Massachusetts’ millionaires tax makes it harder for the New England Patriots to recruit top players, former Patriots coach Bill Belichick said on Monday.

Asked about the millionaires tax on The Pat McAfee show, Belichick said, “That’s Taxachusetts. They take more from you.”

Because the NFL’s high pay makes most players millionaires these days, the tax implications of playing in Massachusetts are factored into player contract talks, the Patriots legend said.

“Virtually every player, even the practice squad, even the minimum players are pretty close to $1 million,” he said. “Once you hit the $1 million threshold, you pay more state tax in Massachusetts. Just another thing you’ve got to contend with in negotiations up there. It’s not like Tennessee or Florida or Nevada. Some of these teams have no state income tax. You get hit pretty hard on that with the agents.”

How many people can name any of the handful of states that have no income tax? Belichick quickly rattled off the names of three without even thinking about it.

If NFL players, coaches and agents think enough about high taxes to know which states have no income tax, what about other high earners?

For the second year in a row, the Massachusetts Society of Certified Public Accountants has issued a report warning that the millionaires tax is driving high-income professionals out of the state.

“The survey results indicate a concerning trend: a significant number of high-income individuals and businesses are considering or have already relocated out of Massachusetts,” according to the report. “This outmigration coincides with the surge in the number of taxpayers impacted by the surtax.”

More specifically:

“Every individual surveyed said that overall tax policy in the Commonwealth was either the primary reason clients are moving or one of the reasons that clients are considering moving. 55% of those surveyed earlier this year indicated that tax policy was the primary reason for relocating. Nearly everyone surveyed stated that the millionaires tax specifically factored into their client’s decision to relocate, with 64% stating that the tax was one of the reasons that their client is considering moving their domicile and 34% indicating that the tax was the primary reason for relocating.

‘Two-thirds of those surveyed reported that at least one of their clients has already established their domicile away from Massachusetts within the last 12 months. Many high-income residents are seriously considering changing their domicile, with 90% of respondents indicating that their high-income clients are considering moving from Massachusetts in the next year. This has increased by 8% in just one calendar year, from 82% of individuals surveyed in 2023.”

The top states Massachusetts millionaires say they’re eyeing? New Hampshire, Florida and Texas. (Two of the three have NFL teams, by the way. All three have no income tax.)

“Fifty-three percent of accounting professionals say that their clients are considering moving across the border to New Hampshire, suggesting that the tax burden imposed by Massachusetts plays an important part in the decision to relocate — and refuting the claims that individuals are just relocating due to a desire for sunnier weather and more coastline,” according to the CPAs’ report.

High taxes don’t send only millionaires packing. For years, the Tax Foundation has documented the moving habits of Americans and found that there’s a consistent trend of people moving from high-tax to lower-tax states. This year’s report showed that average Americans continue to flee high-tax states for lower-tax ones.

“The U.S. population grew 0.49 percent between July 2022 and July 2023, an increase from the previous year’s 0.37 percent. While international migration contributed to population growth at the national level, interstate migration was the key driver of net population changes at the state level. The U.S. Census Bureau’s most recent interstate migration estimates show that New York lost the greatest share of its population (1.1 percent) to other states between July 2022 and July 2023. Not far behind was California, which lost 0.9 percent of its residents, followed by Hawaii (0.8 percent), Alaska (also 0.8 percent), and Illinois (0.7 percent). At the other end of the spectrum, South Carolina saw the greatest population growth from net domestic inbound migration (1.6 percent), followed by Delaware(1.0 percent) and North Carolina, Tennessee, and Florida (all 0.9 percent).

“This population shift paints a clear picture: Americans are leaving high-tax, high-cost-of-living states in favor of lower-tax, lower-cost alternatives. Of the 32 states whose overall state and local tax burdens per capita were below the national average in 2022, 24 experienced net inbound migration in FY 2023. Meanwhile, of the 18 states and D.C. with tax burdens per capita at or above the national average, 14 of those jurisdictions experienced net outbound migration.

“Though only one component of overall tax burdens, the individual income tax is particularly illustrative here. In the top third of states for population growth attributable to domestic migration, the average combined top marginal state income tax rate is about 3.8 percent. In the bottom third (including D.C.), it’s 3.5 percentage points higher, at about 7.3 percent.”

Supporters of Massachusetts’ millionaires tax boast that it brought in far more revenue than predicted. This means that it’s a net gain for the state, they say. Given that 53% of Massachusetts accounting professionals said their wealthiest clients are considering moving to New Hampshire for its low taxes, it would be to New Hampshire’s short-term advantage for Bay State politicians to continue thinking that this punitive 9% income tax is good for their state. When wealthy people move here to escape high taxes, they tend to vote to keep New Hampshire’s taxes low. They also invest in their new home state, give to its charities and otherwise participate in its economic and civic life.

