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Yahoo
2 days ago
- Business
- Yahoo
Supreme Court rules SWEPT tax constitutional, settling one school funding issue
Supreme Court Justices Patrick Donovan, Gordon MacDonald, and Melissa Countway hear oral arguments in Rand v. State of New Hampshire, on Nov. 13, 2024. (Photo by Ethan DeWitt/New Hampshire Bulletin) New Hampshire's Statewide Education Property Tax is equal and uniform and does not violate the New Hampshire Constitution, the state Supreme Court ruled Tuesday, in a blow to state taxpayers who had sued the state and alleged unfairness. In a 3-1 decision, the court held that the tax, known as the SWEPT, is administered fairly and evenly by the Department of Revenue Administration, even though wealthier towns might collect more than they need for their schools and keep the excess. 'Accordingly, regarding the 'excess SWEPT' issue, we hold that the SWEPT scheme is constitutional under Part II, Article 5 because it is 'administered in a manner that is equal in valuation and uniform in rate throughout the State,'' wrote Chief Justice Gordon MacDonald in the majority opinion. The SWEPT is a mandatory process in which towns collect property taxes to pay for their schools. Under law, the state sets a goal each year for New Hampshire cities and towns to collect a combined $363 million, and each year the Department of Revenue Administration sets a tax rate per $1,000 of property value that towns must collect. But that statewide tax rate typically results in towns with higher property values collecting far more from the SWEPT than towns with lower property values, and sometimes more than is needed to fund their schools. When the tax was enacted in 1999, those wealthier towns were required to relinquish any excess SWEPT revenues to the state to be redistributed to needier towns through the state's adequacy formula. But in 2011, then-Gov. John Lynch signed a law to allow those towns to keep the excess, after pushback by some communities that considered themselves 'donor towns.' Plaintiffs in the lawsuit, Rand v. State, had argued that because the current system allows wealthy towns to collect more in property taxes than they need, and because those towns can use the excess to lower the overall percentage of property taxes paid, the tax is neither equal nor uniform in practice. Residents of towns with lower property values pay much higher local property tax rates as a percentage than those in wealthier towns, plaintiffs said. Lawyers for the plaintiffs — who included Natalie LaFlamme as well as John Tobin and Andru Volinsky, two attorneys on the winning side of the landmark Claremont school funding decisions in the 1990s — had brought a motion for 'declaratory judgment' to the Supreme Court. That motion was intended to allow the Supreme Court to rule quickly on the constitutionality of the SWEPT tax before the rest of the case receives a hearing in superior court, in order to lay questions about the SWEPT tax to rest. The court did put the question to rest Tuesday, but not in the plaintiffs' favor. MacDonald held that the SWEPT is administered evenly because the Department of Revenue Administration applies the same flat tax rate each year to all cities and towns, wealthy or poor. Whether those towns keep the excess revenue or not, and whether some towns raise enough to pay for schools or not, does not affect whether the underlying tax is unequal and does not make it unconstitutional, MacDonald wrote. In doing so, MacDonald dismissed evidence from an expert indicating the difference in effective property taxes between towns. 'The plaintiffs do not dispute that under the SWEPT, as administered, taxpayers are actually assessed at a uniform rate. That concludes the constitutional inquiry,' MacDonald wrote. 'The 'effective rates' in the expert's data reflect, at most, an indirect effect of municipalities retaining excess SWEPT revenue, as the statutory scheme permits. Theoretical indirect effects of the scheme on municipalities are not relevant to the analysis under Part II, Article 5.' Associate Justices Melissa Countway and Patrick Donovan concurred with MacDonald. But Senior Associate Justice James Bassett dissented on the question of the constitutionality of SWEPT. Responding to MacDonald, Bassett argued that under SWEPT, taxpayers in poorer towns do face disparities in taxation compared to those in wealthier towns. 'The impact of the SWEPT scheme on taxpayers in excess SWEPT communities is anything but 'theoretical' or 'indirect': the effective SWEPT rate reduction those taxpayers enjoy is real and direct,' Bassett wrote. 