Legislature eyes property tax relief

Lawmakers have introduced a trio of bills that would grant municipalities authority to ease the burden of property taxes on homeowners of meager and modest means. Although the Legislature has enacted an array of exemptions, credits and deferrals for the elderly, disabled, veterans, seniors, deaf and blind, it has rejected earlier attempts to offer property tax relief based solely or primarily on income.

Unlike the exemptions, credits and deferrals granted under current law, which reduce taxes for some but shift a share of the total tax burden to others, each of these programs is intended to enable participating homeowners to pay their full share of property taxes when they fall due. However, like the other forms of property tax relief, these programs would require adoption by the municipality.

The three bills would enable eligible taxpayers to draw on the value of their property to defer or defray their taxes. Two of the three — House Bill 1556 and House Bill 1339 — would provide loans to taxpayers secured by a lien or mortgage on their property. The third, House Bill 1283, would allow municipalities to defer a portion of the property tax and recover the deferred taxes on the sale of the property or death of the homeowner.

HB 1556, sponsored by Representative Neal Kurk (R-Weare), former chairman of the House Finance Committee, and Senator Martha Fuller Clark (D-Portsmouth), would create a "a property tax relief revolving loan fund" of up to $10-million, financed by the sale of general obligation bonds and administered by the New Hampshire Department of Revenue Administration (DRA), to lend to qualified taxpayers. To qualify a taxpayer must be a member of a household with an income below the median household income for the state whose equity in the homestead, after receiving a loan, amounts to at least 5-percent of the equalized assessed valuation of the property. The program is open to taxpayers of all ages, but those younger than 62 cannot participate for more than five property tax years. Moreover, taxpayers participating in the program would remain eligible for any other exemptions or credits to which they are entitled.

The amount of the loans, expressed as a share of property taxes, would vary inversely with household income, expressed as a share of the median household income for the state. Households with incomes below 39-percent of the median would be eligible for loans equal to 100-percent of their property tax liability while households earning between 90-percent and 100-percent of the median could borrow up to 20-percent of their tax bill. Interest would accrue on the principal amount of the loans at the rate the DRA applies to delinquent taxes.

The principal and interest would be repaid on the sale of the property or the death of the borrower, though a surviving spouse or partner to a civil union may assume the debt. If the borrower is younger than 55 when the loan is made, it must be repaid within seven years or before the borrower turns 62, whichever comes first.

HB 1339, which enjoys bipartisan support in both the House and Senate — including Senator Kathleen Sgambati (D-Tilton) — would also establish a loan program, but one financed and administered by private financial institutions rather than the state. The bill authorizes municipalities to accept payment of property taxes in the form of mortgage notes in lieu of cash receipts and to make arrangements with financial institutions to borrow against the mortgage notes to capture the tax revenue due from the mortgaged property. The value of the notes would not exceed 50-percent of the assessed value of the property and would serve as a revolving credit line, with an interest rate pegged to the ten-year Treasury note and a term of 15 years. The note would be repaid and retired on the sale of the property.

HB 1339 also sets narrower eligibility requirements than HB 1556. To qualify, taxpayers must be at least 65 and possess title to the property. Moreover, their annual property taxes must exceed 10-percent of their adjusted gross income.

HB 1283, introduced by Representative Richard Drisko (R-Hollis), would enable municipalities to defer some or all of property tax liabilities in excess of 10-percent of the taxpayer's adjusted gross income, with the limitation that the deferred tax receipts not exceed 50-percent of the taxpayer's equity in the property. The bill provides that municipalities may borrow an amount equal to the deferred receipts to spare costs to other taxpayers.

The deferred taxes could be repaid at any time, but must be repaid within 60 days of the sale of the property or within five years if an increase in income disqualifies the taxpayer for a deferral. If the owner of the property dies, the heirs may redeem the estate by repaying the deferred taxes and costs, but if they do not the municipality may recover its expenses by holding a tax sale or executing a tax lien. Repayment would include interest, together with any costs incurred by the municipality to borrow funds and administer the program.

All three bills have been referred to the House Municipal and County Government Committee, which will hold public hearings on January 15, beginning at 10:30 a.m. with HB 1283.