This is a production of Citizen in a Republic, which covers New Hampshire legislative politics.

Overview of Senate Bill 20-FN (Property Tax Relief Act of 2025)

Purpose: Senate Bill 20-FN, introduced in the 2025 legislative session, is designated as the “Property Tax Relief Act of 2025.” The primary goal of this bill is to alleviate the property tax burden on municipalities by shifting a portion of the retirement system contribution costs from local political subdivisions (such as cities and towns) to the state government. This adjustment aims to provide financial relief to local governments, thereby enhancing public education and public safety services.

Key Provisions:

1. State Contribution to Retirement Costs:

   • Coverage: The state will assume responsibility for 7.5% of the retirement system contributions that are currently paid by political subdivisions for:
     • Group I Members: Primarily teachers.
     • Group II Members: Includes firefighters and local police officers.
   • Effective Date: This change takes effect on July 1, 2025, applicable from the 2026 fiscal year onward.

2. Amendments to Current Law (RSA 100-A:16, II(b) and (c)):

   • Employer Contribution Rates:
     • Group II Members (e.g., Firefighters, Police):
       • Current Requirement: Employers (other than the state) pay 100% of the total retirement contributions.
       • Post-Bill Requirement: Employers will pay 92.5%, while the state covers 7.5%.
     • Group I Members (Teachers):
       • Current Requirement: Employers (other than the state) pay 100% of the total retirement contributions.
       • Post-Bill Requirement: Employers will pay 92.5%, with the state covering 7.5%.
   • State Employees: For both Group I and Group II members employed by the state, the state will continue to pay both the normal and accrued liability contributions in full.

3. Fiscal Impact:

   • State Government:
     • Expenditures Increase: The state’s general fund will see an increase in expenditures by:
       • FY 2026: $28.0 million
       • FY 2027: $28.74 million
       • FY 2028: $29.51 million
     • Funding Source: These expenditures will be covered by the state’s general fund without the need for additional appropriations.
   • Political Subdivisions (Local Governments):
     • Expenditures Decrease: Local governments will experience a reduction in their retirement system contribution costs by the same amounts the state is increasing its expenditures.
     • Net Effect: This shift effectively transfers the financial burden of 7.5% of retirement contributions from local to state levels.

4. No Additional Funding Required:

   • The bill specifies that it does not provide new funding sources. Instead, it reallocates existing financial responsibilities, moving a portion of retirement contributions from local governments to the state.

Impact on Retirement System:

• Total Employer Contributions: The total amount of employer contributions to the retirement system remains unchanged. The bill only alters who bears a portion of these costs.
• Unfunded Actuarial Accrued Liability (UAAL) & Funded Ratio: According to the New Hampshire Retirement System (NHRS), this bill does not affect the UAAL or the funded ratio since the total contributions remain the same; only the funding source changes.

Summary: Senate Bill 20-FN seeks to provide property tax relief to New Hampshire’s municipalities by having the state government cover 7.5% of the retirement system contributions for teachers, firefighters, and local police employed by political subdivisions. This legislative change aims to reduce the financial strain on local governments, thereby supporting continued investment in public education and safety. The fiscal responsibility for these contributions shifts from local entities to the state’s general fund, starting in the 2026 fiscal year.