In a surprise ruling issued December 17, a divided New Hampshire Supreme Court declared that the state’s current system of funding public education, where local property taxes pay for almost 90 percent of the costs, is unconstitutional. The court gave the state legislature and Governor one year to craft an alternative model that does not violate the state constitution.
The ruling also requires the legislature to develop standards for the provision of “a constitutionally adequate public education,” which the state would then have the responsibility for funding.
At the heart of the court’s ruling is an unusual perspective on the school property tax: that it is a state, rather than a local, tax. Writing for the majority, Chief Justice David Brock opined, “We hold that the property tax levied to fund education is, by virtue of the State’s duty to provide a constitutionally adequate public education, a State tax and as such is disproportionate and unreasonable in violation of part II, article 5 of the New Hampshire Constitution.” Having decided this, the court found it unnecessary to take up the plaintiff’s other claims.
Concerned that the decision means a new statewide tax and loss of local control over schools, Republican State Senator Jim Rubens has proposed a constitutional amendment that would ask voters if they want to overturn the court’s ruling. Such an approach would leave voters, rather than judges, with the final say over how education is to be supported in the state. With most school funds raised locally, the state–whose official slogan is “Live Free or Die”–has no broad-based property tax, income tax, or sales tax.
“We need to dramatically increase the quality, cost-effectiveness, and accountability of the public education system without sacrificing local control and without opening a Pandora’s Box of litigation that will ratchet up per-student costs,” said Rubens, who chairs the Senate Education Committee. He points to the example of New Jersey, where litigation has been underway for 28 years, and where statewide spending caps were imposed when per-student costs reached $10,000. New Hampshire’s per-pupil cost is $6,000.
Dissenting from the court’s decision, Justice Sherman Horton said that while he also had concerns about the state’s education financing system, “My problem is that I was not appointed to establish educational policy, nor to determine the proper way to finance the implementation of that policy,” he wrote, adding “I should not involve myself in social engineering, no matter how worthy the cause . . .”
Arguing that the duty of the State is to ensure an adequate education–one that meets the minimum standard of assuring the preservation of a free government–Horton objected to the majority’s equating “duty” with “purpose,” and its rejection of the state’s delegation of authority to political subdivisions.
“Political subdivisions, at their own expense,” noted Horton, “carry out State duties on elections, fire and police protection, land use control and other exercises of the police power, provisions of highway, sanitation, and the structure and staffing of local government.”
Although the court majority determined that it is not reasonable, in discharging a State obligation, “to tax property owners in one town or city as much as four times the amount taxed in others similarly situated in other towns or cities,” the trial court record does not support such an assertion, which illustrates a common confusion between tax rates and tax amounts.
While 1994-95 equalized school tax rates for two comparison districts–“property-poor” Pittsfield and “property-rich” Moultonborough–do differ by a factor of 4.54 ($25.26 and $5.56 respectively), the actual 1993 school tax amounts on a median house in each community differ by a factor of only 2.86, $1,634 versus $572. Moreover, Pittsfield’s $1,634 school tax is actually lower than the state average of $1,796, partly because of the disproportionate distribution of state funding for education. Pittsfield has to raise only 55 percent of its school budget from local taxes, while Moultonborough is expected to raise 94 percent.
The trial court record shows also that 1993 school taxes on a median house in one of the “property-poor” petitioner districts, Claremont, were actually significantly lower than those on a median house in the comparison “property-rich” Lebanon district, $1,288 versus $1,774. In fact, the state requested dismissal of the petitioners’ claim on the grounds that no party with standing presented evidence of “unreasonable, disproportionate and burdensome taxation upon the class of petitioner taxpayers.”
The only party from a “property-poor” district to present evidence in this regard, John Fitzgerald, testified that, as a percentage of median household income, Lisbon residents’ school taxes are below the state average and that his own housing costs, including property taxes, are less than 20 percent of his income.
The only petitioner student who was a witness at the trial, Richard Elliot, felt that he received a good education from the “property-poor” Claremont school district and that the only area of deficiency in his high school education was in the use of graphing calculators, which he had to learn when he went to college to bring his skills up to those of his peers.
George A. Clowes is managing editor of School Reform News. His email address is [email protected].
