Why A 60-Year Old Contract Has Massachusetts And NH At Loggerheads

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Flood control, town tax reimbursements, and tight state budgets have NH and Mass wrestling over back payments

Since the economy tanked and the legislature started slashing the budget, there’s been talk at the town level about so-called “down-shifting.”  That’s when the state stops supporting local programs or making certain payments to towns, forcing localities to pick up the slack.  Now, the legislature’s considering what to do when not only New Hampshire, but Massachusetts, has shifted costs.

At issue is the drily titled 1953 Merrimack River Valley Flood Control Compact.  As Tricia Nadolny reports in the Concord Monitor, 18 New Hampshire communities agreed to give up a set amount of land for flood control.  In exchange, Massachusetts would reimburse the state for 70 percent of the towns’ lost tax revenue each year.  New Hampshire would pony-up the other 30 percent, and between the two states, the towns would get their lost tax funds.

But, Nadolny writes:

“About seven years ago, Massachusetts stopped covering its part, leading New Hampshire to pay the reimbursement in full. But in 2011 the state paid only its 30 percent share, and this year New Hampshire hasn’t covered even that much.”

So those towns are losing some serious revenue.  Here’s a sample:

“In Webster, a 1 percent budget cut this year still resulted in a 6 percent tax increase due to the loss of revenue, Selectman George Cummings said.

In Sanbornton, where “very valuable” riverfront property was seized, the town found itself shorted $27,000 this year, Town Administrator Bob Veloski said.

In Surry, the unpaid $53,000 resulted in a 20 percent tax increase, Selectman Russell Fiorey informed the committee through a letter.”

No doubt, the towns are hurting.  And that’s set both legislative and executive wheels in motion.

This week, the House Ways and Means Committee discussed SB 326.  The bill would require any payments from Massachusetts to go directly to towns, rather than to the state.  Because right now under the law, New Hampshire can “keep the money as back payments.”  After all, from the state’s perspective, it paid the Bay State’s share for several years, and it needs to be reimbursed.  But bill author Senator Andy Sanborn of Henniker argues that the compact says the New Hampshire’s ultimately responsible for paying the towns.  So regardless of a Bay State default, he says, New Hampshire legally owes towns their money.

At the same committee hearing, Senior Assistant Attorney General Peter Roth issued an ultimatum to Massachusetts–pay up, and soon, or go to court.  If an agreement doesn’t shake out by the end of summer, the AG’s office plans to file a lawsuit with the U.S. Supreme Court.

Meanwhile, the Union-Leader’s Ted Siefer reports that just for 2011-2012, the state figures Massachusetts owes $496,000.  And Siefer got the perspective from the other side of the state line:

“A spokesman for the Massachusetts Executive Office of Energy and Environmental Affairs has said that officials have made several attempts to get information from New Hampshire officials that would detail how the state calculated its loss in property value as a result of the flood control improvements.

New Hampshire officials have said that the Bay State hasn’t been seating commissioners to the Merrimack River Valley Flood Control Commission, which oversees the compensation system.

Bay State officials say they want a resolution.”


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