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Republican lawmakers are reviving an effort to impose mandatory budget caps on school districts, arguing the state should intervene to rein in rising local property taxes.
In a 4-3 vote, the House Finance Division II committee voted last week to recommend an amended version of House Bill 675, moving the bill a step closer to a House vote in January.
The bill would block school boards from bringing forward a budget that is bigger than the budget passed the year before, except for any increase in inflation. Under the bill, in order to bypass that block, school district voters would need to vote by a two-thirds majority to spend above the cap.
Voters in school districts are currently allowed to adopt budget caps voluntarily, but HB 675 would make them the default across the state.
The idea comes as New Hampshire public school budgets have increased, straining local taxpayers. But critics have said it would unfairly weaken voters’ input over their district’s spending, hurting local control.
New Hampshire, which provides the lowest proportion of state funding to its public schools in the country, relies on communities to support their own schools through property taxes, which make up about three-quarters of the per pupil expenses. Each year, voters meet to approve that spending.
Introducing the proposal back in March, Rep. Dan McGuire, an Epsom Republican, said the measure is his attempt to address property taxes, which provide the majority of funding for New Hampshire public schools.
“One of the biggest complaints by my constituents, and I’m assuming yours as well, is the accelerating rate of property taxes, most of which is the result of spending in schools,” McGuire said. McGuire argued that despite some wealthier towns spending nearly twice as much per student as poorer towns, the outcomes are not measurably better.
“There is not necessarily a strong correlation, if any, between spending and performance, but there is between spending and property taxes,” he said.
But Rep. Richard Ames, a Jaffrey Democrat, countered that the property tax caps would only perpetuate the disparities between school districts.
“Essentially, this will not quite freeze in, but just about lock in the inequities we have in this system,” he said.
Other critics argued the default caps would make it hard for districts to adapt to years in which special education costs spiked, or they faced an unexpected shortfall.
The proposed statewide cap was introduced as an amendment to HB 675 in March, replacing the original bill, which changed the adequacy formula. And the idea passed the full House that month. But the House Finance Committee moved in April to retain the bill over the summer, allowing them to focus on the budget.
With the bill retained, the Oct. 16 vote is the first indication that Republicans are moving forward with the idea. The bill will next go to the full Finance Committee, which will vote on its recommendation on Oct. 30. The full House will vote whether to pass or kill the bill on Jan. 8.
An amendment to the bill passed last week would allow the budget cap to fluctuate depending on how many students are in the district — an increase in students would increase the cap but a decrease would shrink it.
The proposed cap comes after lawmakers passed a bill in 2024 that empowered voters for the first time to opt into school district tax caps. During annual meetings this spring, voters in most school districts opposed those caps.
McGuire and other Republicans say implementing a mandatory cap will force school boards to find savings and reduce administrative bloat. And they say if financial emergencies emerge, school boards should be able to convince two-thirds of voters to approve more spending.
“When there is a clear need … the town has a very straightforward escape valve of 66% that they can trigger,” said Rep. Daniel Popovici-Muller, a Windham Republican, speaking back in March. He noted that in most of the towns that considered voluntary budget caps this year, voters rejected those caps with majorities that exceeded two-thirds.
At last week’s committee meeting, Republicans declined to reiterate their arguments, allowing the recommendation to pass without discussion. But Democrats made clear they still oppose the intervention.
Rep. Kate Murray, a New Castle Democrat, said the state is “in flux” after the state Supreme Court ruled New Hampshire is not adequately funding its schools and directed the Legislature to reach an appropriate solution.
“I would feel better about a cap if we were adequately funding education in the first place,” said Murray. “And this seems to be cutting education off at both ends. We’re not adequately funding them, and we’re also telling them that they can’t even raise … the cap in order to provide adequate funding.”
Speaking in March, Rep. Hope Damon, a Croydon Democrat, took issue with the idea that overriding the cap is easy when it is necessary. She said she had helped campaign to defeat a tax cap in Kearsarge Regional School District in January — and to reverse deep cuts in Croydon in 2022.
Requiring a two-thirds threshold is unnecessarily difficult, she said.
“Districts already have the option to vote in a cap,” she said. “A number of districts have voted down caps this year in a resounding way. Why are we talking about taking away their local control that we’re forever emphasizing on other things?”
This story was originally publishd by New Hampshire Bulletin and is being reorinted here under Creative Commons license CC BY-NC-ND 4.0. Click here to visit NH Bulletin and view their other stories.