Memorandum In Response To Requests From The Senate
For an Opinion of the Justices (School Financing)
The Senate has posed seven questions to this Honorable Court concerning bills presently pending before that body. Four of those questions ask this Court whether or not certain proposed legislation conflicts with the Court's decisions in the so-called Claremont case. [fn 1] While such questions may be well-meaning, they do, of course, miss the point. The issue which should be of importance to the Senate is not whether the bills conflict with the Claremont case, but whether they conflict with the Constitution.
The fact is that that Court can change its decisions, but it isn't supposed to change the Constitution. Nevertheless, the Senate's questions are revealing. To the extent that they focus upon the Claremont decisions, rather than upon the Constitution itself, they reflect the conventional wisdom that the Court has indeed changed the Constitution.
On the other hand, whether one wants to call what the Court did in the Claremont case "changing" or "interpreting" the Constitution, the one thing that we know the Court can change is its mind. And it ought to do so in this instance. The simple reason for this is that the Court was wrong in Claremont - very wrong!
With all due respect to the Court, Claremont I and Claremont II were ill- conceived from start to finish. From the Court's strained reading of the precatory language of the Constitution's Article 83, Part II; to its conversion of non-justiciable private duties into judicially-enforceable institutional duties; to its creation of a right to an "adequate" education out of whole cloth; to its granting of standing in educational rights cases to virtually everyone; to its unprecedented assertion of a judicial power to regulate the fisc; to its gratuitous adoption of a strict scrutiny standard in educational cases; to its total disregard of the trial court's findings of fact; to its suggestion that the formation of educational policy cannot be delegated by the Legislature to the State Board of Education; to its exercise of judicial review to declare constitutional rights without any serious consideration of the availability of judicial remedies; to its obliteration of 200 years of local control over education; to its transformation of the quintessential local tax, the school tax, into a State tax - in so very many ways, the Court's decisions in Claremont constitute a massive departure from its own well-settled traditions and doctrines. Indeed, taken altogether, the Claremont decisions are nothing short of a jurisprudential catastrophe.
It would be well to heed the words of one of the Court's most famous members, Justice Doe - written before he became Chief Justice and in dissent - in the case of Orr v. Quimby, 54 N.H. 590, 610-611 (1874):
The duty of obeying the divine law when human law is in conflict with it, on a point of morals or religious faith, is everywhere taken for granted. But this duty does not legally require or empower a judge or other officer of the government to officially nullify a law which he is under an express official oath or implied official obligation to officially maintain. By resignation he may throw off an official duty which he cannot conscientiously perform. He may refuse to obey. If he is not a non-resistant, he may exercise the moral right of revolution declared in article 10 of the bill of rights. But however pressing his moral duties, he cannot legally justify an official violation of an official duty. The constitution authorizes the legislature to make constitutional laws: and it requires the court to be sworn to officially support the constitution, and to perform the duties of their office agreeably to the constitution and the human laws of the state; not agreeably to that constitution and those laws supplemented or modified by the divine, natural or moral law, or the principles of reason and justice. While it recognizes the divine government and the unalienable rights of conscience, it does not establish anarchy by legalizing every principle and practice that may be approved by anybody's interpretation of the higher law, nor authorize the court to destroy the constitution and laws which they are commissioned to administer.
We need to return to these First Principles. No one disagrees with the Court's statement in Claremont II that, "Our society places tremendous value on education." Article 83, Part II, of the Constitution, however, places the duty to "cherish" those values in the hands of the "legislators and magistrates", not the Court. [fn 2]
Senate Resolution 3, in particular, demonstrates just how much damage the Claremont decisions have done to the proper separation between the roles our law- makers, the Legislature, and our law-sayers, this Court. The Court stated in Claremont II that "we were not appointed to establish educational policy, nor to determine the proper way to finance its implementation." If, however, the Court answers the question posed by Senate Resolution 3 - which asks whether or not Senator Rubens' so-called A Plan "fulfills the mandates of Claremont II" - establishing educational policy is exactly what the Court will be doing.
