Shrinking state aid, tax cap challenges Laconia, towns at budget time


LACONIA — While the reduction of state aid and the shifting of state costs to cities and towns puts upward pressure on local property taxes throughout the state, it poses particular challenges for municipalities like Laconia, where the budget process is subject to the strictures of the tax cap.

This year, a cut of $455,250 in state aid for education contributed to requiring significant reductions in the School District budget to fit it within the tax cap. This week, the New Hampshire Municipal Association released a report suggesting that the city could find itself under similar pressures.

The property tax cap limits the annual increase in total amount raised by property taxes to the rate of inflation, measured by the Consumer Price Index — Urban, for the prior calendar year, plus an additional amount representing the value of new construction.The total amount raised by property taxes represents the difference between budgeted appropriations and revenue from sources other than property taxes, which includes charges and fees collected by the city and transfers of funds from the state.

Therefore, decreases in other revenues other than property taxes can only be offset by reducing expenditures or raising property taxes. Of course, any increase in property taxes is bound by the limits of the tax cap, which can be overridden by the two-thirds majority of the City Council.

The report finds that since 2009 state aid to municipalities, measured in nominal dollars, has fallen from $160 million to less than $120 million, a decrease of 25 percent.The suspension of revenue sharing, a distribution to municipalities begun in 1970 with the introduction of the Business Profits Tax to compensate cities and towns for the repeal of local taxes on commercial activity, represents the largest share of the reduction.

At the same time, the report indicates the Legislature has taken other measures that have stalled the growth of revenues intended for distribution to cities and towns, chiefly the sharing of proceeds from the Meals and Rooms Tax, but including highway block grants, bridge aid and grants for wastewater and drinking water facilities as well as landfill closures. The suspension of revenue sharing and reduction in the Meals and Rooms Tax distribution have had the greatest impact on the city operating budget.

During the same period, the state reduced and then eliminated its contribution to the New Hampshire Retirement System to fund the retirement costs for teachers, police officers and firefighters, leaving municipalities to bear first a rising share and finally the total cost of the employer contribution, approaching $90 million.

In the 2008-2009 city budget, state aid of $1.7 million represented 24.5 percent of the $6.9 million in revenue from sources other than property taxes. The next year, the Legislature suspended revenue sharing. In the 2009-2010 city budget state aid decreased to $1.1 million, or 18 percent of the revenue from sources other than property taxes of $6 million which reflected the loss of revenue sharing.

As a portion of city revenue from sources other than property taxes, state aid has remained virtually flat since the suspension of revenue sharing in 2010. The 2016-2017 city budget adopted earlier this month includes $1.2 million in state aid, 17 percent of the $6.7 million of all revenues from sources other than property taxes.

When the Meals and Rooms Tax was introduced in 1967, the intent was for the state to retain 60 percent of the receipts and distribute the remaining 40 percent to the municipalities. But, the Legislature reduced the municipal share, effectively freezing it at the level of 1976. In 1993, Legislature enacted a formula designed to reach the original split. It provided that 75 percent of the annual increase in revenue from the tax, but not more than $5 million, would be distributed to cities and towns based on their population.

However, the formula was suspended from 2010 to 2014, leaving municipalities with the $53.8 million they received in 2009 while revenues from the tax rose by $50 million. The suspension was lifted in 2015 but reimposed in 2016. Altogether, suspending the formula cost cities and towns some $58 million in foregone revenue between 2010 and 2016.

In fiscal year 2008-2009, the city received $766,258 in proceeds from the Meals and Rooms Tax and last year, when the suspension was lifted, it received some $780,000.

City Manager Scott Myers has distributed the New Hampshire Municipal Association's report to the Mayor and City Councilors, noting its implications for the tax cap.

Gilford Elementary School updates its infrastructure


GILFORD — Corridors are dug up, equipment and piping is strategically placed in hallways and classrooms, and new fixtures are being installed as the elementary school renovation project progresses through the summer.

Scheduled to be completed over two consecutive summers, the renovation for this summer, said Buildings and Grounds Director Tim Bartlett, is primarily plumbing and drainage.

"We have reconfigured some of the gang bathrooms built in 1938 and 1962 to accommodate handicap and privacy issues," he said. "We're making them much more user friendly."

Because it is an elementary school, Bartlett said many of the classrooms are equipped with single bathrooms, meaning there are a lot of toilets and sinks in the building.

As part of the renovations, all of the sinks and countertops are being updated, along with miscellaneous fixtures. New toilets are all low-flow.

Superintendent Kirk Beitler said this is conducive to improved student hygiene and Cleanliness for Kids educational programs at the elementary level.

Bartlett also said that the wall sinks in the custodial closets are being removed and floor sinks are being installed.

"It's hard to lift mop buckets up to the wall sinks, so this is much more employee-friendly," he said.

Voters approved a $2.4 million bond at the March annual School District Meeting to upgrade the elementary school's entire mechanical, HVAC and plumbing systems. To keep the school open and to minimize interruptions to students, constructions crews will complete the project over this summer and next.

"We will be ready for teachers (to come in and set up their classrooms) by the end of the last full week of August," said Bartlett. The first day of school for students is Aug. 31.

School District Business Administrator Scott Isabelle said that the parking lot and all of the driveways are also being reclaimed and repaved. The paving project, which has been in the planning stages for a number of years but never made the final budget until this year, is not part of the bond, but is one of the capital projects the school does annually. It is scheduled to start Monday.

He said all the construction has led to the school district closing the Imagination Station playground for the summer.

"People just can't safely get there," said Isabelle.

Next year, said Bartlett, is actually the bigger part of the project that will see all of rooftop HVAC units replaced, LED lights for the parking lots, and an upgrade of the fiber optics category to whatever is the newest available technology at the time.

A PowerPoint presentation for the project can be accessed at Isabelle said there are also additional photos of the renovation project at that site.

07-22 Gilford Elementary School hall under construction

The floor in the main corridor of Gilford Elementary School is impassable as construction crews repair some water and sewer lines as part of the two-year $2.2 million renovation. (Gail Ober/Laconia Daily Sun)

Floating for hours will raise money for Make A Wish (226)


MEREDITH — The Make-A-Wish Foundation of New Hampshire will hold its annual Rafting for Wishes event at Hesky Park on Meredith Bay, beginning on Friday, July 29, and ending at noon on Sunday, July 31.

The Make-A-Wish Foundation fulfills the fondest wishes of children with life-threatening medical conditions to enrich the human experience with hope, strength and joy.

With Rafting for Wishes, some 15 teams of at least 10 members will compete to keep their raft occupied and afloat for 44 hours while seeking to raise at least $300 apiece. The goal is to raise $100,000 so that wishes, which cost an average of $10,000, can come true. Since the New Hampshire chapter of the foundation was founded in 1986, more than 1,365 Granite State children have lived their wishes.

The raft-a-thon will begin with opening ceremonies at 3:30 p.m. on Friday. At 4 p.m. the teams will begin boarding their rafts. There will be entertainment during the evening capped with a movie beginning at 8:30 p.m.

Saturday is for kids, beginning at 10 a.m. with a fleet of police cruisers, fire engines, ambulances and construction equipment to explore during Touch-a-Truck in the parking lot of Annalee Dolls on Daniel Webster Highway. Hesky Park will be alive with games, rafting and entertainment for children throughout the day. The evening features a cocktail regatta, barbeque and music trivia before closing with a fireworks display at 9 p.m.

For more information, contact This email address is being protected from spambots. You need JavaScript enabled to view it..