Fear of kids’ impact on tax rates shortsighted
Barriers to limit housing is an economic boomerang
Should New Hampshire’s property owners and town officials concerned about rising education property taxes live in fear of school-age children moving into their community? Is a dwindling school-age population a good thing for a town’s taxpayers? Should towns approve housing that is only designed mainly for singles and seniors in order to keep kids from moving in?
Clearly, many policymakers in New Hampshire have concluded that the answer is yes to all of the above. The facts, however, don’t back up that conclusion, and towns might be inadvertently raising their community’s property taxes as a result.
That was the conclusion in a recent report by UNH Economics Professor Emeritus Richard England of the Paul College of Business and Economics, who reviewed each of New Hampshire’s 234 municipalities in order to examine how changing student populations have impacted education property taxes in each town. The report found that there is little correlation between student population growth and a town’s education tax rate.
The fear that housing families requires a higher property tax rate to pay for schools is common throughout New Hampshire’s select board and planning board meetings.
In Concord, the redevelopment of the former Department of Employment Security site on Main Street was approved to allow “singles, childless young couples and empty-nesters.” According to a city official, “The project will have negligible impacts on student enrollment.”
And in Pembroke, the town administrator summed up opposition to a housing project by saying, “They say there will be a negative impact, more kids in school.”
But do kids really produce a negative fiscal impact on a town? Professor England’s data simply does not back up that concern.
From 2007 to 2017, Concord’s student population dropped 11% while its local education tax rate jumped $4.65 per thousand of equalized value. In sharp contrast, Dover saw a 16% increase in students during the same period while their tax rate increased by only $2.38 — 40% less then Concord’s tax increase, even though Dover’s student population increased.
Now consider that in 2017, Concord approved just 34 new housing units while Dover approved 169. The following year, Dover’s education tax rate went down while Concord’s went up.
In fact, of the 11 school districts with over 2,000 students, only Dover and Manchester experienced enrollment growth between 2007 and 2017 — and the Queen City’s growth was quite modest, at less than 1%. All 11 of those larger districts experienced increases to their education tax rates, but those with the greatest drop in student population (Concord, Derry, Salem and Merrimack) also saw some of the largest increases in their education tax rates.
For instance, Salem’s student population dropped by 20%, but that town saw the largest tax increase of any of these districts.
It isn’t just large school districts. From 2007 to 2017, only 29 of 234 municipalities saw their student populations increase — and of those 29, most of the increase was quite modest.
Hopkinton’s student population increased about 2% over that 10-year period but saw a 50% increase in its education tax rate. In contrast, Epping saw a more robust 7% student population increase and only a 10% rise in the education tax rate.
But what about other Merrimack County towns that saw a decrease in student population? Did their taxes go down? No. Boscawen’s student population dropped 5%, but its tax rate increased 41%. Epsom, Bow, Henniker and Northfield all saw tax increases as student populations declined.
Attempts to control tax rates by placing barriers to housing for families is a shortsighted policy that is just as likely to increase costs on residents. Economics is never as simple as some town planning boards would like it to be. Attempts to keep kids out of a community tends to keep working-age adults out of town as well. And that makes it harder to attract commercial development and diversify the tax base.
Housing is a local issue, but it has to be a state concern. If one town prevents new housing, it places more pressure on surrounding communities to meet the demand. Let’s stop being frightened by students and start working towards real statewide solutions to alleviate the housing crunch.
For the complete study by Professor England, visit nhar.org/kids.
Dan O’Halloran is 2019 president of the New Hampshire Association of Realtors.