Just recently, the U.S. Supreme Court had occasion to deal with the question of whether or not there were limits to the remedial powers of Federal Courts in cases dealing with the public schools. This was the case of Missouri v. Jenkins, 515 U.S. ____, 132 L. Ed. 2d 63, 115 S. Ct. 2038 (1995), in which a District Court had ordered the State of Missouri to raise and appropriate millions of dollars to fund a grandiose educational scheme which the trial judge had devised as a desegregation remedy. The Supreme Court ruled that the lower court had exceeded its powers. In his concurring opinion, Justice Clarence Thomas had some things to say which are equally as apropos to the Claremont case. "There simply are certain things that courts, in order to remain courts, cannot and should not do. There is no difference between courts running school systems or prisons and courts running executive branch agencies." Id. at 132 L. Ed. 2d 63, 108.
Is this where we too are headed? Can't we learn from the experiences of others? Do we have to personally experience the riots caused by Judge Garrity's busing scheme in Boston, or Kansas City's two decades of fiscal profligacy and social engineering, or New Jersey's litigation feeding frenzy or Vermont's current taxpayer revolts in order to appreciate the direction in which Claremont will inevitably take us? Isn't there some route open to the Court to correct its mischief before it is too late?
Some persons are suggesting that if the Court can just avoid answering the Senate's questions, the entire controversy will blow over and, in the fullness of time, resolve itself. One approach which is apparently being offered is that the Court simply decline to answer the Senate's questions, ostensibly on the grounds that the Senate has yet to actually pass either of the bills which have generated the questions which the Senate presented to the Court. To begin with, this is a nonsensical argument. As the name indicates, the purpose of the Court's role in issuing advisory opinions is to act as an advisor to certain governmental bodies. The time that the Legislature needs advice as to the constitutionality of a bill is before it passes, not after it is already enacted into law. [fn 3]
Secondly, there is no precedent to support a stonewalling of the Senate's requests. The Court does not have discretion as to whether or not to accept a bona fide request for an advisory opinion. [fn 4] Article 74, Part II of the Constitution prescribes
that the Legislature, the Governor and/or the Council may, upon solemn occasions, "require" the opinions of the justices. If, as the Court said in Claremont I, the mere fact that Article 83, Part II used the word "duty" makes that provision "mandatory, not hortatory", the language of Article 74 is at least as obligatory.
Another way to duck the Senate's questions being suggested to the Court is based upon the theory that since the ruling in Claremont II that our current system of funding education is unconstitutional does not take effect until April 1, 1999, Claremont doesn't really exist at this time. Consequently, questions about whether or not pending legislation conflicts with or conforms to Claremont are premature. However, as noted above, the measure of constitutionality is not some decision of this Court; it is the Constitution itself. Thus, as ingenious as this argument is, it belongs more in a discussion of metaphysics than it does in the courtroom.
This brings us, then, to the most bizarre of the reasons being proferred to the Court as a basis upon which to return the Senate's questions unanswered. This is the notion that the Court can refrain from issuing an advisory opinion because the Claremont case itself is still pending. As incredible as it sounds, certain members of the Legislature are actually taking the position that the lawsuit has divested them of their power under Article 74 to ask for an advisory opinion. In this regard, they suggest that, "The Claremont litigation should be the arena in which questions about the ABC Plan are answered; it is, after all, the litigation which has necessitated the kind of solution which the ABC Plan offers." See Memorandum of Peter Burling, et al, p. 3.
Although this may pass for logic in the topsy turvy world of Claremont, it sounds like someone needs a lesson in the doctrine of separation of powers. See Article 37, Part I of the Constitution. The arena in which questions about education and education funding are answered - until Claremont - was the Legislature, not the Court. As provided in Article 2, Part II of the Constitution, "The supreme legislative power, within this state, shall be vested in the senate and house of representatives."
Those legislators who are so cowed by the Claremont decision that they are willing to abdicate their own responsibility to legislate are apparently also willing to cede the rights of the public to private litigants. When they tell this Court that "the Plaintiffs in the Claremont case are [the] real parties in interest," they take the supposed right to an adequate education way beyond Claremont. For even this Court held that the right which it divined in Article 83, Part II of the Constitution was "not based on the exclusive needs of a particular individual, but rather a right held by the public to enforce the State's duty." Claremont I, 138 N.H. at 192. (emphasis supplied).
