In the months since the New Hampshire Supreme Court ruled that the state is underfunding its public schools, lawmakers have been divided over how to respond.
Democrats have called on the state to meet its court-ordered obligations. Republicans have denounced the ruling and said the court is infringing on the Legislature’s domain. But no detailed plans have been released.
Now, one Republican says he has a possible answer: increase — and redistribute — statewide property taxes.
At a committee hearing last week, Rep. Walter Spilsbury of Charlestown said he plans to file a bill next year to more than quadruple the Statewide Education Property Tax. Doing so would raise an extra $1 billion per year — enough, Spilsbury says, to satisfy the court’s requirements.
The proposed bill, whose text has yet not been released, would expand the tax so residents across the state would pay about $5 per $1,000 in property valuation toward the SWEPT, according to Spilsbury. In total, the tax would raise about $1.5 billion per year, Spilsbury said. That amount could allow the state to distribute about $10,000 per student to public schools.
That approach would be a major departure from the present system. Cities and towns must currently raise $363 million in SWEPT, not $1.5 billion. And the state currently pays out a base amount of $4,266 per pupil, not $10,000.
In August, in its decision in Contoocook Valley School District v. New Hampshire, the Supreme Court wrote that the current amount is too low, and it agreed with a lower court that the state should spend at least $7,356.01 per pupil to sufficiently cover the basic cost of education.
But Spilsbury’s proposed bill would change the current tax system in another way: All revenue raised by the SWEPT would go to the Department of Revenue Administration and would be redistributed across the state. That would end the process by which wealthier towns are able to retain “excess SWEPT” revenue that they don’t need to fund their schools and use it to offset other local taxes.
Built into his proposal is some tax relief: New Hampshire residents would get a 20% reduction in the SWEPT paid on their primary residence; people who did not have children in the school system would get a 10% reduction in the SWEPT; and people over 65 would also receive a 10% reduction.
Spilsbury said the bill “probably will become a lightning rod.” “It’s ambitious,” he said before the House Education Funding Committee. “Maybe it’s too ambitious.”
And the idea comes as few in Concord appear eager to grapple with the implications of the Supreme Court’s ruling.
In its 3-2 ruling, the court said that the Legislature and governor must fix the current funding system in order to increase the amount the state sends to public schools. But the court did not lay out exact timelines or methods for doing so, with the majority writing that doing so would be an inappropriate breach of separation of powers.
Some Democrats have proposed immediately raising the state’s school adequacy formula to address the court ruling.
A bill by Hopkinton Rep. Dave Luneau, House Bill 651, would increase the base per-pupil adequacy rate to $7,356.01 — exactly the amount ordered by the court — at a price of about $576 million per year. But Republicans have said that move would be too fast, and on Tuesday, the House Education Funding Committee recommended HB 651 be killed, with Democrats voting against killing it.
Other Democrats have embraced studying approaches to addressing the court orders. Democratic leadership has said lawmakers should work to find a solution, but that it is the responsibility of Republicans, who hold power, to present ideas.
“That’s not something Democrats can solve on our own,” said Rep. Alexis Simpson, the House Democratic leader, at a press conference last week. “It just isn’t. And I would say the first step is I would invite Republican leadership from the governor on down to come to the table and actually look for real solutions.”
Meanwhile, Republicans have denounced the court ruling and have begun openly questioning a pair of landmark opinions in the 1990s, known as the Claremont decisions, which established the state’s constitutional requirement to guarantee an adequate education in every school.
The Claremont decisions centered on an interpretation of the word “cherish” in the state constitution. Part 2, Article 83 states that legislators have a “duty” “to cherish the interest of literature and the sciences, and all seminaries and public schools.” The court said this duty means the state must make sure it is providing an adequate education.
Those decisions have influenced how the state pays for education for three decades. But Republicans say they are flawed.
“That word ‘cherish’ is probably the most expensive word in the New Hampshire Constitution, according to the Supreme Court,” said Rep. Daniel Popovici-Muller, a Windham Republican. “I do intend to follow the guidance of the Supreme Court, but to say that the word cherish clearly means that is more than I’m comfortable saying.”
Even Spilsbury says he opposes the court’s interpretation. He clarified Tuesday that he is proposing to expand SWEPT not because he agrees with the court rulings, but because doing so would be beneficial to towns with struggling public schools.
“I’m not here because a court said this is what we have to do,” he said. “We don’t need a court to tell us what we ought to do. I think this committee should proceed because we have a clear understanding that our constituents expect us to do something.”
For progressive Democrats who have been pushing for the state to dramatically increase its funding to public schools, Spilsbury’s proposal has earned a mixed reaction.
Former Executive Councilor Andru Volinsky, a Concord Democrat who helped bring the Claremont lawsuits against the state in the 1990s, said that on the one hand, he is heartened that Spilsbury is seeking solutions to the problem of funding.
“I think Representative Spilsbury deserves a great deal of credit for actually representing his constituents, rather than some strained ideology,” he said in an interview.
On the other hand, Volinksy argued, addressing the funding gap by increasing statewide property taxes is not the most fair way to fix the problem.
Property taxes are regressive and hurt poorer homeowners more than wealthy ones, he said, unless a “homestead exemption” were built into the tax that would exempt a set amount of the home’s value from taxation.
“The problem of a property tax is that it’s inelastic. It doesn’t vary with the homeowner having more or less income, being well or ill,” he said. “… If you’re increasing SWEPT it’s better than relying heavily on unequal local property taxes, but it doesn’t address the inelasticity problem.”
Jeanne Dietsch, a former Democratic state senator from Peterborough who once proposed an income tax on wealthy Granite Staters to pay for education, agreed that property taxes could not solve the problem alone.
“It’s still all on you — all on the property tax,” she said in an interview, speaking on Spilsbury’s proposal.
To Dietsch and Volinsky, the only way to fairly raise the money needed to support schools is to seriously consider an income tax targeted at the wealthy.
“I think we should backtrack on a couple of the four business tax cuts that we’ve given. And I think we should reinstate the interest and dividends tax … or have an income tax with a very high (floor),” Dietsch said.
Fellow Republicans, who oppose income taxes, called Spilsbury’s proposal an interesting start.
“Four times our Statewide Education Property Tax: That has pluses, but it all has negatives too,” said Rep. Rick Ladd, a Haverhill Republican and the chairman of the Education Funding Committee, in response to Spilsbury’s proposal. “It’s going to cause some hardships on those towns which are going to be contributing the bulk of the money.”
”I heard things I liked and things that made me raise my eyebrows a little,” agreed Popovici-Muller. “… It’s always good to hear those complex proposals that are unlikely to survive as they are, but they are a great starting point.”