Study: While State Aid Dwindles, Cities And Towns Rely More On Property Taxes

Jan 24, 2013

This chart from the New Hampshire Center for Public Policy Studies shows the per capita spending for New Hampshire cities and towns from 2001 to 2011.
Credit Courtesy of New Hampshire Center for Public Policy Studies

A study released this week finds that in the past several years, less state money has gone to cities and towns.  

Per capita state aid to cities and towns dropped by roughly 17 percent from 2007 to 2011.

“That’s put continued pressure on cities, towns and school districts to look for more money from the revenue sources they have available to them, which is primarily the property tax at the local level," says economist Dennis Delay, co-author of the study released by the New Hampshire Center for Public Policy Studies.

Delay says the drop in state aid has forced cities and towns to rely more heavily on the local property tax to pay for government services.

But he says the study also finds that on average, per capita spending at the local level has remained essentially frozen during those recession years, which helped lessen the impact on local property taxes.

“Cities, towns and school districts have frankly done an admirable job on trying to hold the rein in on expenditures.”

Delay says the question is whether that trend can hold as the state looks for more places to cut spending in its next two-year budget.