School funding advocates who have worked for years to rewrite the way New Hampshire pays for education say they are disappointed with a state Supreme Court opinion that largely upholds the Legislature’s reliance on a statewide property tax.
In a 3-1 decision released Tuesday, the justices ruled that the use of the statewide education property tax, or SWEPT, is constitutional because all communities pay the same tax rate: currently $1.11 per $1,000 per assessed value. They rejected an argument that towns with high property values and few students effectively pay a lower tax rate if they get to retain some portion of the tax revenue that exceeds what they need to educate their students.
The decision will have little impact on education funding in the state. But the court has not yet issued a decision in a second, potentially more significant case that could force the state to spend millions of dollars more on public schools.
Attorneys who have worked for decades to change the state’s reliance on local taxes to pay for public schools were discouraged by Tuesday’s ruling. John Tobin, one of the lawyers who brought the SWEPT lawsuit, said the decision will have a lasting impact.
“It's a very disappointing decision because it locks in a real unfair component of the current property tax system,” Tobin said. “Property taxes are a huge burden to people. They're by far the largest tax in the state.”
The NH School Funding Fairness Project, which has traveled the state explaining what they call an unfair education funding scheme, also registered disappointment with Tuesday’s decision.
“For far too long the state has allowed this two-tiered system to operate, and this order will allow it to continue at the expense of funding for schools in the districts that need it the most,” said Executive Director Zack Sheehan in a statement.
Gov. Kelly Ayotte and Attorney General John Formella heralded the high court’s decision to leave state funding decisions to lawmakers.
“I am glad to see the Court’s decision to recognize the Legislature's constitutional authority to allocate resources in a fiscally responsible way while respecting local decision making,” Ayotte said in a statement. “New Hampshire is home to excellent public schools and fantastic teachers, and I will continue working with the Legislature and local districts to ensure our students can thrive.”
Tuesday’s decision stems from a 2022 lawsuit filed by New Hampshire property owners, the ACLU of New Hampshire, and other organizations challenging the statewide property tax. They argued that while the tax rate is technically uniform — as required by the state constitution — the effect of that rate is not uniform, due to discrepancies in property values between communities.
Many property rich towns raise more through the statewide property tax than the state requires for an adequate education, which the Legislature has set at about $4,200 per student. Those towns are allowed to keep the excess money for any municipal expense. Property poor towns that can’t meet that per-pupil burden close the gap with money from the state.
For example, the towns of Holderness and Plymouth share a school district. Holderness, which has higher property values, pays about $4.60 per $1,000 in local school taxes, while Plymouth residents pay closer to $12 per $1,000.
Justice James Bassett issued a dissent Tuesday, agreeing with plaintiffs that the SWEPT tax is unconstitutional. He noted too that the decision is contrary to the court’s prior decisions.
Quoting from a prior opinion, Bassett wrote, “It is basic to our collective well-being that all citizens of the State share in the common burden of educating our children.”
Natalie Laflamme, another lawyer on the lawsuit challenging SWEPT, said in a statement Tuesday: “As Justice Bassett points out, this ruling will allow property wealthy towns to continue to use these state education funds, which were intended to support public school students wherever they live, for local projects that are often unrelated to education.”
House and Senate legislative leaders did not respond to requests for comment Tuesday. The Senate added language to the budget trailer bill this month asserting its sole authority to make education funding decisions, including tax decisions.
Professor Lawrence Friedman, of New England Law in Boston, noted that the court recognized the Legislature’s authority in its ruling.
“I think we encounter this all the time with judicial decisions that lead to results that people may, for whatever reason, think are unfair,” Friedman said in an interview Tuesday.
“If (the court conducts) a defensible analysis, if it's an analysis that is persuasive, then we have to accept it, because that is the responsibility of the judiciary to tell us what these things mean,” he said. “If a majority of the citizens of New Hampshire think this is unfair, they can petition their representatives in the Legislature to try to come up with some other arrangement.”
The court was unanimous in finding one aspect of the SWEPT unconstitutional: a measure that effectively exempts “unincorporated communities” with little or no local school expenses from paying the tax.
It’s unclear when the court may issue a decision in the second ongoing case challenging what the state spends on education. A lower court judge in 2023 ordered the state to increase its per-pupil funding for an adequate education to no less than $7,356 a year, significantly more than the $4,200 it does now.
If the state Supreme Court upholds that order, lawmakers would have to raise at least an additional $538 million in state education spending a year.