But in the long run, this misguided tax will hurt New Hampshire too if it slows down the Massachusetts economy. We do better when our neighbors do better. Ultimately, all of New England would benefit were Massachusetts (as well as all of our other high-tax neighbors) to pursue a competitive rather than a punitive tax policy.

 

 

 

 

Steeplegate Mall in Concord is coming down. The city granted approval this month for the building’s demolition. 

Yes, the owners of a mostly vacant large building that has become a magnet for crime (181 police calls in the last two years) needed the government’s approval to take it down and replace it with infrastructure people will actually use, like homes and a Costco.

The mall’s been largely empty since 2022. The redevelopment proposal (mixed use, retail and residential) has been moving along relatively quickly, as these things go. There haven’t been the usual disruptive community meetings with protests and long delays to get multiple variances just to replace an eyesore with something the city actually needs and people actually want.

That’s because the city rezoned the mall property years ago. It sits in a Gateway Performance District, which allows multiple uses and is designed to attract development. That’s made all the difference.

The city loosened land use restrictions to encourage economic development, and guess what happened? Economic development. 

Concord officials anticipated that the land where a huge suburban shopping mall sat might one day be put to a different, better use if market conditions changed. Because they had that foresight, a mammoth commercial structure no longer in demand will be converted relatively easily into buildings that are in very high demand.

A lot of the news stories about the mall in the past two years have focused on what Concord is losing. An outdated movie theater, a pickleball club, a community theater. An NHPR story mused about what the evictions from the mall would mean for Concord’s arts scene. 

It takes a stupefying lack of imagination to see a defunct shopping mall and lament what is lost rather than celebrate the possibilities of its transformation. 

Humans, left to their own devices, will build. They’ll create vibrant communities in which entrepreneurs devise ingenious ways of making their fellow citizens happy. Unless government forbids it. 

Governments forbid behaviors for one reason. People would otherwise do the forbidden things.

Hurting people and taking people’s stuff ought to be forbidden. But building a residence beside (or on top of) a store? Building a tiny house on a half-acre lot? Placing your home 46 feet instead of 50 feet away from the curb? These are not behaviors that harm others. 

Yet governments all across New Hampshire ban perfectly reasonable property uses like these. Why? Because some people prefer them. Without a government prohibition, people would build the kinds of mixed-use residential and commercial properties the market demands. And that just can’t be allowed, even in the “live free or die” state.  

Tuscan Village in Salem was once a horse track. When Tuscan Village was proposed, it was illegal. Salem had to change its regulations to make it legal for an entrepreneur to turn an abandoned dog track into a beautiful mixed-use residential and retail village.  

If New Hampshire wants to live up to its motto, it must repeal or relax many of the regulations that make it illegal for entrepreneurs to unleash their creativity. Local governments have to stop worrying so much about preserving the past and let entrepreneurs imagine the future. Preservation has its place. But innovation does too. And right now too many of our development rules are focused on preservation at the expense of innovation.

Speaking at an event in Portsmouth this month, economist Ali Wolf dropped a stunning statistic. Rents in the United States have risen by an average of 25% since the pandemic—but in New Hampshire they’ve risen by 45%.

Consider the news a follow-up to last July’s revelation that New Hampshire rents rose at double the rate of the prior year, even as rents fell nationwide.

New Hampshire, which is exceptionally hostile to new housing construction, is experiencing exceptionally high rent and home price growth. Go figure!

So, we’re fixing this problem by approving more and more residential units each year, right?

Right?

Well, according to U.S. Census data, the number of new building permits issued in New Hampshire in 2023 was below the number issued in 2022. And that number was down from 2021.

With demand for housing surging, the rate of new construction is slowing. 

This is not good. And it’s hurting the state’s economy and overall quality of life. But too many people can’t see this because the commercial side of the economy looks so healthy.

Last year, New Hampshire passed 100,000 corporate and LLC annual reports filed, setting a new record. And new business applications were up 10% in December of 2023 vs. December of 2022, according to the Small Business Administration.

New business creations are growing, which is a sign of a strong economy. But when only one side of the economy is healthy, it’s at risk from the unhealthy side.

In New Hampshire, there’s a disconnect between the way people think about business growth and the way they think about population growth. Some people (and many town officials) want one, but not the other.

To illustrate the point, consider small businesses that are very popular right now, such as coffee shops, craft breweries and neighborhood pubs. People love them because they create a sense of community. They’re a “third place,” a spot between work and home where people can socialize.

Coffee shops are more than just fun, though. They’re famous for being incubators of economic activity and hubs of information sharing. The London Stock Exchange was created in Jonathan’s Coffee House, located in Exchange Alley in the old City of London. The New York Stock Exchange also first met in Totine Coffee House on Wall Street.

