Over the years many of you have asked me about the differences between the tax rates in Penacook with Merrimack Valley School District and in Concord with the Concord School District. Here is a quick overview of what makes up your taxes.
Your Taxes Explained
Two main ways the City can provide tax relief is to create a tax reduction by cutting services, or to expand the tax base to increase revenue.
Cuts can be achieved by reduction in personnel or services. However, cuts are challenging considering that 62% of the City budget is devoted to police and fire, 23% to water services, wastewater, road maintenance, and the like, and the remainder to paying off debt service for City projects, like road reconstruction/maintenance.
Your taxes are made up of three portions: City, County, and school district. When the City reduces its spending or increases its revenue, the overall Concord and Penacook tax rates decrease by the same amount, as the City can only affect its portion of the tax rate; it can’t change the school or county portion.
The City’s portion of the overall tax rate for Concord and Penacook is identical ($9.84 per $1,000 of assessed value for both rates). For example, if the City rate was cut by $1, the Concord rate would reduce from $28.24 to $27.24 and the Penacook rate in turn would decrease from $33.92 to $32.92 — in equal portion. The entire City is treated equally as to rates. The County tax rates for Concord and Penacook are also the same.
The school districts in the City do not have equal tax rates, however. Merrimack Valley School District (MVSD) accounts for approximately 60% of the total tax burden for Penacook residents, compared with 54% for residents in the Concord School District (CSD). While the CSD rate has remained relatively stable over the past decade, the MVSD rate has slowly risen, despite a decline in overall student enrollment. http://www.concordnh.gov/index.aspx?NID=312
The City and MVSD face similar challenges as to downshifting of costs at the NH State level. Reaching a balanced City budget is made most difficult by this factor, along with the increase in health care costs. For example, for FY 2016, the City’s tax rate went up about 4%, but 3.6% of that was directly related to the State of NH downshifting retirement costs. Similarly, the roughly 20% of MVSD children who have special needs are Federally mandated to receive special services. However, the Federal government does not fully fund their mandate, currently contributing approximately 40% of the cost of these services. Your local tax dollars has to make up the rest.
So considering that the City and County tax rates are the same for Concord and Penacook, and if we anticipate the MVSD will continue to be faced with growing needs that the State and Federal governments will be challenged to or refuse to fund, then the surest way of helping to lower our tax burden is to increase the tax base in Penacook, with continued concentration on housing and new businesses in the downtown, in Thirty Pines, and at Whitney Road.
The impact of additional development alone will not solve all our tax concerns. Penacook would need $17,700,000 of new assessed value constructed in the MVSD area to lower Penacook’s tax rate by $1.00. We would need $100,359,000 in new assessed value (a 27% increase from what currently exists) to make the Concord and Penacook tax rates equal. While we will not be seeing 27% more in assessed value constructed anytime soon, moving projects forward that continue to diminish the tax burden makes good financial sense. Along the way, we will take steps to ensure that this development is appropriate and sensitive to the context of its surroundings.