The fact of the matter is that the Claremont plaintiffs have no standing in the case at bar. 5 The only "party" is the Senate. Everyone else - including a member of the House - is merely an amicus curiae, whose participation is at the pleasure of the Court. Neither the Claremont plaintiffs nor anyone else can reframe the Senate's questions, move to dismiss them or withdraw them. Since the Senate has requested the advice of its constitutional advisors "upon important questions of law and upon [a] solemn occasion", the Senate is constitutionally entitled to an answer.
The only ground upon which the Court can refuse to answer a request for an advisory opinion is if the question posed is beyond the Court's constitutional authority to answer. For example, the Court need not answer a request for it to determine the results of a Senate election contest because under Article 35, Part II, the Senators are the "final judges of the elections ... of their own members." Opinion of the Justices, 56 N.H. 570 (1875). Unless the Court is to use the Senate's requests for an advisory opinion as an opportunity to reverse Claremont, it is stuck with its decisions in that case and those decisions clearly hold that Article 83, Part II and Article 5, Part II of the Constitution are justiciable. This, in turn, means that the questions presented by the Senate regarding the proper interpretation of these provisions are indeed within the Court's jurisdiction.
That is, of course, unless the Court is prepared to confront the real dilemma and do something about Claremont itself. One route for the Court to take is to simply admit that it was wrong, reverse its Claremont decisions, [fn 6] get out of the education business and tell the Senate that both the Governor's ABC Plan and Senator Rubens' A plan - and any other alphabet plan that the Legislature comes up with - are all constitutional. Although such a move would undoubtedly subject the Court to as much criticism as the Claremont decisions themselves, that is a small price to pay for doing the right thing. Let us turn back while we still can.
Alternatively, the Court could take this opportunity to step back and reconsider. One way to do this would be for the Court to vacate its decisions in Claremont I and Claremont II, and schedule the case for reargument. The Court could then consolidate its reconsideration of Claremont with its consideration of the Senate's questions. If the Senate is not inclined to wait and the Legislature passes a law which alters the State's system of education and/or education funding, so much the better. The Court can then dismiss the Claremont suit as moot and, if some group wants to challenge the new law, they can bring a new lawsuit. On the other hand, if the Legislature demurs with respect to new legislation, we can all await the court's reconsideration of these weighty issues in Claremont IV. [fn 7]
Let us assume, however, that this Court is not of a mind to back away from Claremont, but is nevertheless inclined to avoid a confrontation with the Legislature on educational policy - at least for now. Let us further assume that the Court can figure out an intellectually honest way to duck the adequacy-of-education and/or adequacy-of-funding issues which surely would provoke such a confrontation and, by so doing, that the Court can limit the Senate's questions to tax issues. That would narrow this case down to whether the ABC Plan satisfies the requirements of Article 5, Part II of the Constitution that all taxes be "proportional and reasonable". [fn 8]
If that is the only question that the Court needs to answer, the answer is "yes" - even under Claremont. All that Claremont requires is that if a property tax system is used to fund education, it must be "equal in valuation and uniform in rate throughout the State". The ABC Plan satisfies this requirement and, therefore, it is constitutional. [fn 9]
As others will undoubtedly describe to the Court in much more detail than I, this is the way that ABC works: (1) the cost per child for an "adequate" education is calculated according to some yet-to-be-determined method; (2) this is multiplied by the number of "educable" children to get a statewide cost of education; (3) the total equalized value of all taxable real property in the state is determined; (4) the total statewide education cost is then divided by the total statewide property valuation; (5) the resulting tax rate per $1,000 of valuation is then applied by each municipality to all taxable property within its jurisdiction. Thus, all real property in the State is subject to the same method of valuation and assessed at the same rate of tax. [fn 10]
So far, so good. The challenge to ABC, however, comes in the fact that it also includes an abatement provision which abates the taxes of a municipality to the extent that collection of the state education tax in that municipality would raise more money than is necessary to fund the cost of an "adequate" education for the number of children resident in that community. A few examples will suffice. Suppose that the cost-per-child of an "adequate" education is $5,000 and that the uniform state education tax rate is $15.00 per $1,000 of property valuation. Suppose further that Community A has a total of $100 million in assessed property valuation and a population of 300 "educable" children and that Community B also has $100 million in property valuation but only 250 children. Under the ABC Plan, application of the state tax rate would raise $1.5 million to educate each community's children. However, since Community B would only need to raise $1.25 million to provide an "adequate" education for its children, HB 1280 would give its taxpayers an abatement of $250,000.
