Budgets, elections and the tax rate process
A public process open to all Allenstown voters
What are the basics of the process?
Budgets are created by the various departments and presented to the Board of Selectmen (BOS), Budget Committee and the general public. The BOS and Budget Committee can change the proposed amounts in the preliminary budgets. The total budget amount can be amended by discussion and vote at Deliberative Session by the registered voters present. Budgets are approved or rejected by the voters through a ballot vote at Town Meeting/Local Elections. The tax rate is set by DRA based on the results of the ballot vote. People are elected to various Town offices and governing boards where they will play integral parts in creating, monitoring, and following our Town approved budgets.
How can I participate in this process as a resident?
• Attend the preliminary Budget Committee meetings when the various departments are presenting and discussing their proposed budgets. These meetings are always open to the public.
• Review the detailed proposed budgets that are being presented on the various websites such as allenstownnh.gov, the school and SAU websites.
• Run for a seat on the governing boards or committees or ask the Budget Committee to be appointed to any vacant seats that may exist.
• Attend the Public Budget Hearing and the Deliberative Session- this is a great way to learn why the budget numbers are what they are and to ask any questions about any parts of the budget that you are curious about. (1/14/23 and 2/4/23)
• Vote on the various budgets and warrant articles in March each year on the paper ballot. (3/14/23)
Many residents who become involved in the budgeting process are often surprised to find out how much work and preparation goes into creating the budget each year. Our Town strives to be transparent and encourages the public to be involved in the process every step of the way. After all, most of us live here, too!
School Board Members, Selectman Board Members, Sewer Commissioners and Budget Committee Members must be registered voters, and thus residents from Town and are elected to their positions by all of the voters who participate in the March elections. They will be subject to the property tax rate that results from the final approved budgets in the same fashion as the rest of Allenstown's residents.
What’s the schedule?
There are three parts –
1. Prepare (over 3 months) and publicize the budget and other items to be voted on during sessions that are open to the public, including the Public Hearing.
2. Hold an open meeting for all voters where the proposed budgets and warrant articles can be discussed, amended and approved for presenting to the voters (Deliberative Session, Sat, 2/4/23).
3. Election Day (Town Meeting Day, Tues, 3/14/23) where all voters vote for candidates and yes or no on budgets and warrant articles discussed at Deliberative Session using paper ballots.
-Both our School and our Town use these three steps.
-Our School and Town technically hold separate budget meetings and elections BUT they are usually held on the same day and at the same location, either at the same time or back to back.
What are the dates, locations and times?
Public Budget Hearing: Saturday, January 14th- review proposed budgets, 9AM
Deliberative Session: Saturday, February 4th- discuss/amend warrant articles, 9AM at Armand R Dupont School
Town Meeting / Paper Ballots: Tuesday, March 14th- Vote by paper ballots, 8AM-7PM at St John Parish Hall, 10 School St.
What’s at stake?
This year’s tax bill as determined by the 2023 tax rate yet to be set and deciding who will supervise our School and Town as elected officers.
What is the tax rate?
It is a yearly tax amount that is assessed on every $1,000 of property value in an attempt to divide the total tax burden equitably among all of Allenstown's tax payers. It is calculated after the total spending of our Town and School is approved by the voters.
There are actually four parts to the tax rate. State Education funding and County are not acted upon by the voters.
2022 2021 2020
The local school tax rate is: $10.65 $18.06 $14.89
The state education funding tax rate is: $0.88 $2.04 $2.03
The town tax rate is: $6.21 $8.55 $9.62
The county tax rate is: $1.76 $2.85 $2.76
TOTAL TAX RATE FOR PROPERTY OWNERS: $19.50 $31.50 $29.30
LOCAL SCHOOL TAX RATE: NH Department of Revenue Administration takes the amount authorized by the voters on the school ballot, less any other revenue, and instructs our Town to raise the money for our Schools. If there is unexpended tax money left over from the prior year, legally, some of it may be spent by our School Board without voter approval. The balance of it will be used to reduce the new amount to be raised. If the School thinks that it will have a surplus, it may also spend the anticipated surplus before the end of the year to fund other items that were not originally planned for as long as there is some account in the budget that allows the proposed use. There are many services that the State of NH mandates that our school provide but that the LOCAL SCHOOL TAX RATE MUST fund.