'The impact of the SWEPT scheme on taxpayers in other communities that do not generate excess SWEPT is also real and direct: those taxpayers enjoy no comparable reduction in their effective SWEPT rate.' The fifth associate justice, Anna Barbara Hantz Marconi, has been on administrative leave from the court since July 2024, pending a criminal case against her for allegedly interfering with the criminal investigation of her husband. The decision overrules parts of an earlier decision by Rockingham Superior Court Judge David Ruoff, who ruled in 2023 that the SWEPT was illegal. The ruling does not end the Rand case; it merely answers plaintiffs' attempts to receive a declaratory judgment on SWEPT. The rest of the Rand case alleges that New Hampshire's adequacy formula, which currently gives a minimum of $4,182 per student to public schools that need aid, is far too low to pay for an adequate education and is unconstitutional. The court did not rule on that question Tuesday. But it is currently considering a different school funding case, Contoocook Valley School District v. New Hampshire, in which a number of school districts have also alleged that the adequacy formula is too low to provide an adequate education. Oral arguments in that case, known as the ConVal case, took place at the Supreme Court in December. Ruoff has also ruled that the state's formula is unconstitutionally low. The Supreme Court's expected ruling in the ConVal decision could affect how the rest of the Rand lawsuit plays out in superior court, now that the constitutionality of SWEPT has been affirmed by the high court. In an order sent in October, the court indicated that it is unlikely to overturn the Claremont decisions, in which the Supreme Court established the constitutional requirement that the state of New Hampshire ensure an adequate education. Tuesday's ruling did include a partial victory for plaintiffs. The court held that use of 'negative tax rates,' in which the Department of Revenue Administration allows unincorporated towns that don't have school districts to offset their SWEPT tax with negative rates to effectively raise no SWEPT revenue, is unconstitutional. But the court did not direct the state to stop setting negative tax rates. Instead, it said the process for doing so, and fixing the unconstitutional law, is in the hands of the legislative and executive branches. 'Resolving the constitutional infirmity in the State's practice of setting negative local tax rates is the responsibility of the other co-equal branches of government,' MacDonald wrote.
Yahoo
02-04-2025
- Business
- Yahoo
Rise of carbon programs has New Hampshire rethinking the scope of timber taxes
New Hampshire's timber tax is retained by municipalities. (Photo by Dana Wormald/New Hampshire Bulletin) In New Hampshire, timber is considered taxable real estate. But since that tax is assessed at the time of harvesting, some worry carbon programs that keep trees standing for decades to offset emissions could cut into local revenue. A group of lawmakers have proposed a fix, House Bill 123, which they say would simply allow revenue from such programs to be taxed the same as felled trees. The bill comes after action last session to establish a registry of properties in the state enrolled in carbon programs, and amid ongoing debate over the management of the Connecticut Lakes Headwaters forest in the northern part of the state. 'Our world has and continues to change,' said Rep. Mike Ouellet, a Colebrook Republican and one of the bill's sponsors, at a hearing for the bill. 'HB 123 is nothing more than a reflection of today's varying timber market.' The bill faced some pushback from conservation and business groups when it was introduced. It came out of the House Municipal and County Government Committee with a unanimous, 18-0, recommendation that the full chamber pass it with an amendment. But last month, Republican Majority Leader Jason Osborne moved to table it. The Auburn Republican called the issue 'important,' but suggested it would be better to wait until the Department of Revenue Administration finished a related report later this year. His motion failed, 171-185, and the House passed the amended bill, 197-158. Now, it awaits further action in the Senate Energy and Natural Resources Committee. Rep. Arnold Davis, a Milan Republican, said when introducing the bill that it had two goals: to keep municipalities 'whole,' since the tax is retained locally, and to put timber harvesting on 'a fair playing field' with carbon credit projects. Davis and other supporters of the bill said it was not a new tax, but simply a new branding of the same tax. Some opponents, though, disagreed, and said it created a tax on carbon credit programs where none currently exists. 'This is not a new tax. It is still timber tax,' Davis said. 'It is simply a way to keep a fairly new way of doing business from circumventing around paying their property tax to the towns, and to push for best forestry management practices.' Technically, under current state law, standing timber can be taxed when assessors determine a municipality is 'unreasonably deprived of revenue because of the failure of an owner' to cut down timber that has 'arrived at the degree of maturity most suitable for its use.' But Davis said this section of the law has never been invoked, and felt the bill provided a simpler avenue to collect the revenue. Before the timber tax was enacted decades ago, officials would visit properties to assess the value of the standing trees — a 'cumbersome' and likely inaccurate process, and one property owners could circumvent by chopping down their trees, Davis said. Now, and for the better part of the past century, property owners are charged a 10% yield tax upon cutting down timber after a certain amount and under certain circumstances. This made the process simpler for assessors and more accurate, Davis said. While that system