People love coffee shops, which is why local governments are happy to approve new ones. Who protests the permitting of a new coffee house?

When towns approve coffee shops, they do a lot more than give people a cozy place to hang out. They might also be creating other new businesses.

A study published this week by the Bureau of Economic Research has found that the addition of a single Starbucks in a neighborhood can increase business startups. 

The researchers found that “compared to census tracts that were scheduled to receive a Starbucks but did not do so, tracts that received a Starbucks saw an increase in the number of startups of 5.0% to 11.8% (or 1.1 to 3.5 firms) per year, over the subsequent 7 years.”

Similarly, researchers studying the effects of pubs on social capital in Ireland found that local, rural pubs were important sources of economic activity as well as community cohesion. 

“Third places” like pubs and coffee shops facilitate both economic growth and social capital. People get excited when a new bar, restaurant or coffee shop opens in town because these businesses offer additional social opportunities.

But what happens when local governments approve lots of new bars, restaurants, coffee shops and other businesses, yet deny new housing?

What happens is you get more businesses competing for the same number of customers and employees. That’s what’s happening in New Hampshire.

In the Granite State, it’s much easier to start a business than it is to build a residence. So a lot of economic investment has been shifted away from residential construction and toward commercial and industrial development. As a result, we have a lot of businesses competing for too few employees. That’s created a labor shortage (or at least worsened a broader national labor shortage).

Governments in New Hampshire are approving new businesses, but restricting the supply of both customers and employees, which makes it hard for some of the new businesses to survive. It’s as if local planners are trying to build Hallmark movie sets–beautifully designed spaces that aren’t spoiled by the presence of regular people.

Desperate for workers, employers such as Valley Regional Hospital, the City of Lebanon and Service Credit Union are building housing for their own employees. But most small businesses can’t do that. Unable to find employees, or enough customers, they close. We’ve seen this happen with numerous bars, coffee shops and restaurants in places like downtown Manchester and Portsmouth in the last few years.

The residential shortage is already slowing the state’s overall economic growth, as highlighted by these small business closures. This imbalance between commercial growth and residential growth cannot continue. At some point, the housing supply will have to increase dramatically, or overall economic growth will have to slow further, if not contract. 

In the last several decades, local governments have happily approved new commercial developments while restricting new residential developments, as if businesses (and the economy) could grow indefinitely without any increase in customers or employees. 

Most everyone agrees that building more businesses is good for the economy and the community. They create economic opportunities and improve the quality of life. It follows that building the customer and employee base for all those new businesses is also good. Approving new businesses while deliberately depriving them of employees and customers is not a strategy for long-term success. Communities are strengthened by coffee shops that are filled with people, not by pretty but empty ones.

Congratulations to the Boston Celtics, the 2024 NBA champions! Sixteen years to the date of their last championship, the Celtics became the winningest basketball franchise in history. Now the players can spend the offseason celebrating—and paying their taxes.

Aside from the players and Celtics staff, probably no one is celebrating the title more than the Massachusetts state government, which is taking a large cut of the players’ bonuses.

Having won the franchise’s record-breaking 18th championship, each Celtics player will earn a reported $804,000 in bonuses. Fourteen Celtics players already earned more than $1 million in salary this year. With the bonus, at least two others will break the $1 million threshold and therefore be subject to Massachusetts’ new millionaires tax.

Massachusetts’ income tax is a flat 5%. But for annual incomes of $1 million or more, the state takes an additional 4%. The $804,000 championship bonus, like the salary of any player earning at least $1 million, will be subject to this 9% income tax rate rather than the 5% rate that applies to everyone with incomes of less than $1 million.

At a total tax hit of 9%, the 16 Celtics players earning at least $1 million this past season will have to forfeit $72,360 each to the Commonwealth in taxes on their bonus alone.

Without the 4% millionaires tax, each Celtics player would pay the regular state income tax rate of 5% on his championship bonus, or $40,200.

The millionaires tax thus confiscates an additional $32,160 from each qualifying player’s bonus. At 16 qualifying players, that comes to a $514,560 bonus for the state.

The difference is that the players earned their bonuses.

You might think that millionaire NBA players aren’t sympathetic figures, so who cares? But their case illustrates how the millionaires tax works to confiscate earned wealth while offering no additional services to those whose wealth was taken.

Some Celtics players earn tens of millions of dollars a year, but most don’t. The lowest-paid players might enjoy an income of more than $1 million for just this year, or for a few years. They’ll have to continue making a living outside the NBA for many decades. Being able to invest an additional $32,160 this year could make a big difference in their lives.

The same considerations apply to regular Massachusetts residents who might experience one or two exceptionally good years financially. The state confiscates an additional 4% of their income too.

