Citizens in Merrimack have formally announced their intention to add a spending and tax cap amendment to the town charter this year. The petition committee paperwork will be filed Monday January 5th at the Merrimack town hall by Matt Murphy, a representative of the New Hampshire Advantage Coalition (NHAC), and Merrimack Town Councilor Mike Malzone.
This amendment is identical to the one that passed in Rochester last November by a 70% to 30% margin.
The spending cap allows for increased spending from year to year but pegs the amount of the increase to the cost of living, sometimes referred to as the rate of inflation. The tax cap portion protects property owners by restricting increases to the property tax rate under the same formula. The latter protection is of particular importance during revaluations. The combination of the tax-cap on tax-rate increases and the spending cap on the budget combine to prevent the town from using increased values as a motivation to raise taxes or spending beyond the fixed formula.
But the cap doesn’t just limit spending and tax increases. It also comes with a provision for allowing supplemental or emergency spending within the framework of the town charter, whenever two-thirds of the town council votes to approve it. So at no point is the town prevented from addressing necessary short term spending that occurs outside the normal operating budget. But that spending is only good for the duration of that fiscal year, and cannot be included in the operating budget when calculating the next year’s budget. But it can be apporved in succeeding years by another two-thirds vote if the town council has the will to do so.
Opponents, most often town employees or those employed by the town through a union will insist that this kind of cap will force a cutback in services; even critical services like police and fire. But Derry, Franklin, Laconia, Nashua, and Dover all have a spending cap. Some of these towns have been operating under a cap for 15 years or more, and none of them are starving for public services. There is no shortage of policeman or fireman. But that’s what they’ll tell you is going to happen. It’s simply not true.
It is important to remember that while the town will always need to address spending issues, that spending should not be permitted to exceed the ability of the taxpayers to fund it. Most of us will not get a significant raise every year, not in our paychecks, nor see that in the value of our homes. Perhaps not for some time. Most people won’t even see a fraction of that–particularly under the current economic conditions–yet the unions, and the budget writers could continue to ignore these facts when they talk about spending.
By asking the Town of Merrimack to approach its budget the same way Merrimack’s families approach their own, we are simply mandating more responsible management in how local government operates. We are reconnecting the budget writing process to reality, matching our own expenses with the cost of living, and asking our elected officials to do the same.
Thomas Jefferson once wrote in a letter to John Taylor that, “Excessive taxation…will carry reason and reflection to every man’s door, and particularly in the hour of election.” Well we are prepared to carry a petition to every door, and ask your support in amending the town charter–so that the cost of government will never exceeded our ability to fund what is truly necessary for our mutual well being.
Spending Cap Language
Each of the undersigned voters respectfully requests the municipal officers to provide for the amendment of the municipal charter as set out below.
8.4-a Limitation on Budget Increase
A. Limitation on budget increase. Recognizing that final tax rates for the Town of Merrimack are set by the New Hampshire Department of Revenue Administration pursuant to RSA 21J:35, I, the Manager shall submit a proposed budget to the Council on such date as the Council shall establish. The Council shall adopt its annual budget proposal and shall act upon such proposal, in accordance with the mandates of this section, prior to submitting the proposed budget to the voters for adoption. This section shall not limit the authority of voters of the Town to authorize warrant articles calling for appropriations.
Override Provision: Budgetary restrictions described in any part of section 8.4-a may be overridden upon a vote of three-fifths of all elected members of the Council. Such override expires following the adoption of the annual budget. Subsequent budgets or supplemental appropriations require additional three-fifths override votes, or the limitations expressed in section 8.4-a will apply.
In establishing a proposed municipal budget to be approved by the voters, as required by this Charter, the Manager and Council shall be allowed to assume an estimated property tax rate in an amount not to exceed the tax rate established during the prior fiscal year increased by a factor equal to the change in the National Consumer Price Index – Urban as published by the United States Department of Labor for the calendar year immediately preceding the year of the budget adoption.
B. Exception to budget increase limitation. Capital Expenditures, and the total or any part of the principal and interest payments of any municipal bond, whether established for school or municipal purposes, may be excepted from being included in the expenditures that are subject to the prior limitation upon a three-fifths vote of all members of the Council. The exception made under this section shall expire upon adoption of the budget for the next budget year, unless three-fifths of all members of the Council vote to renew the exception for the next budget year.
C. Budget Limitation in a revaluation year. When the Council accepts an increase in real estate values as the result of a town wide reevaluation, the Council shall adhere to a maximum increase in real estate tax revenues as follows: the real estate taxes raised from the prior budget year shall be increased by a factor no more than the change in the National Consumer Price Index – Urban as published by the United States Department of Labor for the calendar year immediately preceding budget adoption, then this figure shall be used in establishing the new municipal budget.
D. Budget limitation with annual changes in assessments. When annual changes in real estate values occur as a result of State of New Hampshire assessing requirements, the Manager and Council shall adhere to a maximum increase in the real estate tax revenues as follows: The real estate taxes raised from the prior year shall be increased by a factor of no more than the change in the National Consumer Price Index – Urban as published by the United States Department of Labor for the calendar year immediately preceding budget adoption, plus real estate taxes calculated by applying the prior year real estate tax rate to the net increase in new construction. “Net increase in new construction” is defined as “the total dollar value of building permits less total dollar value of demolition permits issued for the period of April 1 – March 31 preceding budget adoption.
E. Total Expenditures. Total expenditures proposed in the Council’s budget for any given year shall not exceed the amount of funds reasonably calculated to be derived by the tax rate established herein, increased by the other revenues generated by the municipality.