Now let us look at Community C and Community D. Community C's total property valuation is $200 million. Applying the uniform state rate of $15.00 per $1,000 would generate $3 million. However, since Community C has only 300 "educable" children, it only needs to raise $1.5 million. Thus, it is entitled to an abatement of $1.5 million. Community D also has $200 million in property valuation, but it has 550 children in town. It, therefore, receives an abatement of $250,000.
The argument made by some is that this abatement device destroys the proportionality of ABC's tax scheme. The claim is that the "effective" tax rates in Communities A, B, C and D would each be different. If one calculates the net tax paid in each community, after factoring in the abatements, the effective rates are as follows: (1) Community A pays $15.00; (2) Community B pays $12.50; (3) Community C pays $7.50; and (4) Community D pays $13.75. Accordingly, only Community A's effective rate is equal to the initial State rate. Thus, it is suggested that the tax would not be constitutionally "uniform".
If, however, this were the sole test of constitutionality under Article 5, Part II, we could have no tax exemptions whatsoever. As a pure function of mathematics, every tax exemption, credit, deduction or abatement which is granted to some, but not all, taxpayers creates a disparity in their effective rates of tax. See generally, Ardinger, An Analysis of the New Hampshire Supreme Court's Recent Application of the "Proportional and Reasonable" Standard to Restrict the Legislature's Taxing Power, 33 N.H. B.J. 331 (March 1992). Therefore, unless the Court were to adopt a theory of "uniformity" which would jeopardize virtually every tax presently laid in New Hampshire, the mere existence of an abatement feature in the ABC Plan cannot make it unconstitutional.
This is clearly not the law. As this Court has stated on numerous occasions, "The power of the Legislature to grant a reasonable exemption ... is not doubtful." E.g., Opinion of the Justices, 105 N.H. 22, 24 (1963). Indeed, creating an exemption can be just another form of the process of classification which is involved in selecting what property is to be taxed. As the Court has frequently observed, "There is no doubt that the legislature may provide, by general laws, for the exemption of certain classes of property from taxation, as well as exempt it, in fact, by omitting it in the description of property required to be taxed." Brewster v. Hough, 10 N.H. 138, 142 (1839). Moreover, the form of the exemption does not appear to determine its constitutionality. In this regard, the Court has stated that "we recognize that the legislature has broad power to create exemptions, such as deductions, adjustments and credits". Opinion of Justices, 131 N.H. 640, 642 (1989).
Tax exemptions, therefore, may constitutionally withdraw a category of property from the classification of property which is otherwise taxable [e.g., Trustees + c. Academy v. Exeter, 90 N.H. 472, 482-3 (1940) (exemption from real property tax for schools)] or they may withdraw something which would otherwise be taxable from the tax base [e.g., Opinion of the Justices, 117 N.H. 512, 517-18 (1977) (exemption of $100 from taxable capital gains for persons over 65 or blind)]. Exemptions can also come in the form of expense deductions [e.g., Opinion of the Justices, 123 N.H. 296 (1983) (deduction from gross income for compensation paid to employees in order to calculate taxable net income)], or as credits against the tax [e.g., Opinion of the Justices, 117 N.H. 512, 520 (1977) (tax credit against capital gains tax for taxes paid in another jurisdiction)] or as abatements [e.g., Opinion of the Justices, 117 N.H. 512, 520-1 (1977) (abatement for inability to pay)].
