While new judge is sought for school-funding case, NHDRA begins setting statewide property tax rates
The presiding judge’s recusal has thrown into limbo school-funding litigation being heard in Grafton County Superior Court, leaving the plaintiff’s motion to enjoin the state from levying the Statewide Education Property Tax (SWEPT) unresolved.
Meanwhile, the Department of Revenue Administration has begun setting local school tax rates for the coming year, threatening to render the pending motion to enjoin the SWEPT moot.
Last week, attorneys Andru Volinsky, John Tobin and Natalie Laflamme asked the court to issue a temporary restraining order ordering the state to refrain from setting tax rates in some two dozen municipalities until a newly assigned judge has an opportunity to review the pleadings in the case and ruled on the plaintiff’s request for an injunction.
Levied at a fixed rate, the SWEPT is a surcharge on the local education tax, the proceeds of which are collected by municipalities and appropriated to school districts to supplement the adequacy grants distributed by the state. Since 2011, municipalities where receipts from the SWEPT exceed the amount of the adequacy grants have been entitled to retain the excess funds, which they may use to lower property taxes or fund other public purposes.
In other municipalities, the DRA sets a negative local school tax rate, completely offsetting the SWEPT.
Consequently, taxpayers in these municipalities are spared the liability of paying the SWEPT at the full rate paid by taxpayers elsewhere in the state. The plaintiffs argue that the SWEPT violates the principal ruling of the NH Supreme Court in the Claremont school-funding cases of the 1990s that, “To the extent the State relies upon property taxes to fund a constitutionally adequate public education, the tax must be administered in a manner that is equal in valuation and uniform in rate throughout the State.”
Preliminary injunction
The plaintiffs initially filed suit in June, challenging the constitutionality both of the school-funding system in general and the SWEPT in particular. The state responded in September, and in October the plaintiffs filed to enjoin the SWEPT. A hearing was held on Nov. 4.
Hours before the hearing, the “Coalition Communities 2.0,” an organization of more than two dozen property-rich municipalities with the common purpose of sustaining the current administration of SWEPT, filed a motion to intervene in the case. The state agreed, but the plaintiffs formally objected.
The next day, the presiding judge, Lawrence MacLeod, recused himself from the case. He said that during the hearing he learned that the city of Lebanon was a member of the Coalition Communities 2.0. and that he and his wife owned a residence, two rental properties and two undeveloped lots in the city, with an aggregate assessed value of $1 million.
As a result, MacLeod explained that their financial fortunes could be affected for good or ill by the outcome of the litigation and acknowledged his impartiality could be “reasonably questioned” should he continue to preside.
“The state will take advantage of Judge MacLeod’s recusal to moot Plaintiff’s motion for a preliminary injunction without remedying their harm if no action is taken,” the Plaintiff’s attorney wrote. In seeking a temporary restraining order, the plaintiffs are asking the court to instruct DRA to refrain from setting tax rates in municipalities where they would generate excess SWEPT receipts or yield negative school tax rates. In other words, maintain the status quo until a new judge is assigned, granted time to review the pleadings and issue a decision on the motion for a preliminary injunction.
SWEPT is a surcharge on the local education tax to supplement adequacy grants distributed by the state.
