Text to be removed highlighted in red.
1 New Section; Municipal Budget Law; Preparation of Budgets; Biennial School District Local Tax Cap and School Administrative Fixed Cap on Central Office Administrative Budgets. Amend RSA 32 by inserting after section 5-h the following new section:
32:5-i Biennial School District Local Tax Cap and School Administrative Fixed Cap on Central Office Administrative Budgets.
I. Every town and ward in a city shall conduct a vote on a local tax cap question for their school district and fixed cap on the school administrative unit central office administrative budget in even numbered years at the state general election held in November. The question shall appear on the ballot by operation of law and shall not require a warrant article, citizen petition, or separate local legislative approval.
II. In municipalities that have adopted an official ballot system, the town or city clerk shall cause the question to appear on a separate official ballot.
III. In towns that have not adopted an official ballot system, the town clerk shall cause the question to be printed on separate local ballots. Such ballots shall be distributed to voters at the polling place during the state general election and shall be cast, collected, and counted under the supervision of the moderator in a manner consistent with ballot voting procedures.
IV. Nothing in this section shall prohibit a municipality, school board, or school administrative unit board from holding a public hearing on the question for the local tax cap and for the school administrative fixed cap on central office administrative budgets. The question on the separate official ballot or local ballot shall not be included on the official statewide ballot administered by the secretary of state. Such ballots shall be distributed to voters at the polling place during the state general election and shall be cast, collected, and counted under the supervision of the moderator in a manner consistent with local ballot voting procedures.
V.(a) The school district local tax cap and school administrative unit fixed cap question on the ballot for towns and wards with an annual school district meeting shall read:
"Shall the name of municipality adopt the provisions of RSA 32:5-i to establish, for the next 2 fiscal years, a local tax cap on the portion of property taxes raised for the name(s) of school district(s) and a fixed cap on the central office administrative budget of the supporting school administrative unit (SAU)? If adopted, the amount raised by local school district taxes shall not exceed the prior fiscal year's amount, adjusted for inflation using the CPI-U Northeast Region and the percentage increase in the municipality's taxable property value attributable to new construction. Costs for bonded capital projects shall be excluded. In addition, the SAU central office administrative budget shall not exceed 6 percent of the combined appropriations of the school districts comprising the SAU, excluding bonded capital costs. These caps may be overridden as provided in RSA 32:5-i and adoption requires a three-fifths (3/5) majority vote."
(b) The school district local tax cap and school administrative unit fixed cap question on the ballot for municipalities without an annual school district meeting shall read:
"Shall the name of municipality adopt the provisions of RSA 32:5-i to establish, for the next 2 fiscal years, a local tax cap on the portion of property taxes raised for the name(s) of school district(s) and a fixed cap on the central office administrative budget of the supporting school administrative unit (SAU)? If adopted, the amount raised by local school district taxes shall not exceed the prior fiscal year's amount, adjusted for inflation using the CPI-U Northeast Region and the percentage increase in the municipality's taxable property value attributable to new construction. Costs for bonded capital projects shall be excluded. In addition, the SAU central office administrative budget shall not exceed 6 percent of the combined appropriations of the school districts comprising the SAU, excluding bonded capital costs. These caps may be overridden as provided in RSA 32:5-i and adoption requires a three-fifths (3/5) majority vote."
(b) The school district local tax cap and school administrative unit fixed cap question on the ballot for municipalities without an annual school district meeting shall read:
"Shall the name of municipality adopt the provisions of RSA 32:5-i to implement a local tax cap for the next two fiscal years on the portion of property taxes raised for the name(s) of school district(s) and a fixed cap on the central office administrative budget of the supporting school administrative unit? If adopted, the school district governing body (or budget committee) of each school district shall not submit a recommended budget that increases the amount to be raised by local taxes (this year's base), that is higher than the prior fiscal year's actual amount of local taxes raised (last year's base), adjusted for inflation using the CPI-U Northeast Region and the change in attendance, in accordance with RSA 32:5-i, with costs for bonded capital projects are excluded from both year's bases, and further that the central office administrative budget of the supporting school administrative unit shall not exceed the school administrative unit fixed cap, which is 6 percent of the sum of the total school district appropriation amounts, except costs of bonded capital projects, in the school districts comprising the SAU in accordance with RSA 32:5-i? The local tax cap on a school district, or school administrative unit fixed cap, or both may be overridden pursuant to RSA 32:5-i. The fixed cap applies only to administrative operations of the SAU central office and does not affect classroom instruction, school-based services, or other municipal expenditures. Adoption of these caps requires an affirmative 3/5 majority vote."