worked for decades, Davis said, carbon programs have changed the landscape. He pitched the bill as a way to adapt and close what he called a 'loophole.' The bill would require landowners to pay an annual yield tax of 10% of the 'estimated net value of the carbon offset credits issued and sold in the previous calendar year.' Similarly, the state's timber tax is 10% of the 'stumpage value' — the value of the timber at the time it is cut, as determined by assessing officials. In 2023, it brought in over $3.4 million across the state, according to the Department of Revenue Administration. Right now, at least nine property owners in the state are enrolled in carbon programs, according to the latest version of the state registry. Collectively, they amount to more than 186,000 acres, with the smallest property enrolled standing at 122 acres in Hillsborough County, and the largest being more than 141,000 acres of the Connecticut Lakes forest in Coös County. One project has a minimum duration of 20 years, four are listed at 40 years, and the other four — including the Connecticut Lakes forest — at 100 years. Aurora Sustainable Lands, the owner of the Connecticut Lakes forest, has voiced opposition to this session's legislation. Meredith Hatfield, associate director for policy and government relations with The Nature Conservancy, raised concerns when the legislation was introduced that it 'would undermine efforts to encourage sustainable forestry and could penalize landowners who seek to keep forests as forests to provide a broader range of benefits to the state, its residents, and visitors.' Like Osborne, she suggested lawmakers wait for the Department of Revenue Administration's final report on the topic before taking action. Meanwhile, Executive Councilor Joseph Kenney, a Wakefield Republican, said the bill was about 'fairness.' Kenney, whose district includes the northern chunk of the state where debate on carbon programs has been especially prominent, said the bill would make it so that large property owners can't 'escape' being taxed. 'We just want fairness, through this bill, throughout the state,' Kenney said.
Yahoo
10-02-2025
- Business
- Yahoo
Proposed FY '26 Manchester schools budget comes in at $246 million
Feb. 9—Manchester school officials are set to raise the curtain this week on their tax-cap-compliant Fiscal Year 2026 budget proposal of $246 million. The budget proposal appears on the agenda for this week's meeting of the Finance and Facilities committee on Wednesday at 6 p.m. at City Hall. From there, the budget will head to the full school board for discussion and a public hearing later this month, before being sent to the Board of Mayor and Aldermen for consideration. Superintendent of Schools Jennifer Chmiel has proposed $246,050,206 for the tax-cap-compliant budget, plus $6.3 million for the school food and nutrition budget and $6.6 million for Capital Improvement Plan (CIP) projects. City and school budgets for the next fiscal year can increase by 4.27%. Sharon Wickens, the city's finance director, has notified aldermen of the official tax cap number, which is based on the three-year average change in the Consumer Price Index. The Fiscal Year 2025 tax cap allowed for a 3.43% increase, but the actual tax rate came in at 3.82%. The state Department of Revenue Administration set Manchester's final tax rate for fiscal year 2025 at $19.58 per $1,000, up 72 cents from last year's $18.86 per $1,000, according to Wickens. Manchester operates under a cap on property taxes established by a voter-approved amendment to the city charter. Generally referred to as a tax cap, the provision limits the total amount of money raised from property taxes, rather than the tax rate itself. The cap limits the city's tax revenue to the average increase in the federal consumer price index, or CPI, during the three previous calendar years, plus the value of new construction. According data from the Bureau of Labor Statistics, the three-year average used in preparation for the fiscal year 2025 budget works out to 4.27%. Under the city charter, the mayor must propose a city budget within the tax cap limitations. Aldermen have the ability to override the cap. The budget supports 11,865 Manchester School District students in addition to services at charter and parochial schools. The Fiscal Year 2026 school budget proposal contains $112,136,883 in salaries (a $10.7 million increase over last year), including $203,359 for Superintendent Chmiel, $155,017 for Assistant Superintendent Nicole Doherty, $128,068 for Athletic Director Christine Pariseau Telge and $119,911 for Amadou Hamady, executive director of diversity, equity, inclusion, and justice. The budget also contains $11.3 million in transportation costs (a $3.7 million decrease from last year, due to transition to in-house home to school busing, $11.7 million in debt service, and $9.7 million to cover a $320,000 increase in costs for city services (including a 3% increase in costs for the Aramark custodial services contract and 5% increase for school resource officers from Manchester police. The $6.6 million in CIP projects includes $300K for playground replacement, $1.2 million for the purchase of 11 buses, and $250K for information technology network infrastructure costs.
