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Independent Think Tank Analyzes How Cuts to Local Aid Will Impact New Hampshire Communities

Concord, New Hampshire- The New Hampshire Center for Public Policy Studies today released the first report, in a series, titled “An uneven Playing Field: The Disparate Impacts of Local Aid Cuts.” The report examines ways that cuts to local aid programs would be felt in communities across the state, which could involve public employees, retirement costs, school construction, special education expenses and more.

“The Governor’s budget proposals raise questions about the nature of the state’s financial relationship with municipalities,” said Steve Norton, the Center’s executive director and one of the report’s authors.  “Proposed cuts in local aid can stimulate discussions about the effectiveness of the policies and programs that aid helps pay for.” 

According to the report, cuts to local aid are often described as “downshifting,” or the pushing of costs to local taxpayers in an attempt to save money in the state budget. Since the only major revenue source available to cities and towns is the property tax, the shifting of state costs to municipalities often results in higher local property taxes, a trend that has been occurring for the past decade.

The report finds that across-the-board cuts in local aid would tend to hurt the state’s poorest communities most, yet each form of local aid affects communities in disparate ways, depending on the underlying program that aid supports. 

“For example, money from the School Building Aid Program is spread among communities based on each district’s decision to build a new school.  Cutting Fixed Revenue Sharing, on the other hand, would have a disproportionate impact on the state’s former industrial centers, such as Berlin, Claremont and Franklin,” explained Norton.

The Center makes it clear that the report is not intended as a critique of the Governor’s specific proposals; instead, those proposals are used to prompt a broader discussion of the financial relationship between the state and local communities.

Copies of the report are available on the Center’s website www.nhpolicy.org.

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The New Hampshire Center for Public Policy Studies is an independent, non-profit, non-partisan organization that pursues data-driven research on public policy. Established in 1996, the Center's mission is to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire's future. Its work includes research on the state budget, public school funding and health care finance. More information at www.nhpolicy.org.