Unlovable: Return of the tax cap


The Union Leader is reporting that Gov. John Lynch has signed Senate Bill 2 (SB 2), which restores the tax caps invalidated by last year’s unanimous Supreme Court ruling.

Tax caps are a shortsighted, simplistic answer to complex problems.  As Mayor Ted Gatsas, a tax cap supporter, notes in the article, occasionally municipalities must make large investments to ensure longer-term growth, which may require tax increases exceeding the provisions of a tax cap.  While the aldermen can exceed the tax cap with a two-thirds majority vote, the uncertainty of being able to achieve such a supermajority and fund important projects will likely make the city less attractive to investors, businesses and residents who rightly understand the importance of well-maintained infrastructure and amenities.

Of course there are instances when cities spend carelessly and officials corruptly allocate public funds, and unwise or unlawful spending must be addressed when it occurs.  For the most part, though, spending in the Queen City is done responsibly, funding projects and programs that are vital to the well-being of residents or directed to promote economic development.  Where irresponsible spending does exist, the answer to it isn’t a tax cap; it is an election.

Tax caps are the wrong answer to the wrong problem–the biggest issues regarding taxation and spending in New Hampshire being the lopsided reliance on local property taxes, an inherently inequitable tax structure and a lack of regional cooperation and shared services.  Tax caps do nothing to address these issues or the burden of property taxes that in part leads to the state’s disjointed land use policies, and the sprawl around and on the edge of Manchester.

A more philosophical issue, but one with huge practical implications, is the undemocratic nature of tax caps, especially restoring previously invalidated caps such as the one enacted by Manchester voters in 2009.  SB 2 requires a 3/5 supermajority of voters in order to adopt or rescind a tax cap even though a higher threshold, such as the 2/3 (10 of 14 aldermen) in Manchester, may be required to exceed them.  The narrow majority of voters who supported Manchester’s tax cap does not meet the provisions of SB 2 for adoption of future tax caps, yet 54.4% of voters in 2009 are now able to bind future voters, residents and aldermen to a shortsighted policy, which requires a supermajority to rescind or exceed.  This is certainly undemocratic, and hopefully will be ruled unconstitutional by the Supreme Court.

Tax caps are not the solution for remedying New Hampshire and Manchester’s 18th-century tax structure, and allowing a simple-majority to bind future voters to a higher threshold is a shameful twist of American democracy.


This post is one in an ongoing LivableMHT series, Livable/Unlovable, that will comment on proposals, projects and other topics that are either good (Livable) or bad (Unlovable)  from a livability/urban development viewpoint.

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