Claremont School District v. Governor
703 A.2d 1353, 1997 N.H. LEXIS 120, 142 N.H. 462 (1997)
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Rule of Law:
Because providing a constitutionally adequate public education is a duty of the State, property taxes levied by local districts to fund education are State taxes. As such, these taxes must be proportional and reasonable across the entire State, and a system that results in widely disparate tax rates between districts is unconstitutional.
Facts:
- The State of New Hampshire mandates that local school districts provide elementary and secondary public education meeting specific state requirements.
- The primary source of funding for this education, averaging 74-89% of total revenue, is real estate taxes raised by local school districts.
- The total value of taxable real property varies significantly among the different cities and towns in New Hampshire.
- This variation in property value means that 'property-poor' districts must impose significantly higher tax rates than 'property-rich' districts to raise necessary funds for their schools.
- For example, during the 1994-1995 school year, the equalized property tax rate for schools in Pittsfield was $25.26 per thousand dollars of value.
- During the same year, the equalized property tax rate for schools in the property-rich town of Moultonborough was only $5.56 per thousand dollars of value.
- This disparity meant that property owners in Pittsfield were taxed at a rate more than four times higher than property owners in Moultonborough for the same purpose of funding public education.
Procedural Posture:
- In 1991, several school districts, students, and taxpayers (plaintiffs) filed a petition in the New Hampshire Trial Court against the Governor (State), challenging the constitutionality of the state's education funding system.
- The Trial Court initially dismissed the petition for failure to state a claim.
- The plaintiffs appealed to the New Hampshire Supreme Court.
- In Claremont I (1993), the Supreme Court reversed, holding that the State has a constitutional duty to provide and fund an adequate education, and remanded the case for a trial on the merits.
- After a trial on remand, the Trial Court entered a judgment in favor of the State, finding that the education provided was adequate and the funding system was constitutional.
- The plaintiffs appealed the Trial Court's decision to the New Hampshire Supreme Court.
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Issue:
Does New Hampshire's system of funding public education, which relies predominantly on local property taxes and results in widely disparate tax rates among school districts, violate the requirement in Part II, Article 5 of the New Hampshire Constitution that taxes be proportional and reasonable?
Opinions:
Majority - Brock, C.J.
Yes, New Hampshire's system of funding public education violates the state constitution's requirement that taxes be proportional and reasonable. The court reasoned that providing a constitutionally adequate education is an affirmative duty of the State under Part II, Article 83 of the New Hampshire Constitution. Therefore, the property taxes levied to fulfill this State duty are, in nature, State taxes, not local taxes. When viewed as a State tax, the taxing district becomes the entire State. The evidence of tax rates varying by as much as 400% between different districts demonstrates a clear violation of the constitutional mandate for taxes to be 'proportional and reasonable' throughout the taxing district. The court further held that a constitutionally adequate public education is a fundamental right in New Hampshire, which reinforces the State's obligation to ensure its provision without imposing unjust and disproportionate burdens on taxpayers in different communities.
Dissenting - Horton, J.
No, New Hampshire's system of funding public education does not violate the state constitution. The dissent argued that while education is a State duty, the State is permitted to delegate this duty and the corresponding funding obligation to its political subdivisions, such as local school districts. Therefore, the school tax is a local tax for a local purpose. As long as the tax is proportional within each local taxing district—which it was—it does not violate the constitution. The majority's decision is an act of social engineering that oversteps the court's judicial role, as the determination of educational policy and its financing properly belongs to the legislature and the Governor.
Analysis:
This decision fundamentally restructured public education finance in New Hampshire by invalidating its long-standing reliance on local property wealth. By classifying the school tax as a state tax, the court mandated statewide proportionality, compelling the legislature to devise a new, more equitable funding mechanism. The elevation of education to a fundamental right subjects future funding schemes that create disparities to strict judicial scrutiny. This ruling has had a profound and lasting impact, shifting the financial burden and control of education from a primarily local issue to a central State responsibility, and sparking decades of political debate over how to achieve a constitutional funding system.
