State won’t help Troy with money woes
By Meghan Foley Sentinel Staff
| Posted: Thursday, December 5, 2013 12:00 pm
TROY — Troy’s money woes won’t be solved by a bailout from the state.
The N.H. Executive Council ruled Wednesday not to accept the town’s application for a $953,668 loan to pay its expenses through Jan. 31, 2014.
The Executive Council based its decision on advice from the N.H. Attorney General’s Office, which stated Troy’s request didn’t meet the requirements of state law, Executive Councilor Debora B. Pignatelli, D-Nashua, said in a phone interview Wednesday afternoon.
According to the law, which dates back to the Great Depression, a community requesting financial assistance from the governor and Executive Council must either be unable to collect taxes already assessed or have an extremely high unemployment rate.
In its application for assistance, which was filed the week of Nov. 18, Troy officials said the town wasn’t able to pay for its operations because its 2013 tax rate hadn’t been set, and it couldn’t borrow any more funds to pay its bills.
A few weeks before, on Nov. 1, the selectmen filed a petition with the N.H. Department of Education asking it to overrule voters’ approval of a petition warrant article at the Monadnock Regional School District’s annual meeting in March.
The article sought to change the formula used to calculate the amount each town pays to the school district annually from being based on 50 percent student enrollment and 50 percent town property valuation, to 75 percent student enrollment and 25 percent town property valuation.
The change, which took effect July 1, caused Troy’s payments to Monadnock to spike by $635,821, or 16.1 percent, from about $3.96 million in 2012-13 to approximately $4.6 million in 2013-14.
Troy Selectman William T. Matson said last month the formula change was difficult for the town to absorb. Troy voters approved a town budget in March that didn’t account for a change in the formula, he said.
Besides Troy, the Monadnock Regional School District covers Fitzwilliam, Gilsum, Richmond, Roxbury and Swanzey.
Town between a rock and a hard place
In its petition to the N.H. Department of Education, Troy selectmen argued the approval of the March petition warrant article violated state law because the Monadnock Regional School Board didn’t recommend it.
According to the law, the portion each towns pays to a cooperative school district can either be based on 100 percent property valuation or 50 percent valuation and 50 percent student enrollment. The school board would have to recommend any other formula, the law states.
The state Board of Education issued a ruling on Nov. 27 stating it lacked the authority to grant Troy’s request.
Troy has since taken the matter to court, filing a lawsuit Wednesday against Monadnock.
In the meantime, the N.H. Department of Revenue Administration has upheld Troy’s 2013 tax rate of $36.26 per $1,000 assessed valuation after a hearing on Monday.
The tax rate is about 35.5 percent higher than the 2012 rate of $26.77.
While the town portion of the tax rate is down from last year, local and state education rates, and the county tax rate, have increased. The local education tax rate of $20.32 is up 76.5 percent from the 2012 rate of $11.51.
Gideon L. Nadeau Sr., chairman of the Troy Board of Selectmen, said Wednesday that tax bills are being mailed out, and the town’s financial situation is expected to improve as those bills are paid. He anticipates the town will be able to squeak by come the end of the year.
“We aren’t going bankrupt or anything like that. It’s just going to be tight,” he said.
State Treasurer Catherine A. Provencher said Troy’s financial situation has to do with cash flow.
“The month of December, at least for the town of Troy, has a significant outflow of cash,” she said, because many large bills are due.
It is also one of the biggest months for cash to come in to towns like Troy, she said.
“For many towns, they have more cash on hand in June and December, if that is when their tax bills are due, she said.
During the months when cities and towns don’t have as much cash coming in to pay bills, they take out a tax anticipation note with a local bank, Provencher said. Communities borrow the funds with the anticipation of paying them off by the end of that same year with revenue they receive from taxes.
“The town of Troy borrowed $500,000 in anticipation of taxes coming in December,” she said. “The town agreed to pay back the $500,000 by Dec. 31, which it would be able to do under normal circumstances.”