On the other hand, it is true that not every tax exemption, deduction, credit or abatement is constitutional. As the Court stated in Opinion of the Justices, 117 N.H. 512, 517 (1919), "Although exemptions may, theoretically, produce inequalities in the tax burden, the legislature clearly has the power to grant a reasonable exemption, on a uniform basis." (emphasis supplied.) Accordingly, an exception from a tax - like the tax itself - must be by classification so that all those who are similarly situated receive like treatment.
Uniformity of application certainly presents no problem with respect to the ABC Plan. Any municipality whose state education tax is "in excess of the product of the statewide per pupil cost of an adequate education at the elementary school level times the average daily membership [of students] in residence for the town" is entitled to an abatement equal to such excess. Section 15, HB 1280. Abatements, therefore, are awarded according to neutral factors which are defined in the law and applied across the board. No specific taxpayer or municipality is singled out for special treatment. Compare, Eyers Woolen Co. v. Gilsum, 84 N.H. 1 (1829) (special exemption for "the Eyer Woolen Mill").
The other constitutional requirement for a tax exemption, deduction, credit or abatement is that it be "reasonable". As the Court commented in Opinion of the Justices, 95 N.H. 548, 550 (1949), "In the selective process of classifying certain property for taxation and exempting other property the Legislature has a wide discretion which will be sustained `provided just reasons exist for the selection made.'"
What constitutes a "just reason", of course, can be defined quite narrowly or quite broadly. I respectfully suggest that great breadth is the order of the day when the issue involves taxes. To begin with, the power of taxation is an element of sovereignty which is uniquely consigned by the Constitution to the Legislature. In this regard, Article 28, Part I provides that, "No subsidy, charge, tax, impost, or duty, shall be established, fixed, laid, or levied, under any pretext whatsoever, without the consent of the people, or their representatives in the legislature, or authority derived from that body." See also, Articles 5 & 6, Part II. After all, our ancestors fought a war over the principle that there should be no taxation without representation.
The decisions of this Court confirm the virtually plenary power of the Legislature to determine the objects of taxation, the identity of property to be taxed, rates of taxation and the nature of exemptions. "The power of the legislature to classify property as taxable or non-taxable is a broad one, and the validity of its exercise has rarely been called in question." Opinion of the Justices, 84 N.H. 559, 569 (1930). Thus, it is black-letter law in New Hampshire that the Court does "not pass on the wisdom or advisability" of a tax law. Opinion of the Justices, 95 N.H. 548, 550 (1949). As a result, "A [tax law] is not to be declared invalid for lack of constitutional power unless the conclusion is established beyond a reasonable doubt." Opinion of the Justices, 84 N.H. 559, 572 (1930).
The reasonableness of a tax exemption generally turns upon whether or not the exemption " reasonably promotes a matter of the general welfare." Id. at 551. In this regard, "It is a recognized principle of constitutional law that taxes may not be imposed for the benefit of private persons or for private uses." Opinion of the Justices, 88 N.H. 484, 486 (1937). On the other hand, the concept of the "general welfare" is exceeding comprehensive. For example, a general tax exemption granted in order to "stimulate economic recovery by encouraging new building projects" is "properly within the legislature's discretion in acting for the welfare of the state." Opinion of the Justices, 87 N.H. 490 (1935). See also, Opinion of the Justices, 88 N.H. 500, 511 (1937) (exempting livestock and stock in trade of retailers, mechanics and manufactures in order to aid farming and industry "tends to further the state's general welfare").
