Liberals and Conservatives Join Together to Cap Taxes
Charlie Arlinghaus
February 29, 2012
As originally publish in the New Hampshire Union Leader
As town meeting season approaches and local budgets begin to worry us all, we can find inspiration in the oddest of places. In this particular case, fiscal conservatives across New Hampshire should look to and emulate the liberal lion of New York, Andrew Cuomo.
As governor of New York, Cuomo adopted the most significant property tax cap of recent years. Fortunately for us, the New Hampshire legislature has made it easy for any and all towns of New Hampshire to follow suit. Under legislation passed last year, any town in New Hampshire may adopt a legal limit to the annual growth in property taxes.
Cuomo was elected governor in 2010 as a mainstream liberal but with a difference. In 2010, New York was an economic basket case that made New Hampshire look almost fiscally responsible by comparison. Well, not really but they were definitely in even worse shape.
Cuomo got elected saying raising taxes was not an option. But he went one step further and decided to go after the most annoying of all taxes, the local property tax. The liberal governor pushed through a tax cap long championed by a conservative state think tank.
The Cuomo cap was modeled after the successful prop 2 ½ in Massachusetts. It limits growth in property taxes to the rate of inflation or 2%, whichever is lower. Both houses of the legislature signed on and New York now has a property tax cap for every town, village, district, and other local government (10,500 different government entities).
In New Hampshire the notion of tax cap is not new but they have been under-utilized until recently. The city of Franklin adopted the first tax and spending cap in 1989. For a time, they were something of a lone wolf in New Hampshire but over the intervening twenty years communities that make up 24% of the state’s population have adopted spending caps.
Until last year, caps were limited to cities and the few towns that have a town charter. To make matters worse, lawsuits and uncertain statutory language put the status of some tax caps into question. In 2011, all that changed.
The current legislature passed language making it clear to the courts that it was granting the authority for towns to pass tax caps. In doing so, it extended that ability to any and all towns in the state. Wherever you sit reading this, your town now has the authority to adopt a tax cap limiting the growth in property taxes to the rate of inflation.
A local tax cap is not a radical change but rather a modest restraint. It sets rules for government spending. Opponents complain that it will be harder for government to “spend the money it needs.” But that seems to look at government exactly in reverse. Should government focus on spending ever increasing amounts of money or on limiting the amount of money we take from people? Governor Bill Weld of Massachusetts expressed it succinctly twenty years ago: “We’re raiding the citizen’s paycheck to pay for all this stuff – we’ve got a moral obligation to take as little as possible.”
Some government needs do increase more in some years but a cap makes clear that new priorities demand an adjustment of old priorities. Local government can’t be a one-way ratchet where every program always gets more and none are adjusted downward. A tax cap makes clear that there are limits and boundaries to government.
In unusual times, the spending limit can be exceeded but only by a supermajority vote. This is a principle we already require towns to use to approve borrowed money.
There are two approaches to getting property taxes under control. The wrong approach is raising taxes to cut taxes. The last two states to adopt an income tax, Connecticut and New Jersey, both did so expressly to lower property taxes. It didn’t work. They are two of the three states with higher per capita property taxes than New Hampshire.
Governor Cuomo instead adopted the Prop 2 ½ model. When Massachusetts adopted Prop 2 ½ it had the highest property taxes in the country. Over thirty years, they declined to 32nd. Citizens in every New Hampshire town now have the authority to follow those footsteps.
I don’t understand your logic in the statement “But that seems to look at government exactly in reverse. Should government focus on spending ever increasing amounts of money or on limiting the amount of money we take from people?” How is wanting to give our elected officials flexibility to respond to shifting priorities mean that they are necessarily forced to spend more and more? That seems a non sequitur to me. And in response I would say that government should focus on neither spending more nor limiting spending. Local government should focus on defending the priorities of the communities they serve. I am currently watching in dispair as the Dover city council refuses to hear the citizens say they want a commitment to education. The only thing they see is Tax Cap. Having lived in a few states that actually have high taxes (MN, MA, PA), I am frequently perplexed and annoyed by the constant whining about high taxes in New Hampshire. We have low total taxes. Period. No amount of complaining is going to make that fact less true. I have the pay stubs, property tax bills, and sales-tax free property to prove we are fairing well when it comes to taxes. New Hampshire has chosen to shun broad-based taxes, and then we complain when our choice comes back to bite us. Infuriating.