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Ed Funding Lawsuits Aim at Pushing More Local School Costs onto State

The way New Hampshire funds education could be completely upended as two separate lawsuits advance in court. One suit seeks to halt education property tax rates and the other attempts to increase the amount the state pays per pupil. 

Plaintiffs in the Grafton County education lawsuit are set to argue Friday that the state should not be able to set a rate for the Statewide Education Property Tax (SWEPT), arguing the tax is unconstitutional as implemented.

Meanwhile, Gov. Chris Sununu won’t be forced to sit for a deposition in the Contoocook Valley Regional School District lawsuit. Rockingham Superior Court Judge David Ruoff ruled the plaintiff school districts failed to show the governor is in possession of any unique knowledge.

Both lawsuits are attempting to force the state to pay more of the costs for local schools, with plaintiffs in both cases alleging the state has never followed the New Hampshire Supreme Court’s rulings in the 1980s and 1990s Claremont cases.

The Grafton County case involves several state residents who are also commercial and residential property owners. They claim New Hampshire is violating the 1997 Supreme Court’s Claremont II decision.

In Claremont, the court ruled New Hampshire has a constitutional obligation to provide an adequate education. That decision found, in part, that the use of local property taxes with varying rates to pay for the state’s obligation to provide its students with an adequate education is unconstitutional.

The ConVal case, which now includes dozens of school districts as plaintiffs, seeks to force the state to increase the per-pupil grants for an adequate education from $3,600 per pupil to around $10,000 per pupil, alleging the current grant does not cover the necessary services.

According to attorneys in the Grafton County case, Andru Volinsky, John Tobin, and Natalie Laflamme, the state continues to ignore the Supreme Court by using varying rates for the SWEPT, which in effect continues to punish poor communities with lower property values.

“Ever since (Claremont II,) the state has tried numerous mechanisms to avoid implementing an equitable tax system that would have the effect of imposing a fairer tax burden on wealthier towns, requiring the courts to intervene and protect the constitutional rights of New Hampshire citizens. Now, the state is primed to once again impose a tax using the same mechanisms previously held unconstitutional that will result in some taxpayers paying up to seven times as much for education funding as their wealthier counterparts,” the attorneys write in a new filing with Grafton County Superior Court.

The Grafton County plaintiffs are now seeking an injunction to prevent the state from setting a tax rate, asking the court to keep the SWEPT rate at $0. A hearing on the injunction is set for Friday.

The SWEPT accounts for 30 percent of education funding in New Hampshire. The tax started in 1999 as a response to the Claremont decisions, which found the state has a constitutional obligation to fund an adequate education. The money raised, more than $360 million estimated in the coming year, is used to fund state adequacy grants.

According to the plaintiffs, wealthy communities raise more funds per pupil through SWEPT than the state’s low standard for what it asserts is the cost of a state-funded adequate education. And since 2011, the state has allowed those wealthy towns to keep the surplus, which flies in the face of the Claremont decisions, according to the motion.

“The SWEPT tax as currently administered is not uniform in rate as the state allows towns with surplus SWEPT funds to either set a negative local education tax rate to offset the state’s official equalized SWEPT tax rate or retain the excess,” the motion states. “Both of these mechanisms have been previously deemed unconstitutional by New Hampshire courts.”

In the ConVal case, the plaintiffs sought to depose Sununu in order to get him to testify about the reasons he vetoed a bill that would have increased education spending by $140 million. The bill would have paid for the increase by rolling back some of Sununu’s business tax cuts.

Ruoff found the plaintiffs did not articulate how Sununu’s veto was directly related to the issues involved in the lawsuit, like funding for transportation, meals, and other necessary services.

Ruoff has already found the state is not following the Claremont decisions and that it is unconstitutionally underfunding education. The ConVal case is slated for trial in the spring to try and determine what the adequate education grant should be per pupil. 

NH Commuter Rail Scheme Would Leave Property Taxpayers On the Hook

U.S. Rep. Chris Pappas hopes New Hampshire gets a new commuter rail service connecting Nashua and Manchester to Boston. Critics note how few Granite Staters use available rail now and don’t think local property taxpayers want to pick up the estimated $11 million tab to subsidize the trains.

