Superior Court judge denies injunction against statewide property tax

Rockingham County Superior Court Judge David Ruoff’s ruling doesn’t affect the ongoing case challenging the state’s method of meeting its constitutional obligation to fund education. (Michael Moore/The Keene Sentinel)

Judge David Ruoff has denied a motion to enjoin the state from levying the statewide education property tax that was sought by the plaintiffs in the school-funding suit underway in Rockingham County Superior Court.

The ruling has no direct bearing on the underlying constitutional issues on which the plaintiff’s challenge to the school-funding system hinge.

The suit was filed in June by attorneys Andru Volinsky, John Tobin and Natalie Laflamme on behalf of five New Hampshire property owners. It charges that the state, by meeting its constitutional duty to fund an adequate education with the statewide education property tax – or SWEPT – is violating the mandates issued by the NH Supreme Court In the landmark Claremont cases of the 1990s.

At the time, the justices held, “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.”

Since 2011, municipalities where receipts from the SWEPT exceed the cost of an adequate education municipalities have been entitled to retain the excess funds or apply them to set negative school tax rates. Consequently, taxpayers in these municipalities are spared the liability of paying the SWEPT at the full rate paid by taxpayers elsewhere in the state. Meanwhile, local school property tax rates vary widely, as do assessed valuations from one municipality to another.

In October, the plaintiffs asked the court to enjoin the SWEPT throughout the state, but subsequently amended the motion to enjoin the state from permitting municipalities to retain excess SWEPT receipts or set negative tax rates. So far the proceedings have turned on the administration of the SWEPT.

Some two dozen municipalities — the Coalition Communities 2.0 — which retain excess SWEPT receipts objected to the plaintiff’s motion. Affidavits from Waterville Valley and Newington explained that tax rates have been set and tax bills have already been mailed and would have to be replaced or supplemented, at significant time and expense, while those who pay their taxes with an escrow account would face administrative issues.

Without minimizing the outstanding constitutional issues raised by the plaintiffs, Ruoff denied the injunction, writing, “the Court cannot ignore the substantial, immediate and concrete harm” to those municipalities that years have relied on retaining excess SWEPT for years. Moreover, he noted that when the Supreme Court found a system of funding public education unconstitutional it provided a reasonable period of time “to effect an orderly transition to a new system.”

The Coalition Communities 2.0 also sought to intervene in the litigation. The plaintiffs objected, arguing that the interests of these municipalities was sufficiently represented by the state.

However, Ruoff found that his denial of the injunction demonstrated the interest of the Coalition Communities in the proceedings.