A bipartisan effort in the New Hampshire State Legislature to repeal the highly controversial statewide property tax has passed the House of Representatives but faces a close vote in the Senate and a possible veto by Governor Jeanne Shaheen.
The repeal bill would eliminate the property tax in 2004 but includes no plans for a replacement revenue source. The tax, enacted in 1999, effectively divided New Hampshire into "donor" and "receiver" communities; residents of relatively wealthy districts pay higher property taxes to fund schools in poorer, under-funded towns.
According to Shaheen's press secretary, Pamela Walsh, the governor "has concerns about repealing the statewide property tax without a replacement revenue source to pay for schools. She's speaking to state financial advisers about its impact."
In a press release, Democratic state senator Mark Fernald, who is running to replace Shaheen as governor, expressed his desire "to reduce the property tax and business taxes now."
Hanover, a donor town, is one of 32 communities throughout the state that have formed a coalition to combat the tax.
"We're the ones that are supporting the receiver towns," said Portsmouth mayor Evelyn Sirrell, the coalition's founder. "The receiver towns get so much money back from the state to apply towards education. The problem is that they're not using all that money towards the schools."
Sirrell argued that the mismanagement of funds by receiver communities was the chief reason for the widespread opposition to the tax. "They're abusing [the money], and that seems to be our biggest problem: how the money is being handled. It's wrong."
Although the coalition calls for the outright repeal of the property tax, its members have not outlined a definite alternative, although a state income tax is an option.
"It's the job of the state representatives in Concord," Sirrell said.
State Representative Hilda Sokol (D), a Dartmouth physiology professor who represents Hanover, stressed the need to replace the property tax with a more equitable revenue source.
Republican leaders have rebuffed Shaheen's invitation to discuss the implementation of a statewide income tax, decrying it as harmful to business.
"I'm totally for an income tax," Sokol said. "The income tax would be a lot fairer, because people would be paying based on how much they make."
While the property tax issue has created a rift between the state's donor and receiver communities, both Republicans and Democrats have addressed the need for change.
"Clearly the system is broken," said Charlie Arlinghaus, communications director for Republican gubernatorial candidate Bruce Keough. "Education aid must be targeted to towns that need help, but tax dollars meant for education must be spent on education."