As long as this Court is willing to grant the Legislature the deference that the foregoing principles require, the abatement provision of the ABC Plan should pass the test of constitutional reasonableness. This is, after all, what the Court in Claremont II said it would do: "Decisions concerning the raising and disposition of public revenues are a particularly legislative function and the legislature has wide latitude in choosing the means by which public education is to be supported .... [S]everal financing models could be fashioned to fund public education. It is for the legislature to select one that passes constitutional muster." Claremont II (slip opinion, p. 7)
One of the best reasons for the Court to defer to the Legislature on issues of tax policy is that such matters inevitably involve certain economic assumptions and strategies that the Court is ill-equipped to critique. For example, one of the assumptions of the abatement provision in the ABC Plan is that it will incentivize communities to increase their tax bases faster than the State average. Take our Community B, for example. If it can increase the assessed valuation of its property from $100 million to $200 million, like Communities C and D, it can increase its abatement from $250,000 to $1.75 million. Since Community B gets to keep all that money under the ABC Plan, it is presumed that it will still appropriate some or all of it for local purposes, including the provision of education in excess of that required to meet the test of constitutional "adequacy". [fn 11] Even though the Court may be skeptical
about whether the voters of Community B would still raise that money, as opposed to just leaving it in their pockets, and even though there is no guarantee that if they did raise it, they would spend it on education, those are matters of public policy which are peculiarly within the purview of the Legislature. [fn 12]
Note that another potential consequence of the ABC abatement scheme is to induce municipalities to discourage people with children from moving into town - or even to discourage people from having children. However, no one has suggested that either of these things is a goal of the ABC Plan. Moreover, it is difficult to see how the abatement scheme creates any more of an incentive for these things to occur than is inherent in the mere fact that so long as schools are financed with public money, there is an incentive to minimize the number of children in the school system.
Such speculative considerations as the foregoing aside, what is there for anyone to complain about the ABC abatement scheme? The only thing that anyone can complain about is that someone in another community may be paying less than he is. But that is not what the Constitution's requirement of a "proportional and reasonable" tax is all about. Article 5, Part II is meant to make sure that no one pays more than his fair share.
Take the citizens of Community A. They pay the State rate of $15.00 per $1,000 of valuation, which is, by definition, their fair share of the statewide burden of providing an "adequate" education to all of the State's children. Why do they have any complaint about the people in Communities B, C or D? So long as the abatements that residents of B, C and D receive do not increase the amount that the citizens of Community A have to pay, the Community A folk should have no gripe. Likewise, the people who live in Community B should not be complaining about the fact that the residents of Communities C and D pay less than those in B and, finally, the residents of Community D should not be complaining just because their neighbors in C pay less than those in D.
The only basis for such complaints would be envy. This would be begrudging another for his good fortune - even though his good fortune did you no harm. As Judge Robert Bork pointed out in his book SLOUCHING TOWARDS GOMORRAH, this is equality for its own sake. As such, it is not equality in the constitutional sense. It is, instead, a form of egalitarianism which not only levels just to level, but also inevitably ends up leveling to the lowest common denominator.
This Court, however, has made it clear that, in New Hampshire, "This question of equality is a practical one." Keene v. Roxbury, 81 N.H. 332, 338 (1924). And particularly when it comes to taxes, "Substance rather than form is the test." Eyers Woolen Co. v. Gilsum, 84 N.H. 1, 9 (1929).
What then is the form and what is the substance under ABC? Note that I said that no one should complain about the abatement scheme so long as the fact that some people paid less on account of their abatements did not cause others to pay more. But how can that not be the case? Is it not always true that an exemption for one is an increase for all others? "And as anyone's payment of less than his share leaves more than their shares to be paid by his neighbors, his non-payment of his full share is a violation of their constitutional right." Eyers Woolen Co. v. Gilsum, 84 N.H. 1, 9 (1929).
In a closed system, where the revenues to be raised by a tax must equal the expenditures to be made, the foregoing is true. This would indeed be the situation described by the Court in Morrison v. Manchester, 58 N.H. 538, 550 (1879), as follows:
Non-payment is, in effect, a compulsory payment of money, by those who bear their shares of the common burden, to the privileged person who does not bear his share. It is, in law and in fact, as much a subsidy, paid by the former to the latter, as if it were a subsidy in form and in name. The result is the same whether (1) a man pays his just tax of $10, and receives it back again, and his neighbors pay $10 more than their shares, or (2) they pay $10 and receiving it back again is omitted, or (3) he and they pay their several shares, and they pay him $10. The first may be called a donation of a subsidy or bounty; the second may be called an exemption; the third may be called something else. They are three methods of doing one thing.