New Hampshire doesn’t have an NBA team, of course, so we can’t lure Celtics players away. They’ll pay Massachusetts taxes for the work they do in Boston, even if they live here. But most other Bay Staters, particularly entrepreneurs and investors, can relocate for work more easily than professional athletes can. And many already have, including Celtics co-owner Steve Pagliuca, who warned after he relocated to Florida (not because of the tax), that the high rate posed a threat to the state’s long-term economic health.

“If we become ‘Taxachusetts’ again…the main effect will be not about a basketball player, it will be about business formation,” Pagliuca told Boston Business Journal last year. “It’s going to make it tougher to attract businesses in Massachusetts.”

The Celtics players’ tax hit illustrates the tangible difference between living and working in a low-tax, low-spending state versus one with high taxes, a billion-dollar budget deficit and not much to show for it.

WBUR on Monday labeled the millionaires tax a success because its $1.8 million in new revenue was dedicated in part to education, transportation and “free public school meals for every child in the state.”

But simply generating more revenue for government to spend doesn’t equal success. The MBTA is a money pit, and providing school meals at no charge for middle- and upper-class families who can feed their own kids is a curious use of public tax dollars for a state with a poverty rate more than three percentage points higher than New Hampshire’s.

Massachusetts taxpayers don’t get a better return for all the state’s spending. They just get more spending and higher tax rates.

In terms of taxpayer return on investment (ROI), New Hampshire taxpayers are the champions. Granite Staters receive the biggest bang for their buck, finishing first in WalletHub’s 2024 ROI rankings. And the dichotomy with our neighbor to the south couldn’t be clearer. Massachusetts came in at a distant 41st in taxpayer ROI.

Too often, people assume that high taxes equal high state revenues and therefore better public services. But higher spending doesn’t equal better services. As New Hampshire’s example shows, constraints on spending force policymakers to spend more frugally, which keeps the tax burden low and government more efficient.

Though the millionaires tax has brought in additional revenue for Massachusetts, it has not caused wiser or more careful spending. Just the opposite is true. And the long-term economic impact remains unseen. Given the well-reported exodus of wealthy taxpayers, Pagliuca’s warning still holds.

Unlike NBA players, higher-income Americans can live and work just about anywhere thanks in part to remote work options. Yet even NBA players can be motivated by lower state tax rates. Former Celtics star Grant Williams said last year that he accepted a trade to Dallas partly because of the Massachusetts millionaires tax.

If the tax can drive NBA players out of state, imagine its effect on people who aspire to become millionaires and who have the ability to live and work anywhere they want, not just in a city with an NBA team.

As Celtics fans celebrate the team’s 18th championship, the Commonwealth of Massachusetts is celebrating an additional half-million dollars in revenue. But that revenue comes from punishing most of the players by confiscating an additional 4% of their winnings. A state that treats its own sports heroes that way signals that it’s not a welcoming place for anyone who aspires to create wealth.

Bay Staters have already gotten that message. Massachusetts is among 24 states that experienced a net loss of income tax filers from 2020–2021. It ranked 45th in net migration, while New Hampshire ranked 11th.

The millionaires tax might be generating a lot of revenue now. But Celtics fans should hope that more players don’t get wise to the tax implications that come from working in Boston versus Dallas or Miami.

Kay is a 63-year-old single mom in Manchester who would love to be able to retire in the next five years. But as things stand, she doesn’t think she’ll be able to. Her adopted son needs the kind of high school environment they haven’t found among area public schools. And she needs to find the funds to pay for what he needs.

Kay and her late husband adopted their son from Kay’s husband’s niece. The niece, who struggled with addiction, had three children adopted out. Two were adopted through child protective services and eventually wound up with a grandparent, Kay said. Kay and her husband adopted their son directly, so there were no financial stipends.

In 2019, Kay’s husband died unexpectedly, and she decided to move back East from the Southwest to be closer to family for support, she said. Kay, her son, and two daughters call Manchester home.

Under the income cap legislators set for the Education Freedom Account (EFA) program, Kay’s single-mom family is classified as a “family of four,” which is presumed to have two parents and two children. That classification has put her son’s educational needs just out of reach.

Kay is a sales professional with a good job. But sales work is not always steady work in a changing economy. After she was recruited to work for a New Hampshire company, things seemed to be settling down for the family, but six months after the relocation, and two weeks before Christmas, Kay was laid off, she said.
She joined a new company in April 2023, and three months later, due to market conditions and a company restructuring, she was again laid off.

For a single mom raising a teenage son and two older daughters that she’s put through college, the money, even when it’s steady, goes fast. Even today, she’s still catching up on finances from the layoffs, she said.

State law caps Education Freedom Account eligibility at 350% of the federal poverty level. For a family of four, that’s $109,200. Kay’s salary from her new job puts her $90 over the cap, she said.