VI.(a) The moderator of each municipality or ward in the school district shall report the results on the question to the secretary of the school administrative unit board for the school district. If a 3/5 majority of the voters voting in the municipalities and wards served by the school district approve the question, then the local tax cap for the school district under RSA 32:5-b, I-b, exempting bonded capital costs pursuant to paragraph XVI, shall be binding and apply for the ensuing 2 fiscal years. If the local tax cap question is rejected in a school district, the local tax cap limitation shall not apply for the next 2 fiscal years, but the question shall appear again on the separate official ballot or local ballot during the next even-numbered year's November general election.
(b) The moderator of each municipality or ward in the school administrative unit shall report the results on the question to the secretary of the school administrative unit board served by the municipality or ward. If a 3/5 majority of the voters voting in the municipalities and wards served by the school administrative unit approve the question, then the SAU fixed cap question for the SAU central office administrative budget shall be binding and apply for the ensuing 2 fiscal years. If the fixed cap question is rejected in a school administrative unit, the limitation shall not apply for the next 2 fiscal years, but the question shall appear again on the separate official ballot or local ballot during the next even-numbered year's November general election.
(c) The secretary of the school administrative unit board shall certify the results of the votes to the department of revenue administration. Preservation of ballots shall be pursuant to RSA 33-A:3-a, XXXVII.
VII.(a) Any 10 registered voters from any municipality served by a school district, before the expiration of 7 days from the date of the general election, may apply in writing to the school district clerk for a recount of the ballots for the question on a school district local tax cap under this section. The secretary shall schedule a recount, to be conducted by the school board, not earlier than 5 days nor later than 10 days after the date the secretary receives the petition. The applicants for such a recount shall pay to the school clerk a fee of $10 for conducting the recount.
(b) Any 10 registered voters from any municipality served by a school administrative unit, before the expiration of 7 days from the date of the general election, may apply in writing to the secretary of the school administrative unit for a recount of the ballots for the question on a school administrative unit fixed cap under this section. The secretary shall schedule a recount, to be conducted by the school administrative unit, not earlier than 5 days nor later than 10 days after the date the secretary receives the petition. The applicants for such a recount shall pay to the secretary of the school administrative unit board a fee of $10 for conducting the recount.
VIII.(a) The maximum allowable levy shall equal:
Prior fiscal year property tax levy × (1 + inflation + net new taxable property growth).
(b) "Inflation" means the Consumer Price Index for All Urban Consumers (CPI-U), Northeast Region.
(c)(1) "Net new taxable property growth" means the increase in assessed valuation attributable to:
(A) New construction;
(B) Physical expansion or improvement of structures;
(C) Subdivision or redevelopment of land;
(D) Conversion from exempt to taxable status; or
(E) Any physical change that increases taxable market value.
(2) "Net new taxable property growth" shall not include:
(A) Market appreciation;
(B) Revaluation or reassessment; or
(C) Changes in assessment methodology.
(d) The department of revenue administration shall certify annually the net new taxable property growth for each taxing jurisdiction.
IX. In the municipalities and wards served by a school administrative unit where the school administrative unit fixed cap question under this section is approved by the voters for the biennium, the fixed cap for school administrative unit central office administrative budgets shall be 6 percent of the sum of the total school district appropriation amounts, except costs of bonded capital projects pursuant to paragraph XVI, in the school districts comprising the SAU. "School administrative unit central office administrative budgets" means expenditures for the general management and administration of a school administrative unit. These expenditures include superintendent services; assistant or deputy superintendent services; business administration; human resources; finance; payroll; purchasing; district‑level information technology administration; legal services; public relations; and other non‑school‑based administrative functions, regardless of physical location or building assignment. The term also includes district‑level curriculum directors, directors of instruction, or similarly titled positions who are not employed under a collective bargaining agreement or who do not provide direct classroom instruction for more than 50 percent of their work time, as well as any personnel reported to the department of education as employed by the central office. The term does not include school‑based administrative staff; classroom instruction; instructional support services; special education services; transportation; food services; or facilities operations and maintenance.
