N.H. court says school revenue system unconstitutional Decision may force state to adopt a broad-based tax


CONCORD, N.H. -- It is a political credo in New Hampshire: no personal state income or general sales tax.

That is why a state Supreme Court decision Thursday, declaring unconstitutional the state's use of widely varying local property taxes to pay for public education, fell with a thud heard around the state.

Leading the shouts of protest was the conservative Union Leader of Manchester, the state's largest newspaper. In an editorial that blasted the decision, it said, "New Hampshire can no longer 'Live Free or Die,' if ruled by black-robed monarchs."

The decision left state officials facing the prospect of financing the schools through a more equitable, but politically unappetizing, statewide tax system, such as a sales tax, an income tax or a property tax. Whichever is chosen, the court said, a new system has to be in place within 16 months.

Many educators, whose school revenues have been largely dependent on the value of property in their districts, welcomed the ruling.

"This is one of the most dramatic decisions in the history of New Hampshire," said Dennis Murphy, a longtime lobbyist for the New Hampshire Education Association, the state teachers union. "It means the state has now finally got to face the tax issue head-on."

Murphy noted that only New Hampshire and Alaska are without a personal income tax or general sales tax.

Some political analysts say that the ruling has made New Hampshire's first-term Democratic governor, Jeanne Shaheen, suddenly vulnerable, despite a favorable rating of 71 percent in the latest statewide poll, which was conducted before the ruling.

A political moderate, Shaheen gained office promising to oppose any income or sales tax. With the court's ruling, she may be handed such a tax and have no choice but to allow it to become law.

"While I disagree with the decision, I am committed to working with the legislature to address the issues in it," Shaheen said at a news conference after the ruling was made public. But she would answer no questions.

Conservatives, who have demanded for decades that candidates for governor pledge to oppose any broad-based tax, are now demanding that the state constitution be changed to remove the state's responsibility for financing education.

Moderates and liberals, who have off and on tried to introduce new taxes, find that the politics since the court made its ruling have suddenly turned upside down.

"Anything is now possible," said Douglas Hall of Chichester, a former state legislator who has backed a broad-based tax.

The essence of the court's ruling was that New Hampshire's reliance on local property taxes to pay 90 percent of the cost of public education placed a disproportionate burden on residents in property-poor towns. The case grew out of a lawsuit brought by five communities with low tax bases.

In the ruling, Chief Justice David Brock, a conservative Republican and former U.S. attorney, said, in part, "There is nothing fair or just about taxing a home or other real estate in one town at four times the rate that similar property is taxed in another town to fulfill the same purpose of meeting the state's educational duty."

The state argued that tax rates had to be equal only within municipalities, but the court said they had to be proportional statewide.

The House of Representatives, most of whose 400 members were elected opposing an income or sales tax, has several options, including a statewide property tax; a general sales tax or personal income tax; increases in existing state taxes on everything from rooms and meals to cigarettes and real estate transactions; and a change in the state constitution to eliminate state financial responsibility for schools.

State Sen. Jim Rubens, a Hanover Republican who is education chairman in the Senate and a potential contender for governor, called the court arrogant.

"This decision all but mandates a broad-based tax and will end local control over our schools," he said.

Four of the court's five justices endorsed the opinion, which said that the state constitution required an "adequate education" for all children and that the legislature was responsible for ensuring comparable financing for all school districts.

Pub Date: 12/21/97

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