Cheshire County Government continues to raise concerns about the long-standing and worsening practice of state cost shifting and the increasing burden it places on local governments and property taxpayers across New Hampshire, particularly in counties such as Cheshire
New Hampshire is at a crossroads, particularly in rural counties like Cheshire County. Maintaining essential public services, protecting quality of life, and ensuring a fair tax burden requires a funding system that reflects shared responsibility between the state and its communities.
Nearly five years ago, county officials publicly warned that state budget decisions were increasingly pushing costs down to towns, cities, school districts, and counties. Since that time, those pressures have not eased. They have intensified, forcing local governments to make increasingly difficult choices simply to maintain core services.
New Hampshire continues to balance its state budget by reducing aid, altering funding formulas, or stepping away from long-standing financial commitments to local governments. While these actions may stabilize the state’s finances on paper, they shift real and unavoidable costs onto communities. For counties, municipalities, and schools, there is no alternative revenue source. The result is increased reliance on the property tax.
Cheshire County provides a clear example of this challenge. The County has historically maintained one of the lowest county tax rates in New Hampshire. Preserving that position has required disciplined budgeting, conservative spending, and difficult decisions year after year. Even so, Cheshire County has not been immune to rising costs driven by state policy decisions.
State downshifting has increased county obligations for Medicaid-funded long-term care and human services, while also financially affecting other mandated programs. These services are not optional. Counties are legally required to provide them. When the state reduces its share or fails to meet prior commitments, the cost does not disappear. It is absorbed locally.
Over the past decade, the State of New Hampshire has shifted an estimated three billion dollars in costs to local governments statewide. Counties account for roughly three hundred million dollars of that total, largely through Medicaid nursing home reimbursement shortfalls and expanded human services responsibilities. Without this downshifting, the statewide property tax burden today would be significantly lower than it was ten years ago.
In Cheshire County, holding tax increases to modest levels has required close scrutiny of departmental requests, looking for funding methods and strategies to pay for capital projects across multiple budget cycles, and carefully balancing workforce needs against the goal of minimizing taxes to be raised from property taxpayers. These decisions are made with full awareness that the taxpayer is already carrying a significant burden created elsewhere within the system.
Many of these pressures stem from fiscal commitments made by the State of New Hampshire decades ago that were never fully realized. Revenue sharing tied to meals and rooms taxes and the business profits tax has fallen short of original estimations. Highway block grants and bridge aid have not kept pace with inflation, leaving local infrastructure needs unmet. State contributions to the New Hampshire Retirement System have been eliminated, significantly increasing costs for counties, municipalities, and schools. Additionally, Medicaid long-term care costs, once nearly fully state funded, are now borne in significant part by county property taxpayers.
These financial challenges are not partisan; they are structural, multiple administrations and legislative bodies have contributed to the current funding framework. While individual efforts have been made to ease the burden, incremental changes have not been sufficient to reverse the overall trend and burden.
We have recently witnessed ill-advised decisions made at the state level resulting in the elimination of hundreds of millions in revenue, (business profit tax, business enterprise tax, and interest and dividends tax) at the same time, tourism revenue has declined, federal funding is uncertain, tariffs, health insurance and employee wages have skyrocketed.
The state needs to see that the Perfect Storm is upon us and that we are taking on water faster than we can pump.
Cheshire County continues to advocate for responsible and consistent state funding practices that meet statutory obligations without shifting costs onto local property taxpayers. Keeping county taxes low should not require sacrificing essential programs such as public safety or human services.
Without meaningful change at the state level, the pressure on local governments and taxpayers will only continue to grow.
Chris Coates
Cheshire County Administrator
To learn more about Cheshire County view the Cheshire County at a Glance document for your town HERE. For additional information on departments within the County watch County Conversations with Chris Coates on the County website homepage!