On the state’s spreadsheet, Kay’s family of four looks like a family with two working adults and two children. The spreadsheet doesn’t know the difference between that typical family and a single mom with three children.

When Kay decided to move to Manchester for its perfect location between her work and the customers she serves in Boston, she didn’t realize the challenges in the local public schools, she said. Having lived in the Southwest for years, the cost of many local private schools was another surprise.

Unable to afford a private school for her son, Kay enrolled him in a public charter school in Manchester for 7th and 8th grade. But, given her son’s unique needs and background, she’s seeking a new environment with more resources that could be dedicated to him, she said.

“He has suffered a lot of loss, has ADHD, is in counseling and needs a positive environment with resources,” she said. “He’s a wonderful kid, but needs good examples in other students, leaders, academic support, and a school with athletics and activities.”

The charter school has done the best it can with the resources it has, and there are great people working there, Kay said, but it just isn’t the right place for her son.

In search of a different setting for her son for high school, a Catholic school in Manchester came highly recommended. On a tour, they met with several teachers, administrators, coaches, and even students.

“When we toured, he got in the car and said, ‘Mom, this is my school…everyone is so nice,’” Kay said.

Her son is very excited for robotics and sports. He’s motivated by the support he’d get to excel, she said. The school has academic coaches who will help him with studying, focus and time management, which Kay said was critical for him. The school has a guidance counselor who told her son, “I will be here for your four-year journey to set you up for success in college,” Kay said. She also thinks that the spiritual focus will be a positive influence given the things he is exposed to in a big city.

When she learned about the Education Freedom Account program, Kay thought it would be the answer to her son’s educational needs. But the income cap has kept them locked out. It sees her family as a two-parent, two-child family, not a single mom with three dependents who works in an industry where layoffs are a common risk.

“I get emotional about this because it upsets me that only your W2, not life circumstances, are taken into account when applying for financial aid with schools or education funds,” she said.

When one of her daughters is no longer a qualified dependent, Kay could apply for an EFA as a family of three. But she would again be over the 350% cap, which is currently $90,370 for a family of three.

With an income cap of 425% of the federal poverty level, though, Kay’s family would qualify both as a family of four (a $132,600 cap) and as a family of three (a $109,735 cap). The 425% cap is the limit set in the conference committee version of House Bill 1665.

Without a higher income cap for the EFA program, Kay said she’d take a second job to make the tuition work if she had to. Her daughter is prepared to switch to part-time at New Hampshire Technical Institute to cut the family’s costs, she said. They’d try to make things work, but it wouldn’t be easy.

She would sell her home and downsize, but high interest rates and lack of available homes on the market make that an unrealistic option.

For Kay’s family, the EFA income cap is keeping a perfect educational option just out of reach. A cap designed for traditional families has put a single mom in the position of getting a second job to pay for the education that’s right for her son.

In trying to limit EFA access to families in need, legislators have left out families in need who don’t fit the preconception of what a “family of four” or “family of three” looks like.

As other families will be doing this week, Kay said she and her son will be watching the EFA vote on Thursday with hope. If the income cap isn’t raised, she said she’ll become an activist to push for universal eligibility next year. The difference an EFA could make for families like hers is too important for her not to get involved, she said.

When the House passed House Bill 1400, the bill prevented municipalities from requiring more than one residential parking space per housing unit in their local zoning regulations.

Requiring 1.5 or two parking spaces per unit, as many zoning districts do, is often a prohibitive hurdle for housing developers and owners of multifamily properties to overcome, as every duplex, three-family, and four-family structure in the zone needs to have enough land set aside within its lot for as many as four, six, and eight parking spaces, respectively. As a result, many property owners and developers may determine the juice isn’t worth the squeeze and decide against building a multifamily structure that must accommodate all those spaces.

Originally, HB 1400 would have restored to property owners the authority to decide for themselves whether a unit needs more than one parking space on site. As amended by the Senate, however, the bill allows two parking spaces per unit, double the original bill’s limit.

But while the Senate was less ambitious in protecting Granite Staters’ property rights with respect to parking requirements, the upper body added a separate property protection, this one for victims of squatting.

The Senate’s version of HB 1400 first defines “tenant,” “subtenant,” “implied tenant,” and “non-rental owner” as each is most commonly understood. Then, the bill does away with what are commonly known as “squatter’s rights.”

“No person or legal entity, that is not a tenant, subtenant, or implied tenant, as defined in RSA 540-A:1, II, shall occupy residential real estate without permission of the owner, landlord, or their agent,” HB 1400 states. In other words, unless you have the express permission of the property owner through a written agreement or otherwise, then you do not have a right to live on their property.

And that includes being able to claim squatter’s rights.

As defined by Pacific Legal Foundation (PLF), “‘Squatting’ describes moving into a property without any legal claim or title to the property. Such a person is ‘squatting’—living on—someone else’s property without consent from the owner.”

