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Days After Law Takes Effect, Groups Challenge School Choice Law

Ben McLeod
Flickr Creative Commons

Civil liberties groups have filed suit challenging the constitutionality of New Hampshire’s Tax Credit Scholarship law. The ACLU has teamed up with Americans United for Separation of Church and State to for the complaint.

The plaintiffs say since two thirds of New Hampshire private school students attend religious schools, it’s likely that a greater share of tax-credited dollars will go to religious schools than non-religious ones.

The new law, which took effect on January 1st, allows companies to donate to private school scholarship organizations, and claim 85 percent of that donation as a credit against their business taxes.

Alex Luchenitser – Americans United’s associate legal director, which is leading the suit – says at the heart of this case is whether the state’s constitution considers money subtracted from the state’s coffers as tax credits as the same as revenues given out as a subsidy.

“The New Hampshire Supreme Court has already struck down a very similar program,” says Luchenitser, “The legislature had passed a property tax credit for property tax payers who had children in religious schools. The fact that this was a tax credit instead of a direct grant just didn’t matter.”

When the bill was going through the legislative process, Democrats raised constitutionality concerns, but the prime sponsor, then senator Jim Forysthe, dismissed them saying, “If we start to question whether or not a tax-credit is government money, all the sudden donations to charities, donations to your church would be subject to scrutiny, and I don’t think anybody agrees with that.”

House Republican Leader Gene Chandler expects the law to withstand the test. “Many attorneys worked on this issue and believe it to be constitutional,” says Chandler, “Now if it turns out it isn’t that’s the way the cookie crumbles I guess.”

Businesses could first donate to scholarship organizations at the start of the New Year. So far the state has only one such organization, the Network for Educational Opportunity, which says more than 90 families have applied for scholarships and it has raised over $100,000 in the past eight days. They also say around 60 percent of applicants qualify for free and reduced lunch. 

The law caps tax credited donations to scholarship organizations at $3.4 million during the first year of the program, and jumps up to $5.1 million for the second year. In subsequent years the tax credit allowances increases at 25% a year for every year that 80 percent of the cap is given out for scholarships.

Critics of the program say as fewer students attend public schools, schools will lose out on the state dollars that are allocated on a per-pupil basis. Democrats have filed a bill that would repeal the law, and former House Republican Speaker Bill O’Brien is seeking to expand the program. Governor Maggie Hassan has said she is in favor of a repeal. 

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