Guest contribution by Arthur Green
Some on social media are searching for reasons apart from the obvious for the explosive tax increase which the residents of the district face this year. One possible cause suggested recently is that towns “pay” for students based on 2-year old ADM (Average Daily Membership enrollment) whereas state aid only “pays back” the towns based on 1-year old ADM (reflecting fewer students due to declining enrollment).
Let’s take a fact check on this.
The tax apportionment to each town was provided by the district at deliberative on this handout. The total apportionment is $50,502,000 (proposed budget excluding warrant articles). That is the sum of the line “2 Operating Budget” for each town. This is what needs to be collected from the property taxpayers (after deducting revenues and state aid from the total operating budget).
The corresponding amount last year was $46,674,107.
So the district is calling on the property tax base for $3.8 million more this year versus last year.
But the budget is up only $1 million. How can the tax impact be almost 4 times as much as the budget increase?
- Top factor is that in the 2014/15 year we had a $3.5 million surplus offsetting the tax bill last November (2015/16 year). But for this year, the budgeted surplus is $1,650,000; this means a revenue reduction of $1.850,000 for 2016/17.
- Revenue line “1990 Other Local Revenue” is $817,550 in the current 15/16 year, dropping to $350,407 in the budget year – a $467,000 reduction. This is because the district no longer expects windfall rebates from the LGC HealthTrust.
- State Adequacy Aid (line “3111 Education Grant”) will decrease by $420,000. Two factors are driving this. First, the state provides adequacy aid based on enrollment, and enrollment is falling. This causes about $320,000 of the reduction. Second, Sandown and Danville receive substantial “Stabilization” grants which are being phased out over 25 years – causing about $100,000 of the reduction.
So to summarize:
- $1,000,000 budget increase
- $1,850,000 reduction in planned surplus
- $467,000 elimination of windfall LGC HealthTrust rebate
- $420,000 reduction in state aid
- … adds up to the $3.8 million tax increase.
What about the towns getting charged for students based on (higher) 2-year old enrollments?
This has nothing to do with how much money the district demands from the taxpayers – it only affects the allocation amongst the towns. Let’s see the impact, using 2014/15 figures which are in the 2015 annual report (pages 39-14):
The tax allocation for the 2015/16 year was done using 2014 ADM – as per the 2015 Annual Report. If the allocation had used the 2015 ADM, Atkinson and Sandown would have paid more, Danville and Plaistow would have paid less.
But the total amount paid by the district taxpayers would have been identical. For example, Danville faces an increase of 7.2%, or $567,000. So a swing on the scale of $271,000 would definitely be important to the town. But any relief for Danville would necessarily be at the expense of the other 3 towns. Please note that this analysis applies to last year, when taxes were more or less flat or decreased due to the large surplus. The numbers which would apply to the new budget year will likely be different, with different “winners” and “losers” – but the necessary ADM figures will not be available until September.
What we can see from the tax impacts provided at deliberative is that there will be large tax increases in all four towns. These increases are caused by the district spending more to educate fewer students. Fair sharing of the impact among the four towns is important, but has nothing to do with causing the tax increase.
[Edited by DG]