Local officials say the state is shortchanging communities across New Hampshire by not fully funding municipalities’ share of meals and rooms tax revenue. And on Thursday, a City Council committee expressed interest in investigating what Keene can do about it.
In a letter to the council and Mayor George Hansel last week, Councilor Randy Filiault took aim at the state’s recent decision to reduce the tax — which is applied to prepared meals and hotel rentals — from 9 percent to 8.5 percent. He said that for years, state law said Concord was supposed to send 40 percent of the revenue back to municipalities, but Keene has typically received closer to 20 percent. This has cost the city some $8.8 million over the past decade, he said.
In his Oct. 5 letter, Filiault proposed exploring two options: suing the state to demand enforcement of the law or directing local businesses that charge a meals and rooms tax to send 40 percent of that money to the city instead of sending all of it to the state. Hansel referred Filiault’s letter last week to the council’s Finance, Organization and Personnel Committee, which talked about the matter Thursday night but took no immediate action ahead of further discussion between city and county officials.
Addressing the three committee members present for the meeting at City Hall and one who participated via Zoom, Filiault said the missing money hurts Keene taxpayers.
“Every one of us on the council knows, whenever constituents talk to us, we know that our tax rate is maxed out,” Filiault said. “We know that many people cannot afford the taxes in Keene anymore. Our population has stayed the same for a decade. Why is that? Because people can’t afford to live here.”
However, per one of the two options Filiault put before the council, City Attorney Tom Mullins said he was not aware of any precedent that would give the city authority to direct businesses to send state tax dollars to Keene.
Filiault said this is not a new issue, and is something the council has written to the state about before. He said he realizes his suggestions might not be the most realistic, but that he thinks it’s important to keep the conversation going. “One thing that can’t happen anymore is silence,” he said, “because silence is not an option.”
Filiault said he’s been discussing the matter with Cheshire County officials, who have had their own problems with the state withholding meals and rooms tax revenues. He advocated strongly for working with other municipalities, or asking New Hampshire’s nine other counties to join the cause, saying it would be easier to get every county on board than every city and town.
Cheshire County Administrator Chris Coates also spoke at Thursday’s committee meeting, saying the downward cost-shifting at the state level is driving up property taxes and causing budgeting trouble for other area municipalities.
“This has taken hundreds of millions of dollars from local communities over the past few decades,” he said. “Property taxes have needed to increase to fill this void.”
Coates said the county has already been discussing the issue with officials in other communities, something he said Keene City Manager Elizabeth Dragon has been doing as well.
Dragon told the committee Thursday that other New Hampshire cities and towns “are behind you” in the effort to get the appropriate share of meals and rooms tax revenue but that there hasn’t been much progress in the past few years. She said the biggest step forward, recently, was a change to the law that lowered municipalities’ share of the revenues from 40 to 30 percent.
This might sound like a decrease, but it is actually an increase over the roughly 20 percent the city was usually receiving.
Dragon told The Sentinel last week that this increase amounts to over $400,000 more than the city’s meals and rooms payment last year.
“Even though it’s not fully funded, it was the first year we really saw a significant move from the state,” Dragon said Thursday. “And I do believe it’s because a lot of people are talking about this now, and they’re really getting behind this effort.”
The committee voted unanimously to put Filiault’s proposal on more time, with plans to continue the discussion with the Cheshire County Delegation at its next meeting in 2022.