Municipal leaders urge rejection of House Bill 739, saying it would shift $28.6M in property tax 'swept' funds to state control

The Senate Finance Committee heard extensive public testimony on House Bill 739, a proposal that would require communities with so-called "excess swept" education tax dollars to remit that excess to the Department of Revenue Administration (DRA) for deposit in the state education trust fund. Sponsors and witnesses told the committee the change would restore language repealed in 2011 and is estimated to increase deposits to the trust fund by about $28.6 million.

The bill would take the portion of a community's education-related property tax revenue that exceeds a statutory adequacy threshold and remit it to the state. A committee presenter said the bill does not change the state's total education revenue but would add nearly $28.6 million to the education trust fund; the presenter said the bill's effective date in statute is July 1, 2025, with implementation deferred to the FY27 budget cycle so the remit requirement would kick in March 2027.

Municipal leaders and local officials testified in opposition. "If the taxes that we're getting from that is then going to be sent to Concord instead of being able to stay and educate our population, it's going to be even harder to do that," Portsmouth Mayor Daigle McCarron said, warning that remitting swept dollars would make it harder for municipalities to support housing development and local services. Mark de Coto, Waterville Valley town manager and chair of Education Coalition Communities 2, said his coalition opposes the bill and that Waterville Valley would have to remit approximately $504,200—about 70% of swept dollars his town currently uses for education—under the formula discussed.

Jason Sorens of the American Institute for Economic Research said the proposal could create economic disincentives: he described the change as a form of "property tax recapture" that could depress property values in donor towns and encourage recipient towns to enact growth-control measures. "Property tax recapture, as this bill would enact, would reduce property values in donor towns," Sorens told senators, and he warned the amounts at stake could grow if the state increases the education tax.

Opponents said the policy would reintroduce an unfair redistribution of local property tax revenue, reduce local control over education dollars, and force some towns to raise their local education portion of the property tax to make up remitted funds. Paul To Shane, project manager for the Town of Newington, said Newington would face a local tax increase of about $724,000 under the bill's formula.

Sponsors and proponents argue the change responds to court rulings in the Rand case and seeks to equalize tax treatment across municipalities; supporters in testimony noted that prior legislative and judicial activity raised questions about the current administration of the swept tax. The committee record includes testimony that different funding formulas considered by the legislature in recent sessions produce varying numbers of "donor" communities; one witness said the bill's formula would create 55 donor communities under the proposed per-pupil amount.

The public hearing record closed after dozens of in-person speakers; the committee reported one online signer in support and 52 online signers opposed. No committee vote on HB 739 was recorded in the transcript; senators did not indicate a committee recommendation in the hearing record provided.