New Hampshire Report

by Amy Day

(See also New Hampshire Report #2 and the New Hampshire Libertarians' Welcome to the Granite State Committee.)

My parents moved to New Hampshire from Massachusetts when I was 10, so I've lived here all my adult life (I'm 27). Coincidentally 2 other families in our Massachusetts neighborhood also moved to New Hampshire around the same time, but my family and these 2 others moved to northern New Hampshire. Currently Massachusetts immigrants are moving into the southern region, while continuing to work in Massachusetts. My husband currently works in Massachusetts because he can get paid more working there than in New Hampshire. Thus we pay Massachusetts income tax, plus the high New Hampshire property tax so we get the worst of both worlds. But the reason people are doing this is that housing in the Boston area is so high as to make the high prices in New Hampshire affordable. The housing market has been pushed out of the reach of many low income New Hampshire residents. They are exasperated by town zoning and building rules that are keeping the number of new houses down and keeping the cost of new housing high.

New Hampshire is a beautiful state. Our 18 miles of seacoast are enough room for beaches (public and private), harbors, and the Portsmouth Naval Shipyard, though the PNS has been claimed by Maine and the powers that be have said it is Maine's. This is unsurprising given the tax issue. If it were in New Hampshire, the New Hampshire residents who work there wouldn't be paying the income tax Maine currently collects.

A couple of hours drive from the seacoast and you are in the White Mountains. They are not as high as the Rocky Mountains but they are beautiful. You can camp, hike, and hunt in them, and in the winter you can ski them. We have Mount Washington, the highest peak in the northeast.

The climate in NH includes a lot more precipitation than many western states. Average precipitation is around 40 inches, depending on the area. In the southern part of the state the average temperature in July is 70 and in Jan it is 22. In the northern part of the state the summer temperature is a few degrees less, and the winter temperature is 7-12 degrees less.

In the northern counties, temperature is not the only thing that is lower. The income of the average person is less. In Coos County, the northernmost county, the HUD Median Income Estimate for 2001 was $39,200. In Hillsborough County, one of the southern counties that border the state of Massachusetts, the HUD Median Income Estimate for 2001 was $58,000. The national HUD Median Income Estimate for 2001 was $52,500.

Our state has been pushing recently for the government to buy land and conservation easements on land. Currently Senator Gregg is working on getting the state $8 million in federal money to purchase a conservation easement on 171,500 acres, this would be 1/3 of the total cost. My town of Exeter has been purchasing conservation easements on land in town. Part of the money comes from the state and part from the town budget. This is happening statewide.

The government in our state has different ways to control development. On the state level there is current use taxing. An undeveloped piece of land is taxed at a lesser rate. When it is developed, one must pay a tax of 10% of the value. My own town has an impact fee. This is a fee one must pay to the town when you get the permit to build a housing unit. The amount is based on the impact a new residence will have on the town-provided facilities.

Towns also have restrictive zoning. They make lot requirements of 1 or more acres. With the limited product and high demand, prices are very high. Current prices in my town are: for a 1.25-2 acre building lot, it is from $125,000-$150,000. They also are very restrictive on building multi-unit houses. An example would be an 11-acre piece of land we looked at. Due to zoning restrictions we would only be allowed to build one single-family house on the land (definitely no multi-units), and we could not subdivide it. It is almost impossible to find a piece of land that allows multi-unit homes. Nationwide in 2001, 25% of housing permits were for multi-unit housing. In New Hampshire in 2001, only 9% of permits were for multi-unit housing. This has helped cause apartment rents to increase. In two southern counties, median rents for a 2 bedroom apartment (not including utilities) are $880 in Rockingham county and $860 in Hillsborough county.

In the city of Manchester, rental property is inspected every 3 years. You are required to give the inspector access to the entire house. This process is fraught with bribery and corruption. We had bought a building less than a year before its next inspection date. The inspection showed thousands of dollars in repairs were needed. Granted the building was old and we had planned on doing some updating, but most of the things that needed repairs had been that way for years. There were two long-term tenants, and they told us these problems had existed since they started renting there, and there had been an inspector in that building 3 years ago and he didn't cite the previous owner. In talking to other landlords and tenants in the city I have come to believe that if you get the right inspector and you give him some money, he won't find anything wrong with your apartment. In another building, a tenant had taken batteries out of a smoke detector, so since it wasn't working we were not grandfathered in, so we had to meet the new standard that there had to be built in smoke detectors. That was a few years ago, I believe that all must meet the new standard now.

There is an education-funding problem going on in our state right now. In 1997 the New Hampshire Supreme Court declared that the traditional method of using local property taxes to pay for schooling was unconstitutional. Not that it was unconstitutional for the towns to steal from its property owners. But that it was the state's responsibility to provide an adequate education. They based this decision on article 83 of our constitution which says "Knowledge and learning, generally diffused through a community, being essential to the preservation of a free government; and spreading the opportunities and advantages of education through the various parts of the country, being highly conducive to promote this end; it shall be the duty of the legislators and magistrates, in all future periods of this government, to cherish the interest of literature and the sciences, and all seminaries and public schools, to encourage private and public institutions, rewards, and immunities for the promotion of agriculture, arts, sciences, commerce, trades, manufactures, and natural history of the country; to countenance and inculcate the principles of humanity and general benevolence, public and private charity, industry and economy, honesty and punctuality, sincerity, sobriety, and all social affections, and generous sentiments, among the people. . . ." Now did you get the part where it says the state has to pay for education? I didn't. The New Hampshire Supreme Court has learned from the federal Supreme Court how to twist the constitution to say what they want it to say.

This decision by the court has caused educational funding unrest that continues to today. The state instituted a statewide property tax, but the court doesn't like it, so the state needs to come up with another way. I believe the goal of the courts is to force the legislature (which is cowering before the power of the court) to enact an income tax.

The current method of a statewide property tax consists of the state imposing a $5.80 per $1000 of assessed value. This is collected by the state and distributed to the towns based on the number of students. The result is that some towns send in more than they receive and other towns receive more than they pay in (just like all government wealth distribution methods). So the state has been divided into donor towns and receiver towns. The different towns have banded together to enhance their voice in Concord. The donor towns to abolish this mess, and the receiver towns, to make sure they keep getting money. And as usually happens, the receiver towns out number the donor towns, and since this is a democracy the majority rules.

Another point in all these shenanigans is that the poorer towns were complaining that they needed more money to provide a better education. But when they received the extra money, they used it to offset their education spending thus reducing the amount the town needed to raise, allowing the town to spend more of its own money on other things, and not increasing their education spending. This education funding mess has the whole state in turmoil and I believe it doesn't bode well for our freedoms.

August 6, 2002

The views expressed in this article do not necessarily represent those of the Free State Project, its Officers, or Directors.