As towns announce their 2007 property tax rates and send bills to landowners, some are seeing big tax hikes connected to the extra veterans' benefits they now offer.

In Hampstead, a $200 hike in veterans' benefits this year was responsible for a fifth of the 2.3 percent hike in taxes overall.

And in Salem, where veterans' benefits have grown fivefold in four years, it was much the same story. The Salem veterans' benefit was responsible for an increase of 16 cents per $1,000 of property value, according to Salem Finance Director Jane Savastano.

Salem selectmen on Wednesday had to borrow $750,000 from their own unreserved fund balance to keep the tax hike there to 3 percent.

New Hampshire towns bill their property owners twice a year, and each year's tax rate is typically set between the first and the second bill.

State law allows towns to return up to $500 in property taxes to veterans who served during wartime. But, before the wars in Iraq and Afghanistan, many communities | like Londonderry, Salem, Derry and others | only offered $100 rebates to veterans.

In Londonderry, the Town Council has increased the rebate by $100 each year since 2004, according to Karen Marchant, director of assessing. The tax credit there now sits at the $500 maximum.

While the increases have put pressure on Londonderry | about 930 veterans will get the benefit this year, Marchant said | the gradual increases have given budget planners time to adjust. This year, Londonderry's tax rate actually fell by 0.3 percent, or 6 cents per $1,000 of assessed value.

In Salem, where the veterans' benefit increase has been more abrupt, town leaders were caught off guard.

In 2003, the veterans' benefit in Salem was $100 and it cost Salem $173,000. By 2005, the benefit had jumped to $500.

And this year, with more veterans signed up for the plan than ever, Salem will have to shell out $755,000 in property tax credits to former soldiers, sailors, airmen and Marines, according to Savastano, the finance director.

In Hampstead, it's much the same story.

Voters in that town increased the veterans' benefit from $300 to the $500 maximum this year, which will cost $91,100, according to Sally Theriault, the selectmen's administrative assistant. That means 9 cents for every $1,000 in property value, a fifth of the 42-cent overall tax increase, she said.

But Mary Morin, director of the New Hampshire State Veterans Council, said she thinks the boost in veterans' benefits has been a good thing.

"There is a trend statewide, that (towns are) going up to the $500 (maximum)," Morin said. "Everybody wants to be supportive of the troops."

And not every town is hurting from the cost of veterans' benefits, according to some town officials.

In Derry, where the veterans' credit jumped from $100 to $250 this year, the overall taxes actually dropped. The drop was mostly attributed to a decline in local school taxes. The town's portion of the tax rate actually went up 1.9 percent, according to information from Town Administrator Gary Stenhouse.

And in Newton, where taxes jumped 3 percent, the increase had absolutely nothing to do with veterans' credits, said Town Administrator Nancy Wrigley. The veterans' benefit in Newton has hovered at $200 for the last half decade, she said.

"Our basic issue was the lack of revenues this year," Wrigley said of the Newton tax hike.

Last year, Newton got $470,000 in back taxes on property that was being developed, she said. This year, the town got less than $50,000.


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The towns of Atkinson, Chester, Danville, Kingston, Pelham, Plaistow, Sandown and Windham have not yet set their 2007 tax rates.

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