| Portsmouth Herald
PORTSMOUTH – It’s a story as old as New Hampshire time.
Despite several rulings by the Supreme Court, including two unconstitutional findings, the granite state, which is free of income and sales tax, cannot reach a consensus on how its public schools should be adequately and fairly financed.
According to data from the 2018 census, New Hampshire’s percentage of state funding per student was the lowest in the country. And its reliance on property taxes is unmatched.
The City of Portsmouth has been working quietly to re-lead a new lobbying effort to put down a potential proposal pointed out in a 181-page final report released by the State Legislature Commission on Study Schools Funding in December.
The report contained a possible revival of the “donor / recipient city” education funding model that previously existed in the state. No such legislation has been put in place for this session and officials in Portsmouth hope it will continue.
This is because the model, unchanged and as outlined in the report, could require the city of Portsmouth – the state’s No. 1 donor city – to raise an additional estimated $ 40 million through a local education tax and a statewide property tax. Those funds would ultimately be sent to the state and then passed on to other less fortunate communities for their education costs, according to Nathan Lunney, company administrator for the Portsmouth School District.
Portsmouth residents would see this as an additional $ 5 per $ 1,000 on their local property tax bill, city administrator Karen Conard said.
“It’s a gigantic number, a staggering number,” said Conard. “A non-runner.”
Portsmouth Mayor Rick Becksted said the funding model was “devastating” for this community.
Lunney based its estimate of nearly $ 40 million on Portsmouth’s 2018 numbers, he said, noting that the city is waiting to see how close any legislation might get to applying the funding model in the report.
“We’ll know the real numbers when we get a real bill,” said Jane Ferrini, assistant city attorney. “We could find this in different forms.”
Currently, property-rich communities like Portsmouth, which are collecting more taxpayers’ money than the New Hampshire Department of Education deems necessary, are seeing their money returned.
The Commission’s December report suggests abolishing these “extra grants” known as excess SWEPT and instead using them to fund education costs in other communities that cannot adequately fund their own.
Some in New Hampshire rolled their eyes when Portsmouth tried to reunite a group from the early 2000s – called coalition communities – to fight against the potential funding model of hiring a lobbyist, though this has not yet been proposed to lawmakers.
“No shame among the most privileged,” posted former Democratic Executive Council and gubernatorial candidate Andru Volinsky on Twitter this week with a hashtag #ShameOnPortsmouth. Volinsky was the lead attorney in the 1997 Claremont School Funding cases that established the right to adequate government-funded public education in New Hampshire.
Portsmouth Councilor Deaglan McEachern clapped back on Volinsky’s comments.
“To say Portsmouth is privileged or a shame because we are unwilling to participate in an unfair system that does not take into account a person’s solvency is shameful,” wrote McEachern. “Come to Portsmouth and I’ll introduce you to some of the ‘donors’ you think are shameful. Your homes appreciated it but their bank accounts didn’t.”
Opinion / McEachern: “Donor Town” system unsustainable for Portsmouth or NH
Disadvantaged communities pay higher property taxes
While real estate revaluations and tax burdens are certainly growing for Portsmouth residents, the report by the Commission to Study School Funding found that communities with higher rates of poverty and other disadvantaged factors had the highest real estate tax rates in the state.
“Communities far less affluent than Portsmouth are facing significant increases in property tax rates,” said Jeff McLynch of the New Hampshire School Funding Fairness Project, a nonprofit advocacy group. “If Portsmouth thinks it’s a problem for them, imagine what the Claremonts, Berlins and Charlestowns think.”
McLynch compared Portsmouth to nearby Somersworth. The combined state and local education tax rate for Somersworth in 2019 was $ 15.75 per $ 1,000, while Portsmouth was $ 6.11. This equates to a difference of nearly $ 1,000 a year for someone who owns a $ 100,000 home.
“One point that I cannot emphasize enough is that it is perfectly clear that the current school funding system is unfair, as it forces families in less affluent cities to pay much higher property tax rates for schools, even though this is school funding in principle a state responsibility, “said McLynch.
The Commission’s report recommends more public school funds from the state budget.
