiscal year] in which the municipality's ADMA is zero.
5 Reference Removed. Amend RSA 72:76 to read as follows:
72:76 Property Tax Exemption. An eligible municipality may, by vote of the local legislative body pursuant to RSA 72:77, adopt a new construction property tax exemption for commercial or industrial uses, or both. The exemption shall apply only for municipal and local school property taxes assessed by the municipality [which shall exclude state education property taxes under RSA 76:3] and county taxes assessed against the municipality under RSA 29:11, and shall be a specified percentage on an annual basis of the increase in assessed value attributable to construction of new structures, and additions, renovations, or improvements to existing structures. The exemption may run for a maximum period of 10 years following the new construction; provided, however, that the exemption for all years shall cumulatively not exceed 500 percent of the increased assessed value. Once adopted by the local legislative body, the percentage rate and duration of the exemption shall be granted uniformly within that municipality to all projects for which a proper application is filed.
6 Reference Removed. Amend RSA 72:81 to read as follows:
72:81 Property Tax Exemption. An eligible municipality may, by vote of the local legislative body pursuant to RSA 72:82, adopt a new construction property tax exemption for commercial or industrial uses, or both. The intent of the exemption is to provide incentives to businesses to build, rebuild, modernize, or enlarge within the municipality. The exemption shall apply only for municipal and local school property taxes assessed by the municipality [which shall exclude state education property taxes under RSA 76:3] and county taxes assessed against the municipality under RSA 29:11, and shall be a specified percentage on an annual basis of the increase in assessed value attributable to construction of new structures, and additions, renovations, or improvements to existing structures, but which shall not exceed 50 percent per year. The exemption may run for a maximum period of 10 years following the new construction. Once adopted by the local legislative body, the percentage rate and duration of the exemption shall be granted uniformly within that municipality to all projects for which a proper application is filed.
7 Utility Property Tax; Application. Amend RSA 83-F:9 to read as follows:
83-F:9 [Exemption From Education Tax] Application. [Persons and property subject to taxation under this chapter shall not be subject to tax under RSA 76:3; provided, however, that] Nothing in this chapter shall be construed to exempt [such] persons or property subject to taxation under this chapter from local school, municipal, district, or county taxation under RSA 76.
8 Repeals. The following are repealed:
I. RSA 21-I:18, I(l), relative to the administration of low and moderate income homeowners property tax relief claims.
II. RSA 198:56 through 198:61, relative to the low and moderate income homeowners property tax relief program.
9 Effective Date. This act shall take effect July 1, 2019.
19-0481
1/15/19
HB 676-FN-A-LOCAL- FISCAL NOTE
AS INTRODUCED
AN ACT repealing the collection of the state education property tax.
FISCAL IMPACT: [ X ] State [ ] County [ X ] Local [ ] None
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| Estimated Increase / (Decrease) | |||
STATE: | FY 2020 | FY 2021 | FY 2022 | FY 2023 |
Appropriation | $0 | $0 | $0 | $0 |
Revenue | ($363,000,000) | ($363,000,000) | ($363,000,000) | ($363,000,000) |
Expenditures | ($28,027,645) | Indeterminable Decrease | Indeterminable Decrease | Indeterminable Decrease |
Funding Source: | [ X ] General [ X ] Education [ ] Highway [ ] Other | |||
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|
|
|
|
LOCAL: |
|
|
|
|
Revenue | ($26,827,645) | Indeterminable Decrease | Indeterminable Decrease | Indeterminable Decrease |
Expenditures | $0 | $0 | $0 | $0 |
METHODOLOGY:
This bill repeals the statewide education property tax (SWEPT) which statutorily is required to raise $363,000,000 annually, and replaces the loss of revenue to the Education Trust Fund with General Funds, effective July 1, 2019 (FY 2020). The SWEPT tax rate for FY 2020 is $2.02 per thousand. Replacing SWEPT revenue with existing General Fund revenue will have an indeterminable impact on programs funded with General Funds.
The elimination of the SWEPT will result in two impacts affecting aid to towns under the adequate education funding formula; the elimination of the prohibition that towns with SWEPT that exceeds their cost of an adequate education from receiving a stabilization grant, and the elimination of the ability for towns with SWEPT greater than their cost of an adequate education to retain the excess. This bill also eliminates the SWEPT related to the low and moderate income homeowners’ property tax relief program. This program provided $1,200,000 in relief from the SWEPT in tax year 2017.
Currently, there are 15 towns who do not receive a stabilization grant due to the provision in RSA 198:41, IV(d), which prohibits towns from receiving one if their SWEPT exceeds their calculated cost of an adequate education. This bill would eliminate that prohibition and based on FY 2020, would result in an additional $1,086,622 in stabilization grants (see table below).
Currently, there are 46 towns that raise and retain more in SWEPT than their calculated cost of an adequate education. Under this bill, since SWEPT is eliminated, these towns would no longer have excess SWEPT revenue and would only receive a grant from the state in the amount of their calculated cost of an adequate education. Based on FY 2020 preliminary data, the total amount of excess SWEPT that would no longer be raised and retained by these towns totals $27,914,267 (see table below).