Although the terms are often used interchangeably, squatting in the modern sense is not the same thing as what is traditionally called adverse possession. Under common law, adverse possession occurs when someone wants to lay claim to a property that appears to be abandoned, per PLF. To do so, the person would normally have to show clear possession of the property, start paying property taxes, and get approval from a court to be the new owner of the property.

This common-law understanding of adverse possession would not protect present-day squatting for the simple reason that the properties being occupied by trespassers are not abandoned, let alone the fact that squatters aren’t paying property taxes or going before judges.

The issue of squatting came to a head recently in the state of New York after a series of squatting incidents, including one in which the actual homeowner was put under arrest, led state lawmakers to strip squatters of any tenant protections.

Before these changes, unwelcome guests in New York City could claim squatter’s rights after occupying someone else’s property for 30 days, thereby making it very difficult for the owner to kick them out.

While nothing that extreme has been reported in New Hampshire, squatters can make a legal claim of adverse possession of a property provided they’ve occupied the premises for 20 consecutive years under current state law (RSA 508:2).

HB 1400 would effectively nullify any claim to squatter’s rights in the Granite State if the squatter doesn’t have the homeowner’s permission to live there.

Additionally, HB 1400 would provide enhanced processes for landlords, tenants and non-rental owners to seek relief for unauthorized occupancies on their property. Anyone who claims to be a subtenant or an implied tenant would bear the burden of proof for such a claim.

Laws upholding squatter’s rights—the rights of unwelcome guests to stake a claim on a property they’ve occupied for some amount of time without the owner’s permission—are antithetical to a respect for private property rights. And securing private property rights is paramount to a free society predicated on individual rights and liberties.

The right to private property necessarily includes the right to control who occupies that land. The Senate’s amendments to HB 1400 would make it clear that that power belongs to Granite State property owners.

The House did not concur with the Senate’s changes, so HB 1400 has been sent to a committee of conference to hammer out the differences between the two bodies.

Though a housing shortage amid rising demand continues to push prices up in most of the country, some cities in Florida and Texas are seeing housing prices fall. How? They’ve built a lot more housing, The Wall Street Journal reports.

In most of the U.S., the limited number of homes for sale is pushing prices back toward record highs. Sale prices for single-family existing homes rose in 93% of U.S. metro areas during the first quarter, according to the National Association of Realtors. The median single-family existing-home price grew 5% from a year ago to $389,400.

Yet the market is cooling and prices have started falling in some cities in Florida and Texas, where robust home-building activity in recent years has helped boost the number of homes for sale. The two states accounted for more than a quarter of all single-family residential building permits every year from 2019 to 2023, according to Census Bureau data.

In 10 Texas and Florida metro areas, the inventory of homes for sale in April exceeded typical prepandemic levels for this time of year, according to Realtor.com. In eight of those markets, pending sales in April fell from a year earlier.

In Florida and Texas, “we’re starting to get into a buyer’s market,” said Rick Palacios Jr., director of research at John Burns Research & Consulting.

Only five of the 50 biggest markets posted year-over-year price declines in March, according to data provider Intercontinental Exchange, and four of them were in Texas or Florida: Austin, Texas; North Port, Fla.; Cape Coral, Fla.; and San Antonio.

In Portsmouth and Manchester, where new rental construction has accelerated in recent years, bringing thousands of new units onto the market, prices remain stubbornly high. Some policymakers and observers have suggested that this disproves the idea that adding more supply will lower prices. It does not. New Hampshire’s supply remains tens of thousands of units short of demand. For prices to stabilize, supply will have to approach demand, which will take decades at the current pace of construction.

Stabilizing home prices by letting the market bring supply in line with demand cannot be done overnight. It’s a years-long process. But Florida and Texas show that it can be done.

Everybody loves wineries and craft breweries. Everyone except New Hampshire state statutes, that is. New Hampshire statutes show about as much affection for wineries and craft breweries as the English have for the French, or snooty wine drinkers have for rowdy beer drinkers. 

For example, say you own a winery or craft brewery in New Hampshire, but your location is not exactly on the beaten path. You’re not drawing a lot of tourists down your windy rural road. However, lawmakers have graciously allowed you to have a separate retail outlet, and you created one in a busy tourist area. 

Great for business! Unless people want to taste your product before buying it. 

State law says that breweries and wineries can have a single license for on-premises alcohol sales—at the manufacturing location. Want to sell open drinks at your retail location—where potential customers actually are? Sorry. 

You can sell closed-container drinks at your retail outlet, but not open-container drinks. Because,., safety. Or something. 

This has been a problem for Apollo Vineyards in Derry. Restricted to serving wine only at their vineyard, they’re losing potential sales that could come from being able to serve at a retail outlet in a more prominent location.