Commuter rail is part of the $1.2 trillion infrastructure spending package pushed by President Joe Biden and supported by all the members of New Hampshire’s congressional delegation. Biden signed the bipartisan infrastructure bill, which includes $66 billion for rail, in November.

“This is a project that continues to bubble from the bottom up here in New Hampshire,” Pappas told Manchester’s InkLink last summer about the Capitol Corridor rail project. “I hear about it everywhere I go, residents who are looking for an opportunity to get to work, businesses that are looking to attract the kind of talent they need, and from local leaders who understand this can be an economic engine for New Hampshire.”

The train service would potentially go from Manchester through to Lowell, Massachusetts, with stops in Nashua and at the Manchester-Boston Regional Airport. 

Greg Moore, with the libertarian American for Prosperity organization, said New Hampshire cannot afford the fare. The service cannot operate without a taxpayer-funded handout, he said.

“Every state study has shown that it would require substantial taxpayer subsidies to benefit a small number of riders,” Moore said.

Moore said there are better ways to solve commuting problems that meet 21st century needs. He suggested private services like Turo or ZipCar, as well as Uber and Lyft.  

“Trying to jam an expensive 19th-century transportation solution onto the hard-working taxpayers of New Hampshire makes no sense,” he said.

A common argument from opponents of expanded rail is Granite Staters rarely use the service that’s currently available. The Amtrak Downeaster, for example, connects the Seacoast towns of Dover, Durham, and Exeter with Maine and Boston. According to Amtrak, New Hampshire riders make up less than 20 percent of the total ridership.

In 2019, before the COVID-19 pandemic hit, fewer than 2,000 trips a week began or ended in the Granite State. During the pandemic when ridership fell, the number of trips originating or ending in New Hampshire fell to 362 per week. Neither of those numbers is enough to sustain rail service without taxpayer subsidies.

In fact, Amtrak — often hailed as a success story — has received annual federal subsidies of $1.5 billion to $2 billion, in addition to the new billions from the bipartisan infrastructure bill. And the only reason service in the Northeast “pays for itself,” as advocates claim, is because of inventive bookkeeping that hides a huge backlog of needed maintenance and the subsidies it receives from state governments.

State Rep. George Sykes, D-Lebanon, a member of the House Transportation Committee, said every form of transportation, from air travel to bus service, is subsidized by taxpayers to some extent.

“There’s no free lunch when it comes to transportation,” Sykes said.

Sykes said rail service would be a net financial positive for the state in the long run when factors like increased development and savings on highway maintenance costs are considered. Paying for the service through taxes or fees just goes the territory, he said.

“My question to (those opposed to rail) would be, name me one aspect of transportation where they don’t have to pay for, one way or another.”

Sykes’ colleague on the Transportation Committee, Aidan Ankarberg, R-Rochester, doesn’t want his voters to have to pay for a service they are not going to be able to use. He recently filed a bill that would keep any state funding from being used for the rail project.

“It is not fiscally responsible or the New Hampshire way to expect my constituents in Rochester to pay for a commuter rail in Manchester that very few people will use,” he said. “My bill protects Rochester and other Granite State taxpayers from this boondoggle before it begins.”

Ankarberg said the most recent Department of Transportation report on the commuter rail, which estimates the state would need to subsidize the service at $11 million, is several years old and out of date. The true cost for the service to taxpayers is likely closer to $16 million, he said. That money would come from increased property taxes, or cuts to education funding, he said.

“While current estimates aren’t available, the DOT previously suggested raising statewide property taxes by $15.7 million or diverting 5 percent of our education funding in order to cover the commuter rail’s operating and management costs,” he said.

That kind of spending isn’t going to catch on in New Hampshire, according to Moore.

“Thankfully, there is little appetite in the state legislature for saddling state taxpayers with this backward approach,” Moore said. “New passenger rail isn’t happening anytime soon.”