In total, state Education Trust Fund revenue will decrease by $363,000,000 in each year, and in FY 2020, state education aid to districts will decrease by $26,827,645, and state expenditures for the low and moderate income homeowners’ property tax relief program will decrease by an estimated $1,200,000. The total decrease in state expenditure total decrease of $28,027,645). Impacts on aid in FY 2021 and each year thereafter cannot be estimated at this time.
Using FY 2020 Preliminary Data | |||||||
Town | Stabilization Grant | Excess SWEPT Raised and Retained | Total | ||||
Current | Proposed | Increase / (Decrease) | Current | Proposed | Increase / (Decrease) | ||
Moultonborough | - | - | - | $4,547,796 | - | ($4,547,796) | ($4,547,796) |
Rye | - | - | - | $2,509,365 | - | ($2,509,365) | ($2,509,365) |
Portsmouth | - | - | - | $1,878,954 | - | ($1,878,954) | ($1,878,954) |
Wolfeboro | - | $109,138 | $109,138 | $1,618,505 | - | ($1,618,505) | ($1,509,367) |
Lincoln | - | - | - | $1,353,557 | - | ($1,353,557) | ($1,353,557) |
New London | - | - | - | $1,291,554 | - | ($1,291,554) | ($1,291,554) |
New Castle | - | - | - | $1,158,604 | - | ($1,158,604) | ($1,158,604) |
Bartlett | - | $15,379 | $15,379 | $1,046,711 | - | ($1,046,711) | ($1,031,332) |
Sunapee | - | $15,490 | $15,490 | $1,007,053 | - | ($1,007,053) | ($991,563) |
Newington | - | - | - | $991,403 | - | ($991,403) | ($991,403) |
Tuftonboro | - | $169,216 | $169,216 | $1,127,954 | - | ($1,127,954) | ($958,738) |
Hampton | - | - | - | $811,670 | - | ($811,670) | ($811,670) |
Alton | - | - | - | $793,813 | - | ($793,813) | ($793,813) |
Hanover | - | - | - | $617,272 | - | ($617,272) | ($617,272) |
Meredith | - | $209,144 | $209,144 | $807,517 | - | ($807,517) | ($598,373) |
Holderness | - | - | - | $593,316 | - | ($593,316) | ($593,316) |
Freedom | - | - | - | $582,890 | - | ($582,890) | ($582,890) |
Newbury | - | $3,575 | $3,575 | $579,204 | - | ($579,204) | ($575,629) |
Waterville Valley | - | - | - | $529,233 | - | ($529,233) | ($529,233) |
Jackson | - | $65,627 | $65,627 | $541,187 | - | ($541,187) | ($475,561) |
Carroll | - | - | - | $419,514 | - | ($419,514) | ($419,514) |
Hebron | - | - | - | $407,289 | - | ($407,289) | ($407,289) |
Center Harbor | - | - | - | $392,776 | - | ($392,776) | ($392,776) |
Sandwich | - | - | - | $357,522 | - | ($357,522) | ($357,522) |
Bridgewater | - | - | - | $336,913 | - | ($336,913) | ($336,913) |
North Hampton | - | $197,334 | $197,334 | $484,126 | - | ($484,126) | ($286,792) |
Pittsburg | - | $29,711 | $29,711 | $274,084 | - | ($274,084) | ($244,373) |
Hale's Location | - | - | - | $155,450 | - | ($155,450) | ($155,450) |
Eaton | - | - | - | $126,960 | - | ($126,960) | ($126,960) |
Franconia | - | - | - | $114,319 | - | ($114,319) | ($114,319) |
Errol | - | $12,118 | $12,118 | $112,114 | - | ($112,114) | ($99,996) |
Harrisville | - | $11,210 | $11,210 | $83,782 | - | ($83,782) | ($72,572) |
Success | - | - | - | $30,705 | - | ($30,705) | ($30,705) |
Easton | - | - | - | $30,429 | - | ($30,429) | ($30,429) |
Hart's Location | - | - | - | $24,128 | - | ($24,128) | ($24,128) |
Randolph | - | $14,193 | $14,193 | $37,966 | - | ($37,966) | ($23,773) |
Cambridge | - | - | - | $21,481 | - | ($21,481) | ($21,481) |
Wentworth's Loc. | - | - | - | $18,081 | - | ($18,081) | ($18,081) |
Sugar Hill | - | - | - | $13,695 | - | ($13,695) | ($13,695) |
Dixville | - | $7,313 | $7,313 | $20,354 | - | ($20,354) | ($13,041) |
Millsfield | - | - | - | $12,795 | - | ($12,795) | ($12,795) |
Pinkham's Grant | - | - | - | $11,106 | - | ($11,106) | ($11,106) |
Odell | - | - | - | $5,978 | - | ($5,978) | ($5,978) |
Dix's Grant | - | - | - | $2,031 | - | ($2,031) | ($2,031) |
Windsor | - | $55,049 | $55,049 | $34 | - | ($34) | $55,015 |
Groton | - | $172,126 | $172,126 | $33,075 | - | ($33,075) | $139,051 |
TOTAL |
| $1,086,622 |
| ($27,914,267) | ($26,827,645) | ||
AGENCIES CONTACTED:
Department of Revenue Administration and Department of Education