X. The provisions of this paragraph shall apply only to districts without an annual meeting that have adopted the school administrative unit fixed cap under this section. The legislative body, pursuant to RSA 194-C:9, shall adopt a school administrative unit budget that is not in excess of the school administrative unit fixed cap pursuant to paragraph IX, except that the legislative body may override the fixed cap on the school administrative unit budget by a supermajority vote defined in their charter pursuant to RSA 49-C:33, I(d) or RSA 49-D:3, I(e).
XI. No municipal tax rate shall be set that causes a taxing authority to exceed its certified limits under this section. Any tax rate set in violation of this section shall be void.
(a) For a school district that has adopted the school district local tax cap or a school administrative unit that has adopted the school administrative unit fixed cap under this section, the governing body shall forward, at a time and in a form prescribed by the department of revenue administration, documentation demonstrating compliance with the adopted caps. Such documentation shall include:
(1) The computation of the school district local tax cap or school administrative unit fixed cap for the applicable year;
(2) Proposed appropriations by the governing body and budget committee and estimated revenues going into the annual meeting, showing the estimated amount of property taxes to be raised for the school district budget or school administrative unit central office administrative budgets, or both;
(3) Appropriations voted by the annual or special meeting of the legislative body; and
(4) The count of any ballot votes taken to override the school district local tax cap or school administrative unit fixed cap.
(b) Upon review of documentation submitted under subparagraph (a), if the commissioner of the department of revenue administration determines that the certified school district budget results in estimated taxes exceeding the adopted school administrative unit fixed cap and that no valid override vote was obtained as provided in this section, the commissioner shall reduce the appropriation of the certified budget by the amount that the certified budget exceeds the cap.
(c) Upon review of documentation submitted under subparagraph (a), if the commissioner of the department of revenue administration determines that the certified school administrative unit central office administrative budget results in estimated taxes exceeding the adopted school administrative unit fixed cap and that no valid override vote was obtained as provided in this section, the commissioner shall reduce the appropriation of the certified budget by the amount that the certified budget exceeds the cap.
(d) The department of revenue administration shall not approve any tax rate that exceeds the certified limit and shall withhold rate approval until the municipality demonstrates compliance either by showing the certified budget is within the certified cap or by showing a valid override vote in accordance with RSA 40:13 or applicable annual meeting procedures.
(e) Nothing in this section shall prohibit the department of revenue administration from requiring additional information, documentation, or schedules reasonably necessary to determine compliance with the adopted local tax cap or fixed cap under this section.
XII. If approved by the voters, the school district local tax cap or the school administrative unit fixed cap, or both, shall apply beginning with the fiscal 2028 school district total budget or school administrative unit budget, as applicable, for the following 2 fiscal years.
XIII. Any taxpayer in a member school district or school district of the school administrative unit, as applicable, shall have standing to enforce this section in superior court.
XIV. Nothing in this section may be construed to repeal, supersede, or diminish any property tax limitation that is more restrictive under existing law, a municipal charter, or a local ordinance. When more than one property tax limitation, tax cap, local tax cap, or budget cap applies, each applicable limitation must be fully satisfied.
XV. This section shall operate solely as a local tax cap limitation on the estimated amount of local taxes to be raised for the fiscal year attributable to the school district or a fixed cap on the school administrative unit central office administrative budget, as applicable.
XVI.(a) Bonded capital costs shall include principal or interest on bonds or notes only if the bonded indebtedness is issued solely for the acquisition, construction, or major structural renovation of real property, reported pursuant to RSA 198:4-a. No exclusion shall apply to bonded indebtedness issued for:
(1) Operating expenses;
(2) Salaries or benefits;
(3) Vehicles or rolling stock;
(4) Equipment with a useful life of less than 10 years;
(5) Technology, furnishings, or instructional materials; or
(6) Any purpose other than real property.
(b) The department of revenue administration shall certify annually the portion of debt service that qualifies for exclusion.
(c) No exclusion shall apply unless certified by the department.