STATE EDUCATION TAX RATE: There is a State Education Tax Rate that is used to raise part of the money for our schools. It is set by the State, not the schools or voters on election day. It does not cover the costs of all of the services that the State requires our local schools to provide.
TOWN TAX RATE: NH DRA also sets our Town tax rate by taking the total amount needed for our Town expenses and reducing that amount by other income and setting a new tax rate needed to raise enough to fund all of the expenses. Our Town has greater flexibility in keeping unspent money BUT the money can only be spent with voter approval. The Town of Allenstown usually uses these funds for investment into capital reserves and extraordinary one-time expenditures, but not for normal year-to-year operations.
COUNTY TAX RATE: NH DRA also sets the County tax rate that raises the monies for the County services like corrections, County Sheriff and Prosecutor, human services, Registry of Deeds, county nursing home and courts.
The local school tax – it is 54.6% of the total Allenstown tax rate for 2022
The state education tax that goes to the school – it is 4.5% of the total
The Town tax is 31.8% of the total
The County tax– it is 9% of the total
Who sets the tax rate?
The setting comes from the NH Department of Revenue Administration (DRA) after our Town, School, County and State tell DRA what is due each year, based upon the spending approved by the voters at the March elections. All of the amounts owed to each taxing entity are on a single property tax bill that taxes Allenstown property and is sent and collected by the Tax Collector in a semi-annual billing cycle. The tax rate changes each year in the fall.
How does our Town tax your property?
As prescribed by state statute, our Town uses the assessed value (set every 5 years) of your home in conjunction with the tax rate (set yearly). The total tax rate set by DRA for 2022 is $19.50 per thousand of valuation. We will get 2023’s tax rate in the fall of 2023. On a $250,000 house, that would be $19.50 times 250.0 (thousands) or $4,875.00 in total taxes. The math would be 250 (house value÷1,000) x $19.50 (tax rate) = $4,875.00 (Taxes due for full year)
It is important to note that the assessed property values are dictated by the actual sales figures of homes at the time that they are being set. The free market dictates what the assessed values are. Neither the elected Town officials nor the voters can change what the assessed values are because they can not alter the actual sale prices that are negotiated between buyers and sellers. The tax rate CAN be influenced by the decisions that Town officials and voters make with regard to our Town and School spending. Usually less expense equals less public benefits.
Residential and commercial properties are all paying the same single total tax rate that is set each year. It is the constant variable of the tax bill setting formula that all property owners are subject to equally.
What does each individual tax rate actually cost on a $250,000 house?
Local School: $2,662.50
State Education: $220.00
Town: $1,552.50
County: $440.00
TOTAL: $4,875.00
What does the public get for their tax dollars?
The taxes that we pay fund most of the operations of our Town, School and County resulting in public benefits that are available to everybody such as:
-Police, Fire, and emergency services and equipment
- School buildings, teachers and programs for our children
- Plowing, paving, equipment and maintenance of our public roads
- Garbage collection and disposal at the Transfer Station
- Town Hall services
- Building and community development services
- Library access and services
- Nursing homes, county jail and county law enforcement
*Our Sewer Department has their own individual budget that goes to the voters on its own warrant article. They are self funded by the sewer rates that the elected Sewer Commissioners set at their discretion. Sewer bills are paid separately from property taxes. Sewer is not part of our larger Town operating budget.
Water services are a utility and are handled by Pembroke Waterworks. Water is not a property tax funded public benefit, similar to cable and electricity. Water bills are issued and paid separately by property owners.
Mobile home parks are not public town-owned property. They are privately owned property and so they do not get their roadways maintained by the Town or receive Town trash pick-up. *Mobile home park residents DO receive ALL other public benefits provided by the tax dollars collected.