While it’s common practice for cities and towns to take out tax anticipation notes, it’s unusual for them to be in Troy’s situation of approaching the end of the year, and not having tax revenue coming in, she said.
Troy has been using tax anticipation notes as far back as 2004. That year it borrowed $700,000 to cover expenses. The town borrowed $600,000 in 2005, $500,000 in 2006 and $385,000 in 2007. From 2008-10, the town borrowed $200,000 each year. In 2011, it borrowed $250,000, while it took out a tax anticipation note for $400,000 in 2012.
Each time the town has paid back the notes, it has paid interest, ranging from $2,517 to $14,648.
Some help from
Provencher said her office has offered to help Troy officials navigate the town’s cash flow situation.
The state Treasury processed Troy’s rooms-and-meals tax distribution Tuesday, which was about three weeks earlier than normal, and mailed the $96,000 check to the town Wednesday, she said.
She also plans to write letters to the town’s biggest creditors, including the Monadnock Regional School District and the Savings Bank of Walpole, letting them know the state is working with Troy on the cash flow situation. The letter will also ask the school district and the bank to be a little lenient on the timing of payments from Troy, or extend the deadline of payments due this month, if possible, she said.
Since filing its petition with the N.H. Department of Education to overrule the Monadnock vote approving the school funding formula change, Troy selectmen have consistently blamed inaction by that state agency for its financial situation.
State Education Commissioner Virginia M. Barry adamantly defended her department, and state Board of Education, saying it’s “very disturbing” that Troy officials continue to blame them, as they did in front of the N.H. Executive Council on Wednesday.
“The reality is Troy had never been in touch at all with the (state Department of Education) until Nov. 11,” she said.
Prior to November, the N.H. Board of Education, which oversees the state’s education system within the Department of Education, reviewed the petition warrant article about the funding formula change twice, she said.
In February, the board unanimously OK’d the warrant article to appear on the school district ballot, and then certified it as being adopted lawfully in July, according to minutes from the board’s meetings.
Nadeau said the selectmen didn’t have an opportunity to testify before the state Board of Education before its February ruling, and if they did, he believes this whole situation could have been avoided.
“We weren’t aware of the (February) meeting at the time,” he said.
In addition, the selectmen didn’t find out until the middle of July that the state had certified the vote, he said.
“That is when we started looking into it,” he said.
One of many
One of Troy’s representatives to the Monadnock Regional School Board, Richard H. Thackston 3rd, said the petition warrant article to change the funding formula was one of many high-priority matters the school district was dealing with earlier this year.
The change in Troy’s apportionment caught him and other Troy residents by surprise when the numbers came out in July, he said.
“Troy has ended up with a huge change in its tax bills, while there has virtually been no change for anybody else,” he said.
While Troy’s apportionment increased by 16.1 percent from 2012-13 to 2013-14, Fitzwilliam, Richmond and Roxbury saw their payments to Monadnock drop by 7.7 percent, 0.059 percent and 3.3 percent, respectively.
Gilsum saw its apportionment increase by 9.3 percent, while Swanzey’s rose 4.8 percent.
The last time the school funding formula was changed in 2003, Troy and Sullivan were the only towns that saw their payments to Monadnock decrease.
That year, Monadnock voters approved a petition warrant article, which originated in Troy, to change the funding formula from being based on 100 percent student enrollment to 50 percent student enrollment and 50 percent town property valuation.
While Gilsum, Sullivan, Swanzey and Troy voted in favor of the article, Fitzwilliam, Richmond, Roxbury and Surry were against it. Surry left the district in 2008, and Sullivan withdrew this year.
In contrast, Fitzwilliam, Gilsum, Richmond and Roxbury voted for the petition warrant article this year, while Swanzey and Troy opposed it.
Given recent events, Troy selectmen hope to hold an informational session for residents next week, Nadeau said. A date and time still have yet to be finalized, but the board is shooting for Dec. 12 at 7 p.m. at the Troy Elementary School, he said.