2011 Property Tax Season … Already?
At this time of year, when we all wish we could be enjoying the summer and reading this magazine from a fishing boat or camp site, the Department of Revenue Administration (DRA) has been making plans on how to efficiently process the 2011 property tax rates. We are all sharing the pains of the most difficult budget season in recent history and are collectively facing budget and staff reductions. By working together, we can keep the wheels of local government rolling.
You may have been wondering why the DRA is so involved in the setting of tax rates. The statutory oversight provided by the Municipal Services (MS) and Property Appraisal (PA) divisions helps to ensure a fair and equitable property taxation system in the state.
With that said, let's turn the clocks back one year to a time when I had fewer wrinkles and to when the 2011 tax rate calculation actually began. In 2010, the PA division produced the 2009 equalization survey so the statutory December deadline for the state education tax warrant could be met. By December 15, each of the state's towns, cities and unincorporated places was sent a warrant indicating their amount of education tax for FY12 (tax year 2011). The process for calculating the warrant amount is laid out in RSA 76:3. The DRA calculated a rate to apply to the total 2009 state equalized valuation (EQV) without utilities to raise at least $363 million of education tax. That rate was then applied to each municipality's EQV, without utilities, to determine the municipality's portion of the education tax.
Fast forward to March of this year when the MS advisors (all four of them) started reviewing annual and special meeting documents to determine amounts appropriated. This is done for approximately 550 municipal entities, including every county, town, city, unincorporated place, school and village district. The advisors conduct a computerized review of financial statements, trustee reports and audits. They also work closely with the Department of Education on school district financial reports, making adjustments if applicable.
During the summer, county budgets are reviewed and apportioned based on equalized valuation. Multi-town village district and cooperative school budgets are reviewed and apportioned based on their apportionment formulas. Additional town and city documents, such as the MS-4 (Revised Estimated Revenues) and the MS-1 (Summary Inventory of Valuation) are submitted to the DRA by September 1. The PA staff review valuation data and other associated information used in the equalization process and contact the municipality if discrepancies are found. After another check for accuracy, all of these figures are merged with the database of appropriations for use in the rate setting process.
The MS advisors consult or meet with a representative from each of the 235 taxing jurisdictions to discuss revenues and fund balance use, and the amount of overlay to be added for potential abatements.
After additional revisions or adjustments are made, the rate is finalized and certified by a supervisor before being distributed electronically in a PDF file or mailed. Before a town or city issues the tax bills, the tax collector's warrant must be within one-half percent of the commitment amount certified by DRA (RSA 76:10, II). If the warrant is not within range, the assessing officials must review the valuations and if necessary, submit a revised MS-1, and a revised tax rate will be calculated by the DRA. The PA staff, working with local assessors, have found that past variances have often been due to updates or corrections after the MS-1 was submitted, differences in the tax collection and assessing databases, or tax increment financing districts adjustments not being considered.
To help make this process as quick and painless as possible, and in the spirit of David Letterman's "Top 10" list (though clearly not as funny), here is a countdown of what the DRA suggests your town or city can do to help.
Top 10 Hints to Expedite Your 2011 Tax Rate
10 Use the most current version of every form submitted. Older versions will not be accepted. All forms are available on the DRA website.
9 Thoroughly complete and sign forms prior to mailing or delivering. Faxed documents will not be accepted as filed (except as noted in #4).
8 Prior to calling for an appointment, be sure all necessary documents have been submitted for special meetings and for all the municipality's entities (including the county).
7 Contact the school district(s): Have they filed their documents? School forms must be reviewed by the DRA prior to the tax rate being set. Cooperative school district budgets must also be apportioned.
6 Contact the village district(s): Have they filed their documents? Those forms must be reviewed by the DRA prior to the tax rate being set, even if it is a self-funding district.
5 Assessors: Do not file the MS-1 until property and utility values are finalized. Submit an MS-1 extension request if the September 1 due date will not be met.
4 Faxing an MS-1 extension request to 603.271.1161 is acceptable. If the extension is faxed, do not mail a duplicate hard copy.
3 To receive the tax rate electronically, respond to the DRA May 2011 email to create or verify authorization. Without this authorization, the rate will be mailed.
2 After steps 3-10 are checked off, email or phone the DRA for an appointment. In addition to phone or email appointments, regional appointments at a central meeting location will be scheduled.
1 Be patient. The primary focus will be on tax rates until December, so other questions may have lower priority until all the rates are set.
Barbara Robinson is Director of Municipal Services for the New Hampshire Department of Revenue Administration. She can be reached at 603.271.3397.