2 Effective Date. This act shall take effect November 1, 2026.
Text to be added highlighted in green.
1 New Section; Municipal Budget Law; Preparation of Budgets; Biennial School District Local Tax Cap and School Administrative Fixed Cap on Central Office Administrative Budgets. Amend RSA 32 by inserting after section 5-h the following new section:
32:5-i Biennial School District Local Tax Cap and School Administrative Fixed Cap on Central Office Administrative Budgets.
I. Every town and ward in a city shall conduct a vote on a local tax cap question for their school district and fixed cap on the school administrative unit central office administrative budget in even numbered years at the state general election held in November. The question shall appear on the ballot by operation of law and shall not require a warrant article, citizen petition, or separate local legislative approval.
II. In municipalities that have adopted an official ballot system, the town or city clerk shall cause the question to appear on a separate official ballot.
III. In towns that have not adopted an official ballot system, the town clerk shall cause the question to be printed on separate local ballots. Such ballots shall be distributed to voters at the polling place during the state general election and shall be cast, collected, and counted under the supervision of the moderator in a manner consistent with ballot voting procedures.
IV. Nothing in this section shall prohibit a municipality, school board, or school administrative unit board from holding a public hearing on the question for the local tax cap and for the school administrative fixed cap on central office administrative budgets. The question on the separate official ballot or local ballot shall not be included on the official statewide ballot administered by the secretary of state. Such ballots shall be distributed to voters at the polling place during the state general election and shall be cast, collected, and counted under the supervision of the moderator in a manner consistent with local ballot voting procedures.
V.(a) The school district local tax cap and school administrative unit fixed cap question on the ballot for towns and wards with an annual school district meeting shall read:
"Shall the adopt the provisions of RSA 32:5-i to establish, for the next 2 fiscal years, a local tax cap on the portion of property taxes raised for the and a fixed cap on the central office administrative budget of the supporting school administrative unit (SAU)? If adopted, the amount raised by local school district taxes shall not exceed the prior fiscal year's amount, adjusted for inflation using the CPI-U Northeast Region and the percentage increase in the municipality's taxable property value attributable to new construction. Costs for bonded capital projects shall be excluded. In addition, the SAU central office administrative budget shall not exceed 6 percent of the combined appropriations of the school districts comprising the SAU, excluding bonded capital costs. These caps may be overridden as provided in RSA 32:5-i and adoption requires a three-fifths (3/5) majority vote."
(b) The school district local tax cap and school administrative unit fixed cap question on the ballot for municipalities without an annual school district meeting shall read:
"Shall the adopt the provisions of RSA 32:5-i to establish, for the next 2 fiscal years, a local tax cap on the portion of property taxes raised for the and a fixed cap on the central office administrative budget of the supporting school administrative unit (SAU)? If adopted, the amount raised by local school district taxes shall not exceed the prior fiscal year's amount, adjusted for inflation using the CPI-U Northeast Region and the percentage increase in the municipality's taxable property value attributable to new construction. Costs for bonded capital projects shall be excluded. In addition, the SAU central office administrative budget shall not exceed 6 percent of the combined appropriations of the school districts comprising the SAU, excluding bonded capital costs. These caps may be overridden as provided in RSA 32:5-i and adoption requires a three-fifths (3/5) majority vote."
(b) The school district local tax cap and school administrative unit fixed cap question on the ballot for municipalities without an annual school district meeting shall read:
"Shall the adopt the provisions of RSA 32:5-i to implement a local tax cap for the next two fiscal years on the portion of property taxes raised for the and a fixed cap on the central office administrative budget of the supporting school administrative unit? If adopted, the school district governing body (or budget committee) of each school district shall not submit a recommended budget that increases the amount to be raised by local taxes (this year's base), that is higher than the prior fiscal year's actual amount of local taxes raised (last year's base), adjusted for inflation using the CPI-U Northeast Region and the change in attendance, in accordance with RSA 32:5-i, with costs for bonded capital projects are excluded from both year's bases, and further that the central office administrative budget of the supporting school administrative unit shall not exceed the school administrative unit fixed cap, which is 6 percent of the sum of the total school district appropriation amounts, except costs of bonded capital projects, in the school districts comprising the SAU in accordance with RSA 32:5-i? The local tax cap on a school district, or school administrative unit fixed cap, or both may be overridden pursuant to RSA 32:5-i. The fixed cap applies only to administrative operations of the SAU central office and does not affect classroom instruction, school-based services, or other municipal expenditures. Adoption of these caps requires an affirmative 3/5 majority vote."