The tax rate and assessed values formula that is used to create the individual property tax bills is governed by the State of NH. Our Town of Allenstown does not have the ability to deviate from using this formula. The state legislature created this formula, used state wide, in an effort to divide the local property tax burden among all of our Towns property owners in a fair manner. It generates a larger tax bill for those who own more valuable property while those who own less valuable property, generally pay less. ALL residents have the same unfettered access to the tax funded public benefits that the tax dollars provide, regardless of how large or small their individual tax bill is or how many of the services they actually use.
What is the Town or School budget?
It has two parts; an expense budget that explains in detail how much money will be spent and how it will be spent. It also has an income budget that explains where the money will come from. Proposed budgets will be in the Town and School Reports as well as on Town, School and SAU 53 websites. All of the budget information is printed out in packets for the attendees of the Public Hearing and the Deliberative Sessions.
Who prepares the expense budget?
Departments (Fire, Police, Highway, Administrative, Building, Clerk, Library, Sewer)
Management (Town Admin. or Superintendent in conjunction with their Finance Administrators)
Governing Board (Board of Selectmen or School Board, as elected officials)
Elected Budget Committee
Voters at Deliberative Session (usually approve/amend Total Appropriation only)
Who approves the budget?
The Allenstown voters approve the total dollar amount to be spent. They usually do not approve a specific expenditure. The elected governing boards and appointed management manage the day-to-day expenditure of funds within the total amount authorized by the voters. Even though both our School and Town have published budgets that have hundreds of lines, our School Board/Select Board and appointed management may move monies between those accounts, at any time during the year, as long as the total stays within the amount that the voters approved. The exception to this is that if a specific expenditure is approved/rejected as its own warrant article, the governing board may not fund it with any tax dollars at all (if rejected) or remove tax dollars from that purpose (if approved). They MUST adhere to the decision of the voters.
-Most warrant articles will be followed by an estimated cost/tax impact so that the voters can know when they are voting what the effect, if any, MAY be on their tax bill.
-The warrant articles also include a statement of recommendation by the Budget Committee and the respective governing board such as the BOS or the School Board, as allowed by law. These entities work heavily through out the process of crafting the budgets and warrant articles, and are considered experts of sorts on the subject matter by the time the final budget is presented.Sometimes they recommend the final warrant articles that result and sometimes they don't. Their recommendation, or lack there-of, is meant to assist the voter in their individual decision making process, if they so choose to heed the recommendation.
What are Capital Reserves in the Budget & how do they affect equipment purchases?
A capital reserve account is like a savings account where our Town or School can save up money for unexpected expenses or very large expenditures that would be unaffordable in a single tax year. The money is usually restricted as to use and who can authorize the spending. Most capital reserves that our Town maintains can only be spent with voter approval.
Why have capital reserves?
Say a fire truck cost nearly $300,000 and must be replaced every 30 years. If a particular tax year had the full cost of this truck, it would result in a large tax increase. To avoid that, we ask the voters to put away a much smaller amount of money each year to fund all of our fire equipment purchases in a capital reserve fund explicitly created for this purpose. These funds most often come from unassigned fund balance, and so the expense of funding the account does not result in any further additional tax impact on the property owner. The monies were already previously billed and paid by the tax payer but for what ever reason, the money was not spent.
Why use unassigned fund balance to fund capital reserves?
There will be a future explanation of unassigned fund balance, but it is easy to think of unassigned fund balance as a surplus, coming from one of two sources. Our Town either under spends the budget or it comes from getting in more revenue than expected.
We know what the fund balance is by the end of each year so we take the unspent money and surplus revenue and put it into the capital reserve accounts. Alternatively we could put a separate line in the budget to raise funds to go into the Capital Reserves, but using the unassigned fund balance means that if we ever have a situation where we can’t afford funding the capital reserves, we can defer it a year and make it up in the next year.
Why not lease equipment?
Some Towns have Capital Improvement Programs and use lease purchasing to acquire major equipment. While we have a Capital Improvement Plan, we try to fund it each year with deposits to the capital reserve accounts. We have used lease purchasing in the past, and that practice costs thousands of additional dollars each year for interest payments.