Claremont is named “one of the most striking examples of taxpayers’ inequality in the state” in an additional report produced for the state by the American Institutes for Research.
Claremont has the third lowest net worth per student in the state, at just over $ 400,000 per student in 2019, the report said. To spend $ 18,861 per student – roughly the national average – a local education tax of $ 21.94 per $ 1,000 of valuation is approved. When combined with other local property taxes and government education property tax, the total Claremont property tax rate is $ 42.17 per $ 1,000 of estimated value.
The total property tax rate for the City of Portsmouth in 2020 was $ 14.70 per $ 1,000.
At a meeting of the Portsmouth City Council’s Legislative Subcommittee on Jan. 4, two councilors wanted to keep quiet efforts to reunite the coalition communities until they could curate a better public message.
Councilor Esther Kennedy, who is a school district administrator, said that maybe the city “should be careful about getting things out of there” because she didn’t want it to look like Portsmouth was acting alone.
“Nobody out there in the world is sorry for Portsmouth,” said Kennedy.
“We’re all dancing around, is there a way to bring this to the council, dispassionately, quietly, quickly, and without stirring a hornet’s nest through many well-intentioned conversations in a council meeting,” Councilor Paige asked Trace.
Conard said she thought it “wise not to speak publicly about” what city councils ultimately did on Monday, January 11th.
Recently, up to 20 other donor communities have joined Zoom and called for the possibility of the coalition communities reuniting, Conard said. You are currently working on a draft Memorandum of Understanding.
These communities include Newington, Rye, Moultonborough, Carroll, Waterville Valley, Newbury, Center Harbor, Sunapee, Sugar Hill, Hebron, Meredith, Bridgewater, Grantham, Lincoln, Hampton, North Hampton, and Holderness, according to Ferrini.
In an interview this week, McEachern said his biggest criticism of the funding model was that it did not take household solvency into account. Someone’s property may be of great value, he said, but they could be a longtime resident, retired, and living on a steady income.
McEachern sees New Hampshire’s inability to adequately fund its public schools as the state’s “systemic problem.”
“This is about how we raise money, and if we refuse to test people’s solvency, we will continue to make sure that the people who can least afford it pay the most,” he said.
McEachern fears that proponents of a return to the donor city system are calling those who oppose it, like Portsmouth, “against education”.
“I wouldn’t keep an eye on them if they said, ‘Deaglan, based on your solvency, you need to make sure the Claremont children are educated as well as your daughter,’ but not everyone is in that position.” he said.
Former Portsmouth councilor Chris Dwyer was a member of the Education Study Funding Commission and said taxpayers’ equity was “absolutely important here”.
“Other states did a better job of doing this and were able to consider household wealth in determining what is fair,” Dwyer said. “I don’t think our statutory assessment approach is perfect enough to be relied upon for fair assessment between communities.”
Dwyer wrote a comment in the final report that focused on just that.
“The Commission has not been able to come up with such a clear case for taxpayers’ equity,” Dwyer wrote. “From my point of view, the essence of tax justice rests on considerations of the solvency of individual taxpayers – a value that runs parallel to the conceptual fundamentals of student equity.”
Dwyer noted that both Vermont and Massachusetts “each found ways to incorporate taxpayer financial performance directly into their funding models.”
One of the recommendations in the Finance Commission’s report was to improve taxpayers’ equity “by relieving property tax for homeowners and tenants” and introducing a program to defer property tax. But Dwyer called this a “temporary patch” in her comment.
The commission had not looked for new sources of funding for public education, Dwyer said. Her ideas included a capital gains tax, an income tax over a certain amount, an increased tax on second homes, or a local option to raise funds.
“Nobody wants higher property taxes, but they don’t want any other taxes either,” Dwyer said. “But they all want more money for education. That is the dilemma.”
In his recent interviews, Dwyer believed that Portsmouth City Council used the “most extreme numbers” in the simulation.
“I find it difficult to imagine our legislation becoming the most extreme case,” she said.
McEachern sees the school funding meeting as “a pretty big needle that will move”.
“It will be painful when we return to the donor cities,” he said. “We risk losing what brings a community too deep.”
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