Lebanon warns taxpayers to budget for larger bills

By PATRICK ADRIAN

Valley News Staff Writer

Published: 05-28-2024 7:30 PM

LEBANON — Spring property tax bills have just gone out, but city officials already are warning property owners to prepare for “an unprecedented increase” when the next bill arrives.

The fall bill is when property owners will see the full effects of the municipal budget adopted by the City Council and the 2024-25 school budget the voters approved in March.

Residential property owners are expected to see a 9% increase in their end-of-the-year tax bill.

“We want to make sure that people are aware so that they can plan and budget the amount necessary to deal with the tax bill that will be coming in the fall,” City Manager Shaun Mulholland said in an online video the city posted to warn residents.

Lebanon collects property taxes in two billing periods, one in the spring and another in the fall. An explanation of this year’s tax bills, including the video presentation, is on the city website. 

The city’s overall property tax rate, which is set each fall by the state’s Department of Revenue Administration, represents the combined costs of the city, state and county operating budgets and the city’s portion of the statewide education property tax, known as SWEPT.

Mulholland advised taxpayers that the spring tax bill, which the city mailed out last week, is based on Lebanon’s tax rate from last fall — $24.28 per $1,000 of assessed property value.

The fall tax bill will use the new rate set later this year.

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The spring bill, which is due July 1, is based on a best-possible estimate of the property taxes that need to be raised in 2024, Mulholland said in an interview Tuesday.

For example, the Grafton County, which has a fiscal year that starts on July 1, is still setting a budget.

The delegation will vote on the budget proposal June 24. The city and school district will not know actual revenues until later this year.

The fall tax bill is typically the larger of the two annual payments, though in a typical year the increase is less than 3%, Mulholland said. This year, the increase could be at least three times as large.

The city is estimating a 8.1% increase in the municipal portion of the tax rate this fall, Mulholland said.

Half of this is attributable to the city’s operating budget, which increased this year’s spending by nearly 6%.

Also driving this increase is a decrease in the citywide assessed value, due to the loss of Alice Peck Day Memorial Hospital from the city’s tax rolls, Mulholland said. Alice Peck Day, which had been paying property taxes to the city in previous years, became eligible this year to make payments to the city in lieu of taxes, which the city allows to medical facilities under the Dartmouth Health umbrella. The total assessed value of Alice Peck Day’s properties in Lebanon are over $31 million.

The concerns about property tax increases are not confined to this year.

The municipal portion of the tax rate is projected to increase by an annual rate of 12% over the next four years, due a combination of spending commitments and a shrinking unassigned fund balance. The city has relied on the fund balance in previous years to soften tax impacts, Mulholland said, but the practice is not sustainable.

The increased city spending will include repayments on a new downtown fire station, a $22.6 million project.

Another potential cost is additional fire department personnel, Mulholland said.

In November, the City Council authorized Fire Chief James Wheatley to apply for a $1.25 million federal grant to fund the salary and benefits for eight firefighters for three years. The city would need to assume the cost of those position in 2027. The City Council will hold a public hearing on June 5 to consider the request.

“Adding new staff is a major cost driver, and the costs will keep going up (due to ongoing increases in wages and benefits),” Mulholland said.

At a meeting on May 8, city councilors agreed that they need to begin thinking about next year’s spending plan ahead of their first scheduled budget meetings in October. Long-term strategic planning is needed to find a balance between managing operating costs and maintaining services.

“If people see their taxes increase 50% (or more) over the next five years ...I think that will be unacceptable (and) unattainable to a large portion of our population,” Mayor Tim McNamara said at the May 8 meeting. “We could see a significant demographic shift that I think would not be positive. … I personally think Lebanon would be a lesser place if we  were just a community of people who could afford t o live here at those tax rates.”

  Patrick Adrian may be reached at padrian@vnews.com or at 603-727-3216.