What about Petitioned Articles?
People or organizations may submit Warrant Articles to raise and appropriate funds for items that are not in the big general budget. Petition Articles do not come from the Board of Selectmen, School Board or the Budget Committee. They usually come directly from the voters.
How have operating budgets changed this year?
One way to see how a budget has changed from last year is to compare the amount previously budgeted for a particular line with the actual amount spent for that line along with the proposed amount on that line for the upcoming budget year. Looking at these three numbers will allow you to see major changes. You can ask questions about these changes at the Public Budget Hearing, the Deliberative Session or at any Budget Committee meetings during the budgeting process.
You know about expense, now consider Income.
By law, there is a requirement that both our School and our Town show estimates of income. Non-property tax Income is important because it will offset the expense and lower the tax rate. Our School prepares a State DRA MS 27 form and our Town prepares a DRA MS 737 form that shows last year’s income (or revised estimate) as well as the estimated income for the new year.
*There must be enough income to cover all expense. There may be more than enough, which could result in a larger unassigned fund balance.
A portion of our Town income applied to our Town budget (including capital reserves and equipment purchases) comes from non-property tax revenue that includes Motor Vehicle Fees, Meals & Rooms Tax Revenue, & Grants.
In NH, there is no sales tax or income tax, which are commonly used in other states to off set their property tax bills. As a result, the money needed to run municipalities comes mostly from the property taxes that are levied on property owners by each NH town. This means that property taxes tend to be higher in NH while all residents enjoy the benefit of not paying any yearly state income taxes on their earnings or sales taxes at the stores every time that they go shopping.
What is an Unassigned Fund Balance?
The Unassigned Fund Balance contains funds that have not been spent or excess revenue not needed to cover expenses. This Unassigned Fund Balance has not been set aside for other purposes.
• Why spend it on Capital Reserves? We ask you to set this money aside so that it will be available to make large purchases without relying on a future tax increase.
• Who approves the use? The voters approve putting it in Capital Reserves and taking it out.
What is the School Unassigned Fund Balance?
As with our Town, it is the excess revenue and unspent money that was approved for expenditure by the school voters.
What is it used for?
There are two purposes that are allowed. It can be kept and used for emergencies or unexpected needs for up to 2.5% of the net assessment. If it isn’t kept for this purpose, it will be applied towards the amount that needs to be raised for taxes in the following year.
Anything else you should know?
• Legally, our School or Town elected governing boards can divert unspent money from one account to another before the end of the fiscal year and it never becomes part of the unassigned fund balance.
• The state education and county portion of the tax rate is not created or proposed by any local Officials, Board or Committee members. The voters do not vote to approve them. They are directed by the State of NH.
How does Deliberative Session work?
What is the Deliberative Session? It’s a meeting open to all town residents where the budgets and warrant articles to be voted on in March are discussed. Questions can be asked. Suggestions can be made. The voters will have the opportunity to approve or amend the Articles for the ballot as they are discussed. The Articles are usually taken in order. After all of the Articles have been read, discussed, possibly amended and then approved, the Articles will be finalized for presenting to voters on paper ballots in March.
Deliberative Session for 2023 is on Saturday, February 4th at 9 AM at Armand R Dupont School. The first part of the session is for all Town related issues including our Town budget for this year. Any member of the public may attend and the Moderator reads each Article and coordinates the discussion and action by the registered voters. The Board of Selectmen, the Budget Committee, the Town Clerk and the Town Administrator usually attend.
The second part of the session is for all School related issues including our School budget for next year. The Superintendent, School Board, School Clerk and Budget Committee usually attend. The Moderator reads each Article and coordinates the discussion and action by the voters.
At these meetings, the proposed budgets and warrant articles are discussed and approved or amended in preparation to be presented to the voters in March.
On Town Meeting Day, Tuesday, March 14th, 2023, at St Johns Parish Hall, all Allenstown registered voters have the right to vote yes or no on our Town and School budgets and warrant articles. The proposed budgets and warrant articles presented on the ballot will be set by the voters who attend the Deliberative Sessions.