The Downshifting Doom Loop

Concord cut 38 jobs and raised property taxes 12.2 percent because its home values went up and its state aid went down. One week later, the legislature held a hearing to write that mechanism into the state constitution.

On April 8, the New Hampshire Fiscal Policy Institute released its most comprehensive analysis of the state’s tax structure. The report documented that New Hampshire depends on property taxes more heavily than any other state in the country, that the aggregate property tax paid has climbed 12.1 percent adjusted for inflation over the past decade, and that the burden falls three times harder on low-income households than on the state’s wealthiest.

Seven days later, on Tax Day, Republican leadership convened a hearing on a constitutional amendment to make that dependence permanent.

The amendment is CACR 12. As introduced in the Senate and passed 16-8 in February, it required a two-thirds legislative supermajority to enact any new broad-based tax on income, sales, capital gains, inheritance, or estates. The House version under consideration is a “replace all” rewrite — amendment #2026-1134h, sponsored by House Majority Leader Jason Osborne along with Reps. Joe Sweeney and Alicia Janigian — that swaps the supermajority framework for a direct constitutional prohibition on the House adopting any tax on personal income. The Ways and Means Committee votes on its recommendation next Monday, April 27. If the amendment clears a three-fifths House vote this spring and wins two-thirds of the November ballot, the House will be constitutionally barred from ever passing the one reform that could break the property-tax loop: a tax on personal income.

Senate President Sharon Carson went first at Wednesday’s hearing. “No income tax in New Hampshire,” she said. “Not now, not ever.” House Speaker Sherman Packard followed: “What are we afraid of? The people who elected us, they are the bosses.”

Neither of them mentioned the NHFPI report. Neither did Gov. Kelly Ayotte, whose same-day statement called New Hampshire “a beacon of freedom and opportunity” for holding the line against an income tax. The report was covered, without much analytic heat, by the Bulletin, NHPR, Valley News, and InDepthNH. The numbers in it are not in dispute.

The Receipt

In fiscal year 2022, the average New Hampshire resident paid $3,388 in property taxes. Only New Jersey paid more per person. The national average is $1,943. Alabama, the lowest, pays $697. Against that highest-in-the-nation burden, New Hampshire ranks 48th among states in per-person aid to cities and towns. Local governments here draw 61 percent of their revenue from property taxes — the highest proportion of any state.

The burden is not distributed evenly. Bottom-quintile households spend 5.9 percent of income on property taxes. Top earners spend 2 percent. A $500,000 house in Hart’s Location pays $1,310 a year. The same house in Charlestown pays $18,270 — fourteen times more. And the Hold Harmless Grant, which cushioned communities whose school aid is being cut under the state funding formula, is phasing out. This fiscal year, 109 New Hampshire communities lost an average of $137,000 in school funding because of it. The cuts are scheduled to continue through 2035.

Two weeks earlier, Concord’s Board of Education had already shown how the system works.

The Mechanism Runs On Schedule

Concord’s budget cycle this spring executed the doom loop in one document.

Superintendent Tim Herbert opened February with a $17 million shortfall. The drivers were insurance costs, special-education obligations outside district control, contracted salary and benefit increases, and debt service on a new $155 million middle school. Business Administrator Jack Dunn told the board it would need to find $14.5 million in cuts to hit its target of a 5 percent tax-rate increase. The board could not find it.

The $124 million budget that passed on the final day of March cut 38 staff positions, zeroed out principal payments on the middle school’s first bond, and shaved millions from equipment purchases — and still landed at a 12.2 percent property tax hike. That works out to $1.81 per $1,000 of valuation, or an extra $724 on the tax bill for a $400,000 home. Concord High School alone absorbed 12 position cuts. Kim Bleier, a 30-year Concord teacher and the union president, told the Concord Monitor the staffing cuts were the most sweeping she had ever seen.

Why did a district that held operating expenses to a 0.25 percent increase land on a 12.2 percent tax hike?

Because Concord got $2.8 million less in state education aid this year than last year. The reduction came from the state’s adequacy formula, which cuts aid to municipalities whose equalized property values have risen. Concord’s values rose because home prices rose. Home prices rose because New Hampshire does not build enough housing to meet demand. The city that looked richer on paper got poorer in practice. Thirty-eight people lost their jobs. The tax bill went up anyway.

This is the mechanism NHFPI described. Concord is what it looks like at full speed.

The Rebuttal That Wasn’t

Three days before the hearing, House Majority Leader Jason Osborne (R-Auburn) and Senate Majority Leader Regina Birdsell (R-Hampstead) co-authored an op-ed in NH Journal attacking the NHFPI analysis before it had fully landed. “The state sent more money than ever. Your property taxes still went up 20 percent,” they wrote. If downshifting were real, they argued, that would be impossible. Local governments got a record check from Concord, they said, and spent more on top of it.

Osborne went further in a separate statement. He called the NHFPI report a lie. A property tax bill that looks like a ransom note, he told supporters, was not evidence of a revenue problem. It was evidence of a spending problem.

Osborne is also the lead sponsor of amendment #2026-1134h. The same legislator attacking the report documenting the property-tax crisis is the one running the amendment designed to block the reform that could ease it.