Local property tax ruled a state tax George A. Clowes
In a surprise ruling issued December 17, a divided New Hampshire Supreme Court declared that the state’s current system of funding public education, where local property taxes pay for almost 90 percent of the costs, is unconstitutional. The court gave the state legislature and Governor one year to craft an alternative model that does not violate the state constitution.
The ruling also requires the legislature to develop standards for the provision of “a constitutionally adequate public education,” which the state would then have the responsibility for funding.
At the heart of the court’s ruling is an unusual perspective on the school property tax: that it is a state, rather than a local, tax. Writing for the majority, Chief Justice David Brock opined, “We hold that the property tax levied to fund education is, by virtue of the State’s duty to provide a constitutionally adequate public education, a State tax and as such is disproportionate and unreasonable in violation of part II, article 5 of the New Hampshire Constitution.” Having decided this, the court found it unnecessary to take up the plaintiff’s other claims.
Concerned that the decision means a new statewide tax and loss of local control over schools, Republican State Senator Jim Rubens has proposed a constitutional amendment that would ask voters if they want to overturn the court’s ruling. Such an approach would leave voters, rather than judges, with the final say over how education is to be supported in the state. With most school funds raised locally, the state–whose official slogan is “Live Free or Die”–has no broad-based property tax, income tax, or sales tax.
“We need to dramatically increase the quality, cost-effectiveness, and accountability of the public education system without sacrificing local control and without opening a Pandora’s Box of litigation that will ratchet up per-student costs,” said Rubens, who chairs the Senate Education Committee. He points to the example of New Jersey, where litigation has been underway for 28 years, and where statewide spending caps were imposed when per-student costs reached $10,000. New Hampshire’s per-pupil cost is $6,000.
Dissenting from the court’s decision, Justice Sherman Horton said that while he also had concerns about the state’s education financing system, “My problem is that I was not appointed to establish educational policy, nor to determine the proper way to finance the implementation of that policy,” he wrote, adding “I should not involve myself in social engineering, no matter how worthy the cause . . .”
Arguing that the duty of the State is to ensure an adequate education–one that meets the minimum standard of assuring the preservation of a free government–Horton objected to the majority’s equating “duty” with “purpose,” and its rejection of the state’s delegation of authority to political subdivisions.
“Political subdivisions, at their own expense,” noted Horton, “carry out State duties on elections, fire and police protection, land use control and other exercises of the police power, provisions of highway, sanitation, and the structure and staffing of local government.”
Although the court majority determined that it is not reasonable, in discharging a State obligation, “to tax property owners in one town or city as much as four times the amount taxed in others similarly situated in other towns or cities,” the trial court record does not support such an assertion, which illustrates a common confusion between tax rates and tax amounts.
While 1994-95 equalized school tax rates for two comparison districts–“property-poor” Pittsfield and “property-rich” Moultonborough–do differ by a factor of 4.54 ($25.26 and $5.56 respectively), the actual 1993 school tax amounts on a median house in each community differ by a factor of only 2.86, $1,634 versus $572. Moreover, Pittsfield’s $1,634 school tax is actually lower than the state average of $1,796, partly because of the disproportionate distribution of state funding for education. Pittsfield has to raise only 55 percent of its school budget from local taxes, while Moultonborough is expected to raise 94 percent.
The trial court record shows also that 1993 school taxes on a median house in one of the “property-poor” petitioner districts, Claremont, were actually significantly lower than those on a median house in the comparison “property-rich” Lebanon district, $1,288 versus $1,774. In fact, the state requested dismissal of the petitioners’ claim on the grounds that no party with standing presented evidence of “unreasonable, disproportionate and burdensome taxation upon the class of petitioner taxpayers.”
The only party from a “property-poor” district to present evidence in this regard, John Fitzgerald, testified that, as a percentage of median household income, Lisbon residents’ school taxes are below the state average and that his own housing costs, including property taxes, are less than 20 percent of his income.
The only petitioner student who was a witness at the trial, Richard Elliot, felt that he received a good education from the “property-poor” Claremont school district and that the only area of deficiency in his high school education was in the use of graphing calculators, which he had to learn when he went to college to bring his skills up to those of his peers.
George A. Clowes is managing editor of School Reform News. His email address is [email protected].
George Clowes is former Heartland senior fellow addressing education policy. He served as founding managing editor of School Reform News between November 1996 and January 2005.