VI.(a) The moderator of each municipality or ward in the school district shall report the results on the question to the secretary of the school administrative unit board for the school district. If a 3/5 majority of the voters voting in the municipalities and wards served by the school district approve the question, then the local tax cap for the school district under RSA 32:5-b, I-b, exempting bonded capital costs pursuant to paragraph XVI, shall be binding and apply for the ensuing 2 fiscal years. If the local tax cap question is rejected in a school district, the local tax cap limitation shall not apply for the next 2 fiscal years, but the question shall appear again on the separate official ballot or local ballot during the next even-numbered year's November general election.
(b) The moderator of each municipality or ward in the school administrative unit shall report the results on the question to the secretary of the school administrative unit board served by the municipality or ward. If a 3/5 majority of the voters voting in the municipalities and wards served by the school administrative unit approve the question, then the SAU fixed cap question for the SAU central office administrative budget shall be binding and apply for the ensuing 2 fiscal years. If the fixed cap question is rejected in a school administrative unit, the limitation shall not apply for the next 2 fiscal years, but the question shall appear again on the separate official ballot or local ballot during the next even-numbered year's November general election.
(c) The secretary of the school administrative unit board shall certify the results of the votes to the department of revenue administration. Preservation of ballots shall be pursuant to RSA 33-A:3-a, XXXVII.
VII.(a) Any 10 registered voters from any municipality served by a school district, before the expiration of 7 days from the date of the general election, may apply in writing to the school district clerk for a recount of the ballots for the question on a school district local tax cap under this section. The secretary shall schedule a recount, to be conducted by the school board, not earlier than 5 days nor later than 10 days after the date the secretary receives the petition. The applicants for such a recount shall pay to the school clerk a fee of $10 for conducting the recount.
(b) Any 10 registered voters from any municipality served by a school administrative unit, before the expiration of 7 days from the date of the general election, may apply in writing to the secretary of the school administrative unit for a recount of the ballots for the question on a school administrative unit fixed cap under this section. The secretary shall schedule a recount, to be conducted by the school administrative unit, not earlier than 5 days nor later than 10 days after the date the secretary receives the petition. The applicants for such a recount shall pay to the secretary of the school administrative unit board a fee of $10 for conducting the recount.
VIII.(a) The maximum allowable levy shall equal:
Prior fiscal year property tax levy × (1 + inflation + net new taxable property growth).
(b) "Inflation" means the Consumer Price Index for All Urban Consumers (CPI-U), Northeast Region.
(c)(1) "Net new taxable property growth" means the increase in assessed valuation attributable to:
(A) New construction;
(B) Physical expansion or improvement of structures;
(C) Subdivision or redevelopment of land;
(D) Conversion from exempt to taxable status; or
(E) Any physical change that increases taxable market value.
(2) "Net new taxable property growth" shall not include:
(A) Market appreciation;
(B) Revaluation or reassessment; or
(C) Changes in assessment methodology.
(d) The department of revenue administration shall certify annually the net new taxable property growth for each taxing jurisdiction.
IX. In the municipalities and wards served by a school administrative unit where the school administrative unit fixed cap question under this section is approved by the voters for the biennium, the fixed cap for school administrative unit central office administrative budgets shall be 6 percent of the sum of the total school district appropriation amounts, except costs of bonded capital projects pursuant to paragraph XVI, in the school districts comprising the SAU. "School administrative unit central office administrative budgets" means expenditures for the general management and administration of a school administrative unit. These expenditures include superintendent services; assistant or deputy superintendent services; business administration; human resources; finance; payroll; purchasing; district‑level information technology administration; legal services; public relations; and other non‑school‑based administrative functions, regardless of physical location or building assignment. The term also includes district‑level curriculum directors, directors of instruction, or similarly titled positions who are not employed under a collective bargaining agreement or who do not provide direct classroom instruction for more than 50 percent of their work time, as well as any personnel reported to the department of education as employed by the central office. The term does not include school‑based administrative staff; classroom instruction; instructional support services; special education services; transportation; food services; or facilities operations and maintenance.