The NHFPI report recommends no tax. Not an income tax. Not a sales tax. No tax at all. Phil Sletten, its author, runs a nonprofit whose charter forbids supporting or opposing legislation. His response to Osborne’s attack was procedural: NHFPI produces research to inform public policy; it does not take positions on bills.

The report’s actual finding, in its own words: the design and structures of New Hampshire’s revenue methods make public services disproportionately reliant on local property taxes, and that reliance forces property taxes upward whenever costs outpace revenues at the local level.

That is not an opinion. That is what the numbers do. Concord got $2.8 million less in state aid this year. The board’s choice was a tax hike or cuts the district could not survive. The report described the system. Concord ran it. Osborne called the description a lie.

The Councilor From Lebanon

In the Ways and Means Committee that afternoon, Executive Councilor Karen Liot Hill — the sole Democrat on the five-member council — was one of the few witnesses who named the mechanism.

Liot Hill served on the Lebanon City Council for twenty years, from 2005 to March 2025, including a term as mayor in 2008. Roughly $3 billion in costs have been shifted from the state onto local communities in the past 15 years, she told the committee. That, she said, is what is driving New Hampshire’s property tax problem.

Then she said the line the Republican majority on the committee did not answer: “I served as a city councilor for 20 years. Local officials are not the cause of this problem. They are the ones managing the consequences of it.”

CACR 12 and its amendment, she told them, take New Hampshire in the wrong direction.

She is correct on the mechanism and correct on the math. The 2011 shift of retirement costs from state to municipalities, the revenue-sharing commitment on rooms and meals the state never fulfilled, the Hold Harmless Grant now phasing out — none of those are decisions a town selectboard gets to make. They are state policy. The consequences arrive at the local level as tax bills.

NH Bulletin editor Dana Wormald took the comparison further in an April 15 column. New Hampshire spends about $22,252 per pupil — roughly in line with Maine ($22,153), and below Massachusetts ($26,123) and Vermont ($28,697). But the state share of that spending is different. Vermont covers 85 percent. Maine covers 46 percent. Massachusetts covers 42 percent. New Hampshire covers under 29 percent. No state in the country contributes less to public schools.

What The Amendment Actually Does

CACR 12 addresses none of this. It does not raise state aid to municipalities. It does not fix the adequacy formula. It does not restore the Hold Harmless Grant. It does one thing: it makes the current system much harder to change.

Written into the state constitution, the prohibition would end the debate. The structural deficit Liot Hill described, the downshift NHFPI documented, and the mechanism Concord ran would become the permanent financial architecture of New Hampshire.

It is not the only lockdown mechanism in motion. Thirteen days after Associate Justice Daniel E. Will’s confirmation on February 11 gave the New Hampshire Supreme Court a new majority, the Ayotte administration filed its appeal seeking to overturn Claremont — the line of rulings that require the state to adequately fund public education. The appeal was filed February 24. The former executive councilor and original Claremont lead attorney Andru Volinsky flagged the timing in an April 15 op-ed. Two tracks, one destination: freeze the property-tax regime on the legislative side, loosen the constitutional obligation to fund schools on the judicial side.

Packard conceded during the Tax Day hearing that hitting a two-thirds public vote in November would be difficult. He was right to worry. A similar amendment in 2012 got 57 percent — and still failed. But Republicans are running this one now, rushed through committee without normal process, because the NHFPI report, the Concord budget, and the Hold Harmless phase-out are making the case for reform easier, not harder. The “New Hampshire Advantage” argument is losing its grip. CACR 12 is a constitutional attempt to weld it in place before the public finds the exit.

Generational Malpractice, In Spreadsheet Form

Policy failures rarely hit in a single blow. They compound. The 2011 pension shift, the unfulfilled rooms-and-meals revenue sharing, the Hold Harmless phase-out, the Interest and Dividends Tax repeal that took roughly $100 million a year out of state revenue — each of those looked manageable alone. The damage is in the stack. The 30-year-old Concord teacher who got cut this spring is not paying for one decision. She is paying for fifteen years of them.

That is the argument at the center of Generational Malpractice. New Hampshire is running a live demonstration. The state built a tax structure that rewards people who already own homes and punishes the people trying to become them. The school districts they pay into lay off teachers when the homes they own appreciate too fast. The homes keep appreciating anyway, because nothing in the system builds supply.

CACR 12 is the capstone. It takes the compounding choice and promotes it from policy into constitutional law. Rising home values will still cut state aid. Reduced state aid will still force local tax hikes. Local tax hikes will still push wage-earners out of the homes their parents could afford. The mechanism will keep running. The exit will be welded shut.

Sletten documented the loop. Liot Hill named its cause. Concord ran the math and found 38 teachers on the wrong side of it. Osborne called the report a lie. Carson and Ayotte called the exit door a threat to freedom.

Four of them built and defend the system. One of them described what it does.

The House Ways and Means Committee votes Monday. The full House will follow. In November, if the amendment makes the ballot, New Hampshire voters will decide whether to make the failure permanent.

Dexter Dow is the editor of Granite State Report and the author of Generational Malpractice.