With the recent passage of the House budget bill by the NH House with a vote of 225-159, the state’s budget for the next biennium is a step closer to being finalized. As one of your Milford State Representatives, I’m pleased to report that we’ve drafted a budget that focuses on you, the property taxpayer.
As a member of the House Finance committee this term, I can tell you first hand that your priorities were at the heart of the budgeting process. Committee members listened to input from citizens across the state. Top priorities included property tax relief, education funding and adequate resources for critical community services like child protection and mental health. Many of you attended the state budget public hearings, including one held here in Milford at the Boys & Girls Club of Souhegan Valley, and we listened. House colleagues also shared constituent concerns with us, based on conversations and meetings with citizens over recent months. We not only listened to your concerns but we acted on them, incorporating them into the House’s state budget.
So what would the House budget provisions mean for Milford?
- School Funding: In the House’s budget, Milford schools would receive an additional $2.1 million in state aid over the next biennium. Also included in the budget are state resources to fully fund full-day kindergarten (up from 50%) and fully reimburse special education aid (up from 80%). The moratorium on school building aid would be lifted and there would be new resources for our successful Applied Technology Center programs. These critical state investments in our public schools would ensure our children receive the high quality education they need to thrive in the future. In addition, school budgets would rely less on property tax increases.
- Family & Community Resilience Support: The House state budget envisions a bright future for all of NH’s children and families. Every child should be provided with the foundation they need to succeed in school, and at home. The state budget makes critical investments in evidence-based family strengthening and child well-being initiatives. The House’s budget bill also supports the strengthening of our community-based supports and services for mental health, based on the state’s new 10-year mental health plan. A paid family medical insurance policy, as supported by a full House vote, is included in the budget bill. Establishing a paid family leave program would allow families to care for their children and loved ones in cases of illness or emergency, while safeguarding their job and providing economic security.
- Property Tax Relief: Reinstatement of state revenue-sharing with cities and towns would provide another potential source of property tax relief. Revenue sharing, which has been suspended since 2010, would be restored and $12.5 million would be allocated to towns and cities beginning in FY 2021. The town of Milford is scheduled to receive at least $113,000 of these shared revenues in the House state budget. This state revenue sharing would decrease the demand for property taxes to cover town expenses.
- Decreased Reliance on Property Taxes: Another policy change in the House state budget that would decrease our reliance on property taxes is the extension of our state Interest & Dividends (I&D) tax to include Capital Gains (CG). Capital gains result from the sale of an asset at a higher price than the purchase price. Capital gains from certain sales, such as stocks and bonds or real estate, would be taxed at the current I&D tax rate of 5%. Primary residence sales would not be included as capital gains and would not be taxed. This policy change would help to decrease tax burdens for seniors and working families. Improvements to the current filing thresholds for the I&D tax would prevent more people from having to pay the new combined I&D/CG tax. The current filing threshold for the state I&D tax of $2400 for an individual would be increased to $5000 per tax year; joint filers would be exempt for up to $10,000 in interest and dividends and capital gains (up from $4800). Seniors would add $7500 to their exemptions; married seniors would add $15,000 yielding a $25,000 annual threshold.
Looking at data from the United States as a whole, the Tax Policy Center estimates that more than 90 percent of all capital gains go to the top 20 percent of income earners. Most Milford residents would see their overall tax burden decrease as a result of this tax change. For anyone inquiring with worry about what some are calling a “new tax,” simply review your recent property tax bill. Milford property taxes have continued to surge, increasing by 58 percent over the past ten years. Although property taxes are technically not a “new” tax category, the escalating amounts of these taxes are certainly “new,” and a large tax burden that too many can no longer bear. This I&D/Capital gains tax provides a sustainable revenue stream as an alternative to property taxes; hence, providing much needed property tax relief.
This brief summary of the House state budget bill reveals a strong focus on Milford citizens’ priorities: property tax relief, state funding for schools and critical investments in community services. Like any budgeting process, difficult decisions had to be made. We said “no” to yet another round of tax cuts for businesses as these tax cuts would once again be subsidized by higher property taxes. We felt strongly that it was the people’s turn for tax relief. The House’s budget is a balanced budget that focuses on the priorities of Granite Staters and ensures that every citizen has the essentials they need to thrive.
Now it is the Senate’s turn to deliberate state spending priorities. As the NH Fiscal Policy Institute stated in their recent report on the House state budget, “The State Budget is a statement of NH’s priorities, and with funds available now to make long-term investments that will pay dividends in the future, policy makers should wisely deploy public resources… The House budget makes significant steps toward rebalancing NH’s priorities in a manner that promotes long-term prosperity for all the state’s residents.”
I encourage you, as NH residents, to reach out to your Senator and urge her/him to keep the people’s priorities at the heart of the state budget. Here in Milford, our Senator is Shannon Chandley (Email: Shannon.Chandley@leg.state.nh.us).
Representative Joelle Martin, Vice Chairman of House Finance Division III, serves Hillsborough District 23, Milford