House Bill 1076 would sort-of fix that problem by allowing wineries and breweries to choose whether to use their one on-premises license at the manufacturing facility or at the retail outlet.

Shouldn’t they be able to sell at both places, you might ask. 

What do you think this is, the 21st century?

So what about brew pubs, which are a separate category in state law? Let’s say you own several restaurants in New Hampshire but have decided to also open a single brew pub because, well, brew pubs are cool and hip and trendy and you have a great idea for one. 

Trivia question: Is it legal for you to do that?

Don’t be ridiculous. This is New Hampshire. Of course it isn’t legal.

State law prevents a beer manufacturer from also owning multiple on-premises alcohol licenses (such as for a restaurant or bar).

It turns out that this particular law has caused a huge problem for the owners of Lost Cowboy Brewing Co., which is under construction in Nashua. It’s being opened by Michael Timothy’s Group, which owns Buckley’s Great Steaks in Merrimack and Surf in Nashua and Portsmouth, among other restaurants. 

Technically, their new venture is not a restaurant, but a beer manufacturer. So, technically, they can’t own it and be licensed to sell alcohol at their other restaurants. 

House Bill 1380 would fix that by allowing a company that owns a beer manufacturing license to also hold licenses that allow the sale of alcoholic beverages for consumption on-or off-site. And, as amended, it would allow the owner to sell the beer from his brewery at one of his restaurants. Just one. 

Now, you might be wondering what possible public health or safety justification there could be for prohibiting a company from distributing beer it makes at a local brew pub to more than one restaurant it owns elsewhere in the state. 

Well, welcome to New Hampshire alcohol laws. The ghosts of Prohibition haunt these statutes. Each tiny step into modernity, such as the bills listed above, exorcises one of those pesky Prohibition ghosts, even though others usually work their way into the bills to pull them back a bit toward the 1930s. It’s a seemingly never-ending struggle between the future and the past.

There’s a growing consensus that New Hampshire’s overly restrictive land-use regulations need to be addressed to reverse the state’s housing shortage. Whether changes should be made at the state or local level, though, remains a major point of contention.

State-level solutions generate reflexive opposition from people who view local land-use regulation as an entirely local issue. Yet some of this opposition, maybe most, is based on an important misconception.

Opponents of state action commonly assert that bills to address the housing shortage are an effort by legislators to take for themselves powers that belong at the local level. This is mistaken. 

Decisions about land use will continue to be made locally. Under many of the bills working their way through the Legislature this session, those decisions will be made by individuals at the local level rather than by local governments—boards and bureaucrats—or voters.

Changes in Manchester

Realizing the desperate need for housing, some local governments are changing their ordinances to allow more development. In Manchester, for example, several proposed amendments to the city’s zoning ordinance would represent small but important steps to relax land-use regulations in the Queen City. 

The amendments would permit four-unit housing to be built on lots currently zoned for three-unit housing, drop the required number of parking spaces for multifamily housing from 1.5 spaces per unit to one space per unit, and no longer require property owners to petition the city’s planning board for a conditional use permit before building accessory dwelling units (ADUs).

These steps are the beginning of a bigger set of reforms being studied in the city. Not every municipality is moving in this direction, though, prompting state lawmakers to intervene in limited but meaningful ways. 

But these interventions don’t amount to the creation of statewide zoning. They just return some decision-making authority to property owners, from whom it was taken in the first place.

Legislation to restore limited rights to property owners

Consider the following bills: allowing one ADU, attached or detached, by right and allowing up to two per lot under certain conditions (HB 1291), forbidding municipalities from banning manufactured housing (HB 1361), allowing the expansion of a single-family residence within an urban residential zone to no more than two residential units without review if it meets certain requirements (HB 1399), and preventing local zoning regulations from requiring more than one residential parking space per unit (HB 1400).

Yes, these would be state laws, albeit modest ones. No, they would not amount to a uniform state zoning code. They would restore some limited rights to property owners while retaining local authority to regulate in each of these areas.

Currently, if a property owner wants to add a second ADU or convert a single-family home into a duplex within an urban residential zoning district—even if the developments wouldn’t encroach on neighboring property, disturb anyone, or change the outward appearance of the property whatsoever—local ordinances can prohibit them from doing so. 

Contrary to popular belief, local governments do not hold that power by right. The power to regulate private property is, under New Hampshire’s Constitution, granted to local governments by the state. 

With each of the bills above, lawmakers are not proposing to impose a single uniform ordinance statewide. They are proposing to reduce the regulation of property in these very limited areas altogether, thus restoring a small measure of rights originally held by property owners. 

Manufactured housing—prefabricated homes that are transported to sites—is an easy, quick, and often inexpensive way to put more people into homes. Under HB 1361, municipalities can still regulate manufactured housing but not to the extent that it is effectively banned. 