X. The provisions of this paragraph shall apply only to districts without an annual meeting that have adopted the school administrative unit fixed cap under this section. The legislative body, pursuant to RSA 194-C:9, shall adopt a school administrative unit budget that is not in excess of the school administrative unit fixed cap pursuant to paragraph IX, except that the legislative body may override the fixed cap on the school administrative unit budget by a supermajority vote defined in their charter pursuant to RSA 49-C:33, I(d) or RSA 49-D:3, I(e).
XI. No municipal tax rate shall be set that causes a taxing authority to exceed its certified limits under this section. Any tax rate set in violation of this section shall be void.
(a) For a school district that has adopted the school district local tax cap or a school administrative unit that has adopted the school administrative unit fixed cap under this section, the governing body shall forward, at a time and in a form prescribed by the department of revenue administration, documentation demonstrating compliance with the adopted caps. Such documentation shall include:
(1) The computation of the school district local tax cap or school administrative unit fixed cap for the applicable year;
(2) Proposed appropriations by the governing body and budget committee and estimated revenues going into the annual meeting, showing the estimated amount of property taxes to be raised for the school district budget or school administrative unit central office administrative budgets, or both;
(3) Appropriations voted by the annual or special meeting of the legislative body; and
(4) The count of any ballot votes taken to override the school district local tax cap or school administrative unit fixed cap.
(b) Upon review of documentation submitted under subparagraph (a), if the commissioner of the department of revenue administration determines that the certified school district budget results in estimated taxes exceeding the adopted school administrative unit fixed cap and that no valid override vote was obtained as provided in this section, the commissioner shall reduce the appropriation of the certified budget by the amount that the certified budget exceeds the cap.
(c) Upon review of documentation submitted under subparagraph (a), if the commissioner of the department of revenue administration determines that the certified school administrative unit central office administrative budget results in estimated taxes exceeding the adopted school administrative unit fixed cap and that no valid override vote was obtained as provided in this section, the commissioner shall reduce the appropriation of the certified budget by the amount that the certified budget exceeds the cap.
(d) The department of revenue administration shall not approve any tax rate that exceeds the certified limit and shall withhold rate approval until the municipality demonstrates compliance either by showing the certified budget is within the certified cap or by showing a valid override vote in accordance with RSA 40:13 or applicable annual meeting procedures.
(e) Nothing in this section shall prohibit the department of revenue administration from requiring additional information, documentation, or schedules reasonably necessary to determine compliance with the adopted local tax cap or fixed cap under this section.
XII. If approved by the voters, the school district local tax cap or the school administrative unit fixed cap, or both, shall apply beginning with the fiscal 2028 school district total budget or school administrative unit budget, as applicable, for the following 2 fiscal years.
XIII. Any taxpayer in a member school district or school district of the school administrative unit, as applicable, shall have standing to enforce this section in superior court.
XIV. Nothing in this section may be construed to repeal, supersede, or diminish any property tax limitation that is more restrictive under existing law, a municipal charter, or a local ordinance. When more than one property tax limitation, tax cap, local tax cap, or budget cap applies, each applicable limitation must be fully satisfied.
XV. This section shall operate solely as a local tax cap limitation on the estimated amount of local taxes to be raised for the fiscal year attributable to the school district or a fixed cap on the school administrative unit central office administrative budget, as applicable.
XVI.(a) Bonded capital costs shall include principal or interest on bonds or notes only if the bonded indebtedness is issued solely for the acquisition, construction, or major structural renovation of real property, reported pursuant to RSA 198:4-a. No exclusion shall apply to bonded indebtedness issued for:
(1) Operating expenses;
(2) Salaries or benefits;
(3) Vehicles or rolling stock;
(4) Equipment with a useful life of less than 10 years;
(5) Technology, furnishings, or instructional materials; or
(6) Any purpose other than real property.
(b) The department of revenue administration shall certify annually the portion of debt service that qualifies for exclusion.
(c) No exclusion shall apply unless certified by the department.
2 Effective Date. This act shall take effect November 1, 2026.