Taylor Caswell
It’s October and as the leaves fall, town budget committees, school boards and select-boards are beginning the process that will culminate in Town Meeting as snow starts to melt in March. The famous quote is that “all politics is local,” but in New Hampshire so are budgets.
As inflation continues to roar, this year will be the toughest one in years for local towns. As I am writing this, heating oil up here in the North Country is already hovering at or over $6 a gallon, and the diesel used to power jobs and deliver goods everywhere is in the same boat. Food costs are up, the Federal Reserve has raised interest rates, with a 30-year mortgage now near 7%.
These costs don’t just hit each one of us individually; they hit governments, too. Plow trucks use diesel, the library and town hall need to be heated, and big projects have to get bonded, and every rate increase makes that borrowing more expensive.
But the reason all budgets are local is that governments at every level are good at one thing: pushing costs downhill. Federal to state, state to town. That’s not a partisan observation; both parties do it. In New Hampshire once you get to a town budget, that is the bottom of the hill.
The major revenue lever a town has is its property tax. In 2022, NH towns received 61% of their revenue from property taxes, the highest share of any state. And remember that businesses pay property tax, too. According to the NH Fiscal Policy Institute, local property taxes make up about 45% of their taxes, compared to 29% in direct state business taxes.
We cannot forget that the largest piece of the local tax bill is the school budget, and under local control each town decides how to prioritize its kids’ education. For me, that’s a primary role of local government, and the choices a town makes set a course for the future. Enrollment statewide has fallen about 22% in 20 years, from more than 205,000 students to about 160,000. But schools carry large fixed costs, like buildings to heat and maintain and staff to pay, that don’t shrink just because fewer kids show up in each grade.
Enter tax caps. On Nov. 3, voters statewide will decide whether to cap the school district’s share of local property taxes. It’s worth understanding what the cap actually does. It doesn’t set a maximum tax rate or freeze the school budget. It limits how much the school tax levy can grow each year: by inflation, plus the value of new taxable property added to the town. It takes 60% to pass, lasts two years, and would apply starting with the 2027-28 school year, which means the FY28 budgets being built right now could be the first ones affected.
That distinction matters. Because the cap limits dollars raised rather than the rate, a town that adds new homes or businesses gets room to grow its levy BUT/AND can hold its rate steady for existing taxpayers. The flip side is that a district losing state aid or facing a big cost jump feels the cap much more sharply. Construction bonds, federal grants and donations sit outside it entirely.
Whether or not the cap passes in your town, the arithmetic points in the same direction. Growth spreads that fixed cost base across more taxpayers. Schools with room to spare can likely be filled at low marginal cost. If a town or a school district hasn’t been considering how it can grow, now would be the moment. Yes, that takes time and investment, but even a smaller budget can focus on growth over time.
Growth does not have to mean sprawl.
We need to look at zoning, how we site and build housing, how we attract mission-specific investment, improving quality of life, investing in water and sewer projects, and leveraging the huge investments the state has already made in broadband infrastructure.
We are very understandably proud of our local-control tradition in New Hampshire. That means local values and decisions shape the future. But it also means that no one is going to do it for you. Now is the time for some good old Yankee ingenuity and to put that local control to use with innovation and long-horizon planning.
Taylor Caswell has led economic policy agencies on the state and federal level for decades, most recently serving as New Hampshire’s commissioner of business and economic affairs. You can reach him at linkedin.com/in/taylorcaswell.
It’s October and as the leaves fall, town budget committees, school boards and select-boards are beginning the process that will culminate in Town Meeting as snow starts to melt in March. The famous quote is that “all politics is local,” but in New Hampshire so are budgets.
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