Stop the GOP ‘Downshifting!’
The cry can be heard from Democrats in the State House. Republicans are “shifting the tax burden from the wealthiest onto hard-working and retired Granite Staters and their property taxes,” said Deputy Senate Minority Leader Cindy Rosenwald (D-Nashua).
The same in Democratic-run cities like Dover. “We’re seeing this continuing erosion of funding by the state and by the federal government for public education needs,” said Dover City Manager Michael Joyal. “And in a state like New Hampshire, the only way you can make up those funds and still provide the services that are needed is to ask the property taxpayers to pay more.”
New Hampshire Democrats even embrace the phrase in their party platform. “We oppose unfunded mandates and downshifting costs to the local municipalities and property taxpayers.”
When Republicans talk up a decade of business tax cuts and eliminating the state’s last tax on personal income — the interest and dividends tax — Democrats respond with the “downshifting” throwdown: Lost revenue means less money for local aid and public schools. Local taxpayers, they argue, get stuck with the tab.
But is it true?
The argument has certainly been around for a while.
In an April 2011 op-ed published in The Nashua Telegraph, then-state Rep. Rosenwald argued the Republicans’ budget “does actually downshift costs to communities.”
The Democrats’ claim has three separate elements:
- Tax cuts over the past decade have denied the state revenue;
- Lack of revenue kept the state from sending aid to local towns and schools;
- As a result, property taxes soared to make up the difference.
Have GOP tax cuts driven down revenue?
This is a trickier question than it appears. There’s no doubt that New Hampshire has been collecting and spending more money since the business tax cuts began a decade ago. But the state has many sources of revenue, from the federal government to lottery and liquor sales. The question is whether business tax revenues have fallen, denying Concord cash to share around the state.
And the answer, as the Josiah Bartlett Center for Public Policy has definitively (and repeatedly) shown is “no.” Using data from the State Comprehensive Annual Financial Reports, the Bartlett Center shows that “revenues from business taxes have more than doubled since the tax cuts began, rising by 124 percent from state Fiscal Years 2015-2023.”
In addition, “the share of state tax revenues generated by business taxes rose by 56 percent from 2015-2023.”
Has the state cut the aid it sends to cities and schools?
Just because the state has more money doesn’t mean that money is making its way to local governments. What has happened to the amount of local aid coming out of Concord? Has it declined?
Absolutely not, says former state Senate President Jeb Bradley.
“We have poured huge new resources into property tax relief,” Bradley told NHJournal.
“The ‘downshifting’ argument is all Democrats have because despite millions in new dollars for education funding, doubling of dollars going to cities and towns from the rooms and meals tax, steady funding for the state share of water infrastructure, increases in dollars for local road and bridge projects, etc., property taxes are still an issue for taxpayers.”
And Bradley brought receipts. In the 2021-2022 budget, the state provided $500.24 million in local aid. In the next budget (2023-2024), that number jumped to $683 million in state aid to New Hampshire cities, towns, and counties.
Asked about state tax policy cutting local aid, Sen. Tim Lang (R-Sanbornton) told NHJournal that’s nonsense.
Lang referenced the rooms and meals tax system that has seen revenue to cities and towns rise from $68.8 million in 2021 to $136.6 million in 2025.
“Tell me again how we are ‘downshifting costs’ with tax reductions?” Lang said. “It’s a foolish argument when the actual numbers say something different.”
And in her budget address Thursday, Gov. Kelly Ayotte (R) announced a plan that “sends more money to the local level, and spends more on education, than ever before.”
As for “downshifting,” Ayotte said, “that is just a false argument.”
“The legislature, even before this budget, was returning more money than ever locally, whether it’s through education funding, (or) through the changes in the distribution of the rooms and meals tax. There has been more money.”
But are property taxes rising?
Absolutely.
That’s the one claim New Hampshire Democrats make that’s indisputable. Granite Staters have among country’s highest property tax bills, ranked either fourth or third in the nation for the highest average property tax bill. And those bills have been rising.
Most of the reason, according to the data, is increased school spending.
When Rosenwald wrote that letter to the editor 14 years ago, enrollment in New Hampshire public schools hovered around 200,000. In FY 2011, public education spending in New Hampshire topped out at $2.9 billion. The state’s contribution was $1.04 billion, or 36.6 percent of the total.
Per-pupil spending averaged $13,548.
Fast-forward to the 2023-24 school year. Public education spending hit a record $3.9 billion, even as enrollment dropped below 163,000 students.
Per-pupil spending averaged $20,323, a 67 percent increase since 2011.
In Dover, where Joyal bemoans the “continuing erosion” of state funding, the city had an small increase in its student population of just 1.6 percent between 2001 and 2019. But the city increased its school spending over that same period by more than 93 percent.
“This issue isn’t downshifting of costs, it’s the upshifting of increased local spending,” Lang said.
So, have GOP tax cuts “downshifted” costs to local taxpayers?
NHJournal repeatedly asked Rosenwald, as well as Democratic caucus leaders Rep. Alexis Simpson (D-Exeter) and Sen. Rebecca Perkins Kwoka (D-Portsmouth) to explain what they mean by “downshifting.” Given the available data, their claim doesn’t appear to make sense.
They declined to respond.
Therefore, we give the Democrats’ claim a grade of:
While state revenues are currently below projections and the upcoming budget is going to be tight, general fund tax revenues have been up over the past decade, and the amount of that revenue going to local schools and towns is up, too.
This claim earns a rating of “False.”
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