question on local taxes - spend or send to Concord?

[mishman]

I have a question about local taxes. If a town with a lot of waterfront like Meredith does not spend all their tax revenue locally, does the excess get sent to Concord to somehow equalize a town with a lower value tax base? In other words, is there a perverse incentive to find all kinds of ways to spend local tax dollars locally rather than ship the unspent money to the State?

[Descant]

The money stays in town, or goes back to the taxpayers.
There will often be "extra" revenue since budgets plan, for example, to hire an employee for a year. If he leaves and it takes three months to hire a replacement, you have three months in the salary and benefit accounts left over. This is referred to a sa "lapse" in the budget. You can also have excess revenue because the budget did not anticipate particular income. For example, the economy booms and lots of people buy and register new cars at higher registration fees than their old vehicles. Unanticipated revenue.

At Town Meeting in March, the voters can decide what to do with the money, and it does not all have to go to one place. Usually, the Board of Selectman would propose a warrant article requiring the funds be used to offset next year's taxes. At the meeting, voters could amend that article to do a variety of things as long as suitable for a government to accomplish. For example, increase the "surplus account". (Bad name, should be called "working capital") The voters could also add the funds to a capital reserve account for a variety of purposes, new fire truck, new or rehabbed library, etc. School districts generally return surplus to their respective towns, although they can word warrant articles to "add $50,000 or 25% of surplus, whichever is less, if any, to be added to the roof repair capital reserve fund."

The ability to just spend money at the end of the year is somewhat limited because the Selectmen, or School Board, cannot spend unless there is a line item in the budget for that category. They can manage the money, moving it within the budget. Sometimes you will see "placeholders", a line item with $1.00, so that the voters authorize the category if there is money available to be used as the year end approaches. RSA's control all this and are similar for cities and SB2 towns.

[Pineedles]

There not using any surpluses to offset next year's taxes in Moultonborough. If they were, my tax bill wouldn't keep going up!

[tis]

I don't see it get returned to us too often. They usually spend a surplus on something else.

[Scott's Yott]

Money goes into the unexpected fund ballance which every town is required to have.They recommend to keep 12% of the towns annual budget in that fund at all times.Additional money can be used to lower future taxes or be spent in an emergency, but must be approved by town vote

[Slickcraft]

The tax revenue collected is simply the amount authorized by the annual town meeting minus other revenue expected (such as auto reg fees). The tax rate is set just prior to the 2nd tax bill in Nov when a very good estimate of other revenue can be made.

This is the same in all towns. The real effect of a lot of waterfront is a lower tax rate. There will be $$ left over only to the extent that the total amount authorized at the town meeting was not fully expended or other revenue is higher than expected. Barring unplanned emergency spending during the year, most towns have some left over. As noted this adds to the town's "surplus" account.

Towns are advised by NH DRA to maintain a reasonable surplus account. It helps with cash flow and helps avoid short term borrowing (tax anticipation notes). The surplus is also insurance against unexpected emergencies. If the surplus account grows to more than necessary, the selectmen can elect to use some to offset taxes at the time that the tax rate is set. Or propose to pay for a capital item totally or in part with surplus in the wording of a warrant article.

[Acrossamerica]

Thee is not enough wealth in the entire world to satisfy government wants and bureaucratic mischief. We are fortunate that NH has some of the saner politicians and local selectmen other wise we could be as bad as the rest of the country in taxation vs what we receive for the money spent.

[secondcurve]

Originally Posted by Descant

The money stays in town, or goes back to the taxpayers.
There will often be "extra" revenue since budgets plan, for example, to hire an employee for a year. If he leaves and it takes three months to hire a replacement, you have three months in the salary and benefit accounts left over. This is referred to a sa "lapse" in the budget. You can also have excess revenue because the budget did not anticipate particular income. For example, the economy booms and lots of people buy and register new cars at higher registration fees than their old vehicles. Unanticipated revenue.

At Town Meeting in March, the voters can decide what to do with the money, and it does not all have to go to one place. Usually, the Board of Selectman would propose a warrant article requiring the funds be used to offset next year's taxes. At the meeting, voters could amend that article to do a variety of things as long as suitable for a government to accomplish. For example, increase the "surplus account". (Bad name, should be called "working capital") The voters could also add the funds to a capital reserve account for a variety of purposes, new fire truck, new or rehabbed library, etc. School districts generally return surplus to their respective towns, although they can word warrant articles to "add $50,000 or 25% of surplus, whichever is less, if any, to be added to the roof repair capital reserve fund."

The ability to just spend money at the end of the year is somewhat limited because the Selectmen, or School Board, cannot spend unless there is a line item in the budget for that category. They can manage the money, moving it within the budget. Sometimes you will see "placeholders", a line item with $1.00, so that the voters authorize the category if there is money available to be used as the year end approaches. RSA's control all this and are similar for cities and SB2 towns.

Thanks got your detailed explanation. Very helpful.