By GARRY RAYNO, InDepthNH.org
CONCORD — A superior court judge’s decision not to delay implementation of his order on the Statewide Education Property Tax will disrupt the local school budget process for many communities, claim those affected by the order.
The Statewide Education Property Tax was instituted to address the Supreme Court’s Claremont education ruling and currently is assessed at $1.44 per $1,000 of equalized valuation to produce $363 million annually.
Last week, Rockingham County Superior Court Judge David Ruoff, rejected motions by the state and the Coalition Communities to delay his order until a final decision by the state Supreme Court of an appeal, which has yet to be filed.
“The latest Superior Court decision ignores the real-world effects on municipalities all across New Hampshire,” said Mark Decoteau, Waterville Valley town manager and chair of the Coalition Communities 2.0. “If this Order goes into effect, towns in our coalition may have to lay off teachers, forego renovations of school facilities, and cancel plans to fix roads and old bridges, and update sewer and water services to comply with state and federal regulations.”
Ruoff had ruled the state’s collection method for the SWEPT by allowing property wealthy communities to keep excess funds and negative tax rates for small unincorporated places was unconstitutional because the effect was to have differing tax rates for communities while the constitution requires taxes to be proportional and reasonable.
In his order, Ruoff said the communities should have planned for a change in the way the state administers the statewide property tax. “The clarity of the relevant legal landscape should have inspired Coalition members to plan for the fiscal impacts of the SWEPT order during the pendency of this action,” he writes.
Ruoff also criticized the group’s attorney. “The court remains both unpersuaded and deeply troubled by the characterization of the plaintiffs’ injuries as a ‘mere’ violation of their constitutional rights,” the judge said, because they will not immediately benefit from changing how the tax is administered.
“The Court concludes that although the plaintiffs will not sustain an immediate fiscal benefit from the disgorged funds they will derive significant benefit from injunctive relief that cures the above-described constitutional violations,” he writes.
And he noted everyone admitted to practice law in New Hampshire has to take an oath and subscribe to the New Hampshire and United States constitutions.
Decoteau said the problems do not affect just a few towns but will be felt all over the state.
He said Seacoast towns will not be able to carry out environmental projects on coastal water bodies that are needed to keep beaches open in the summer, while Lakes Region towns will not be able to modernize their sewer systems to prevent algae and bacterial bloom in their lakes and ponds.
The change in administering the SWEPT would have the state collect about $24 million from about 25 cities and towns, and small unincorporated places with few or no children. The unincorporated places account for about $200,000 of the total figure.
Andru Volinsky, an attorney bringing the suit Rand versus the State, said their argument that the tax was unconstitutional was first raised before a Grafton County Superior Court judge in October 2022 and the coalition’s attorney was at that hearing as was the deputy city manager of Portsmouth.
Since that time, the coalition communities have not done anything to prepare for the ruling that Ruoff issued in November, Volinsky said.
“The Legislature decided over 12 years ago to use statewide educational property tax revenues to fund local schools. Municipalities relied on that longstanding law when planning their budgets, assessing taxes, and planning projects important for their residents and the entire state,” Decoteau said.
The judge’s decision not to stay his order comes at the worst time possible, he said, when towns and school districts are holding their annual meetings and trying to finalize their budgets.
“Even the NH House of Representatives recognizes these flaws when it voted (last week) to table a bill to require towns to remit SWEPT revenue to the state,” Decoteau said.
He, the coalition’s attorneys and the state contended during trial that the legislature’s 2011 decision to end the donor-receiver model is not a tax but a spending decision by the legislature.
“Under our Constitution, the Legislature has the authority to fund education and wisely decided to spend education tax dollars in the local communities where the taxes were raised,” Decoteau said. “The courts and unelected judges are not supposed to be a super-legislature deciding how Granite Staters’ hard-earned taxes are spent.”
The court rejected their argument that it was a spending and not a taxing decision.
Although the coalition communities claim they are donor communities, the plaintiffs’ attorneys argued the state collects the tax through the communities on every property owner in the state regardless of where they live and that requires the rate to be proportional and reasonable under the state constitution.
Both the Rand decision, and the ConVal School District decision that the state failed to pay for an adequate education and instead used local property taxes to cover its share of the cost, making the system unconstitutional with varying property tax rates, are expected to be appealed to the State Supreme Court.
Garry Rayno may be reached at garry.rayno@yahoo.com. Garry Rayno is InDepthNH.org’s State House bureau chief.