Parking space requirements are a pernicious roadblock to creating more multifamily housing. In zoning districts that require 1.5 parking spaces per housing unit, that means every duplex, three-family, and four-family building needs enough land set aside for three, 4.5, and six spaces, respectively. Where municipalities require two parking spaces per housing unit, that means every duplex, three-family, and four-family building must have four, six, and eight spaces, respectively. 

Often these stringent requirements keep a lot of multifamily housing from being created, either through development or single-family expansions. By preventing local governments from requiring more than one space per residential unit, HB 1400 would restore to property owners the authority to decide whether a unit needs more than one parking space on site. 

Because these kinds of state proposals would supersede local ordinances, they rub some the wrong way. Local control has long been a very important principle in New Hampshire.

The state’s historical adherence to local control, however, shouldn’t justify unlimited local control. Local governments are still governments, and as a result, their ordinances can be fundamentally oppressive.  

At the same time, we shouldn’t always assume that the state government overruling some local ordinances automatically represents state overreach. In the case of these four bills, such actions seek to pull back the centralized planning powers of local governments and protect Granite Staters’ property rights. 

Isn’t that what governments are instituted to do, to secure our rights? If so, then private property rights are chief among them.

When you consider that these state laws would be superseding some of the most overly restrictive local regulations that limit property rights throughout the state, and that state lawmakers have only resorted to these very modest steps because of inaction on the part of municipalities, then such proposals look less like top-down state government control and more like state government doing the bare minimum to protect Granite Staters’ property rights and address the state’s housing shortage.



While crime stories, campus protests and political drama captured much of the media attention this week, a bill with tremendous potential consequences for taxpayers quietly passed the House on Thursday.

Senate Bill 383, which has passed both chambers in slightly different versions, would strengthen local tax caps and allow school district caps to be tied to enrollment. 

Under current state law, town and school district tax caps can apply to estimated taxes “as shown on the budget.” That excludes off-budget warrant articles that might also have a tax impact. SB 383 would cover the budget and “all other warrant articles with a tax impact.”

RSA 32:5-b II mandates that a town or district “tax cap shall be either a fixed dollar amount or a fixed percentage applied to the amount of local taxes raised by the town or district for the prior fiscal year…”

SB 383 authorizes voters to use “a multiplication factor” that would cap tax increases at the inflation rate times population growth. That’s been the general idea behind tax caps from the start. The bill lets towns use this more precise formula rather than a fixed amount or rate. Those fixed numbers were always basically a proxy for the multiplier anyway.

Perhaps most consequentially, SB 383 creates a new formula for school district tax caps. The school district formula would be a combination of inflation times enrollment, rather than municipal population growth. That’s an important change. School budgets can be the largest portion of local budgets and the largest driver of local spending and tax increases.

Our 2023 analysis of district school spending in New Hampshire found that there generally wasn’t a strong correlation between school enrollments and local school spending. New Hampshire public school districts lost 29,946 students from 2001-2019, but increased spending by an inflation-adjusted $937 million. School district budgets tend to grow faster than the inflation rate, and faster than all other areas of government spending, even when enrollment is falling, we found. 

In Manchester, for example, school district enrollment fell by 13% from 1995-2018. During those same years, city school district spending grew by a remarkable 68%. 

This year, the Manchester school district’s proposed budget was 7.9% higher than the 2020-21 school budgetafter adjusting for inflation—though enrollment was 4.3% lower than in the 2020-21 school year.

Now, Manchester has a tax cap, and that cap applies to the school district’s proposed budget. Neither the city nor the school district is allowed to propose a budget that exceeds the average inflation rate of the prior three years. 

(City tax caps are regulated in a separate section of state law (RSA 49) than are town tax caps. Manchester’s cap, like Nashua’s, is tied to the inflation rate.)

Though SB 383 doesn’t apply to cities, and thus wouldn’t affect Manchester’s school district tax cap, Manchester’s experience shows how the formula in the bill would put a further constraint on spending.

Manchester’s school district taxes have been restrained by this cap for more than a decade, but spending still grew rapidly despite falling enrollment. The formula Manchester uses does not take into account district enrollment. If it had, the cap would’ve been lower, and therefore might have prompted some efficiencies in district budgeting.

The city school district accounts for about 52% of Manchester’s budget, which shows how consequential the new caps allowed in SB 383 could be. 

The formulas allowed in SB 383 are more flexible than the fixed number or rate caps towns and districts can adopt now. That could weaken some of the opposition to tax caps, leading to their more widespread adoption. At the same time, the bill lets voters strengthen caps by covering warrant articles that have tax impacts and by tying school district tax changes to enrollment. On the whole, the bill would turn tax caps into a more powerful and more appealing tool for taxpayers.