By GARRY RAYNO, InDepthNH.org
CONCORD — The plaintiffs in the education funding lawsuit filed by property taxpayers have offered a settlement to the state to resolve the Statewide Education Property Tax issue.
The proposal, which the plaintiffs sent the state a week ago, but has not received a response, would set a timeline to change two aspects of the state’s administration of the tax they claim make it unconstitutional because taxpayers are assessed at different effective rates and not proportional rates as required by the state constitution.
The plaintiffs, Rand and other residential and commercial property taxpayers, claim some communities have their local education property tax rate set at a negative number to avoid paying the statewide tax, and other communities are allowed to retain excess money raised under the tax to cover the state’s adequacy grant to school districts, which reduces their effective rates.
“The state has not offered a defense to these practices in the face of the plaintiffs’ constitutional claim that state taxes must be uniform across the state. The negative offsetting rates and the keeping of the excess funds makes the SWEPT a non-uniform tax,” said Natalie Laflamme, one of the plaintiffs’ lawyers. Rather than defend this directly, she said, “the state claims it would be too disruptive to correct the practice.”
The state has argued the rate is the same for all communities but the legislature has made a spending decision to allow the affected communities to retain the money instead of sending it to the Education Trust Fund as originally required in the state’s education funding plan to address the State Supreme Court’s original Claremont decisions enacted more than 20 years ago.
The proposed settlement sets a timeline for the state to come into compliance by April 1, 2024.
Under the settlement proposal, the state would stop using negative rates at the start of the next property tax year, April 1, 2024 and the same date would apply to have the communities with excess funds send that money to the state’s Education Trust Fund.
“There is no question that the State’s actions have violated the rights of the plaintiffs and countless other taxpayers around New Hampshire by giving some property owners special treatment,” Laflamme said. “The timeline offered in the proposed settlement is a fair allowance to make administrative adjustments, while guaranteeing the future fair treatment of all New Hampshire taxpayers.”
The settlement would need legislative approval to undo what has been done by a previous legislature.
“If you believe the partial settlement should be adopted, now would be a good time to contact your legislators,” Laflamme said.
The case was scheduled for trial next month but was postponed by Superior Court Judge David Ruoff until he makes a decision on the summary judgment request from both parties on the constitutionality of the Statewide Education Property Tax and a decision on the merits in the case filed by the ConVal School District and others claiming the state has failed to pay the true cost of an adequate education.
The state currently pays a little more than $4,000 per student, while others have argued about $10,000 per student would be more appropriate.
The state claims such things as transportation, school nurses, school facilities and their maintenance and capital costs are not included in the cost of an constitutionally adequate education.
The state argues the Supreme Court’s Claremont decision does not forbid the legislature from requiring local school districts to dedicate additional resources for schools or educational programs beyond a constitutionally adequate education.
The state argues it does not have to pay those costs, but the plaintiffs argue the requirements are still needed to adequately educate a student and the state should be paying those costs, not relying on local property taxes to do so with widely varying rates.
The state has also filed a motion for summary judgment on the remainder of the Rand case, but the plaintiffs do not agree on the facts presented by the state on the definition of an adequate education or the services needed to provide it and have about three weeks to respond to the state’s filing.
According to Laflamme, the state has acknowledged it has received the settlement proposal, but has not responded.
Under the agreement, the plaintiffs agree to not further pursue litigation claims about the Statewide Education Property Tax’s constitutionality or seek attorney fees or expenses for that part of their case, but do reserve the right to seek fees and costs for the other part of their suit.
The plaintiffs also “reserve the right to challenge other schemes or mechanisms adopted by the State to fund constitutional adequacy as well as the State’s efforts to define and assign a cost to constitutional adequacy.”
Garry Rayno may be reached at email@example.com.