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KEENE, N.H. (MyKeeneNow) City officials used Thursday’s Finance, Organization and Personnel Committee meeting to walk residents through how Keene builds its budget and how property taxes are calculated, amid growing public concern over rising bills.
The session focused on explaining why tax changes occur, how a citywide revaluation will affect property owners, and how factors beyond local control, particularly state funding decisions, are influencing what residents ultimately pay.
Finance staff said Keene’s operating and capital budgets are rooted in the city’s Master Plan and City Council priorities, which guide both daily services and long-term investments such as roads, buildings, parks and infrastructure.
Day-to-day municipal services, from police and fire to public works and the library, are funded through the general fund, while enterprise services like water, sewer and parking are paid through user fees rather than property taxes.
Property taxes remain the largest revenue source. Officials emphasized that the tax rate itself is not set solely by the city. Instead, the New Hampshire Department of Revenue Administration determines the final rate each fall using a formula that factors in budgets from the city, school district and county, along with total taxable property value.
As of 2025, Keene’s total property valuation is about $3 billion, with roughly 22 percent classified as tax-exempt under state law. That includes schools, churches, government facilities and certain nonprofits—properties that do not contribute directly to the tax base.
Staff said this dynamic, combined with assessed values currently below full market value, helps explain why Keene’s tax rate appears high compared to other communities. Officials stressed that comparing tax rates alone can be misleading, noting that total tax bills offer a more accurate measure of affordability.
The city is now preparing for its next required full revaluation, the first since 2021. Updated values will reflect the market as of April 1 and are expected to be finalized this fall, with the biggest impact appearing on the second tax bill of the year.
While higher assessments may lower the tax rate overall, officials noted that individual bills could still shift depending on how property values change relative to others—potentially shifting more of the tax burden between residential and commercial properties.
Beyond revaluation, city leaders identified rising fire department costs and gaps in state education funding as major pressures on local budgets. Increased staffing needs and overtime expenses in the fire department are driving higher public safety costs, while underfunded special education mandates continue to shift more responsibility onto local taxpayers.
Officials also discussed efforts to offset the impact of tax-exempt properties through voluntary payments in lieu of taxes, known as PILOT agreements. Over the past decade, annual PILOT revenue has grown significantly, including contributions from major institutions such as healthcare and senior housing facilities.
Much of the discussion ultimately turned to what officials described as “downshifting” from the state—reductions in revenue sharing and education funding that push more costs onto municipalities.
City leaders said they continue to advocate through the New Hampshire Municipal Association and direct outreach to state lawmakers for policy changes that could ease the local property tax burden.
Throughout the meeting, staff encouraged residents to participate in upcoming budget discussions, emphasizing that transparency and public input are key as the city prepares for both its next fiscal plan and the upcoming revaluation cycle.