Plaintiffs Claim State Arguments Faulty in Latest Ed Funding Suit

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Courtesy photo

Speakers at a gathering for the 30th anniversary of the Claremont decision are from left: Frank Sprague, Molly Horn, Andru Volinsky, Tom Connair, John Graziano, and John Tobin in this file photo.


CONCORD — Plaintiffs in the latest lawsuit challenging the state education funding system, say the court should issue a summary judgement on the constitutionality of the Statewide Education Property Tax.

In the latest filing, the plaintiffs respond to the state’s and coalition communities’ earlier filing claiming allowing the property wealthy communities to retain the excess money collected from SWEPT is a legislative spending decision, and claim unincorporated places escape the tax because they are not municipalities.

The plaintiffs say those contentions are the state’s latest attempt to shirk its duty under the Supreme Court’s Claremont decisions to provide all students an adequate education and to pay for it.

The plaintiffs, a group of residential and commercial property owners, say the defendant’s arguments do not align with past court decisions.

The state argued the property wealthy towns are allowed to retain the excess money collected under the SWEPT because it is a legislative spending decision. The communities keep the excess money over what the value of the state’s adequacy grant and use the money to offset the local education property tax, lowering their overall tax rate.

The change was made by the 2011 legislature. Prior to that time, the state collected all the SWEPT revenue and put it into the Education Trust Fund.

No such grant is allowed under the trust fund statute, the plaintiffs note in their filing, and the Department of Revenue Administration has a long history of issuing tax warrants for the unincorporated areas that include the SWEPT calculation, the plaintiffs claim but now the state argues they are exempt because they are not “municipalities.”
“These arguments fail as a matter of law,” the attorneys write in their filing. “Further, if taken as true, they uncover further constitutional violations.”
The plaintiffs had sought a temporary injunction blocking the DRA from setting the tax rates for the wealthy communities and the unincorporated areas in October, but Superior Court judge David Ruoff denied a request for the injunction, saying it would be too financially disruptive for the affected communities in the middle of a tax year, but did not rule on the merits of the suit.

The plaintiffs then filed a request for a summary judgement on the issue of the SWEPT constitutionality before the new financial year begins for most school districts April 1.

The state and a group of property wealthy communities objected to summary judgement and instead argued the tax was instead a legislation spending decision and the unincorporated areas were not municipalities.

In its filing answering those filings, the plaintiffs argue the state has a long history of backing away from the requirements of the Claremont decisions and instead has made the funding system more like it was before the landmark rulings.

“This history should be considered by the Court when deciphering the latest iterations of the State’s efforts to avoid following the Claremont decisions,” the lawyers write.

They contend allowing the unincorporated places to have a negative education tax in order not to pay the SWEPT, flies in the face of past Supreme Court decisions.

“The Supreme Court has made clear that a locality cannot avoid paying a statewide education funding tax on the basis that it has little to no educational needs,” the lawyers wrote citing the Supreme Court’s Claremont II decision.

The plaintiffs also dismiss the state’s contention that allowing communities to retain the excess money is legal because it is a legislative spending decision.

“Claremont makes clear that the State bears the burden of funding constitutional adequacy, so to the extent that the State chooses to meet this funding responsibility with a property tax, the tax must result in taxpayers in the various communities bearing an equal burden so as to avoid violating Part II, Article 5,” the attorneys write.

They also address that state’s argument that the communities are all assessed at the same rate, which means it is constitutional, while the grant to the wealthy communities comes after the assessment.

“The current property tax scheme to fund adequacy which results in a differing effective tax rate is unconstitutional, even if that action occurs after assessing a nominally uniform rate,” the attorneys contend. “To hold otherwise is to elevate form over substance.”

The state and the coalition communities argue any change in the current arrangement would be financially disruptive and should be phased in.

But the plaintiffs say that some taxpayers are bearing a greater burden than others and that needs to be remedied.

“This Court should declare the tax unconstitutional and order its sunsetting,” the plaintiffs argue in their filing. “The State may then choose to reform the tax by adding excess funds to the Education Trust Fund and no longer setting negative local tax education rates, or it may end the tax altogether.”

In their original suit, the plaintiffs claim the state’s administering of the SWEPT results in higher taxes for them and lower taxes for 47 communities that either raise more money than they need or are extremely small with no or little education costs.

The two provisions amount to between $10 million to $11 million of tax revenue.

The judge set the trial on the case the week of Sept. 25 to Oct. 2. 

It was originally scheduled for August when it was before Grafton County Superior Court before Justice MacLeod. before he recused himself.

Garry Rayno may be reached at

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