The ABC Plan, however, does not create a closed system. One the contrary, through its subsidy provision, it is an open system. To understand this, we must add to our examples; now we must look at the communities who raise less than what they need to provide an "adequate" education. Suppose that Community E, like Communities A and B, has $100 million in property valuation, but it has 350 children. Application of the State rate of $15.00 per $1,000 will leave Community E $250,000 short. However, under the subsidy provision of the ABC Plan, Community E will receive a grant from the State in the amount of the shortfall. On the other hand, the subsidy will not be financed through the property tax system; the money will come from other, as yet unidentified, State revenues. The critical feature of the ABC Plan, then, is that the money will not be financed by taxes raised from Communities A, B, C or D.
Thus, in the open system created by ABC, everyone is assessed the same state education tax, on the same class of property, valued in the same manner. Money then flows out of the system to those communities who are eligible for an abatement and money flows into the system to those communities which are in need of a subsidy - but the abatements do not finance the subsidies. Although those who receive abatements and those who receive subsidies arguably pay less than their fair shares, no one pays more than his fair share.
This is not the first New Hampshire tax scheme which collected taxes on one basis and then distributed the revenue to the same parties who paid the taxes, but according to a different formula. For example, in Opinion of the Justices, 84 N.H. 550, 577-582 (1930) the revenues collected from separate State taxes which were assessed at uniform rates upon timber and utilities were placed into an equalization fund and then redistributed to the towns in which such property lay, as if the property had been taxed by the towns at their municipal rates. In essence, the Court separated the tax from the expenditures. From this perspective, the two taxes were clearly constitutional because they were uniform across the State. As for the lack of statewide uniformity with respect to the distribution of the revenues, the Court said this: "[S]tate aid to relieve the burden put on some towns and not on others, or put upon towns in differing degree or amount, may be granted by the legislature. If the burden put upon the town is one the legislature might rightly impose, relief therefrom by an appropriation of state funds is permissible." Id. at 580. [fn 13] See also, Opinion of the Justices, 94 N.H. 506, 510 (1947) (one-half of State tax on bottled soft drinks distributed to towns "in the same proportion which the total valuation of that town for [real property] bears to the total such valuation of all towns"); Opinion of the Justices, 88 N.H. 500, 507 (1937) (payments to towns out of State revenues "to replace the loss of revenue by reason of a repeal of the law taxing live stock and stock in trade").
The only distinction between the ABC Plan and the utility and timber taxes upheld in the 1930 Opinion is that under ABC, the State does not actually collect the money and then redistribute it to the towns. Looking at the substance of the transaction, however, they are the same. If one then views ABC's abatement just like its subsidy - as a separate appropriation from State revenues in to order to finance municipal activities, including education - the abatement is clearly justified by a public purpose and, therefore, it is just as constitutional. [fn 14]
The bottom line, then, is that this Court can leave Claremont in place and still uphold the ABC Plan. This would be terribly unfortunate because it would keep the notion of a "constitutionally adequate education" alive, well and ready to wreak havoc on another day. Nevertheless, half a loaf is better than no bread at all.
Respectfully submitted,
____________________
Eugene M. Van Loan III
Unless the Court elects to reconsider its decisions in Claremont I and Claremont II, I do not request the opportunity to make oral argument in this case.
____________________
Eugene M. Van Loan III
[footnote 1] Claremont, 138 N.H. 183 (1993); Claremont II, 142 N.H. ____ (1997); and Claremont III, ____ N.H. ____ (May 8, 1998).
[footnote 2] This assumes, of course, that the reference in Article 83 to "magistrates" does not include the members of the Court itself. If, however, Article 83 was addressed to judicial officers as well as legislative and executive officers, that would be just one more reason to believe that the provision was not intended to be justiciable.
[footnote 3] Indeed, it is settled law in New Hampshire that the Court will not issue an advisory opinion on existing, in contrast to proposed, legislation. E.g., Opinion of the Justices, 123 N.H. 510 (1983); Opinion of the Justices, 119 N.H. 266 (1979); Opinion of the Justices, 116 N.H. 358 (1976).
[footnote 4] Whenever the Court has failed to answer a question, it has asked to be relieved from its obligation to provide an answer. See, e.g., Opinion of the Justices, 121 N.H. 280 (1981).
[footnote 5] By the same token, the Court's advice to the Senate in this case will not be binding upon the Claremont plaintiffs in their suit. As this Court has said on many occasions, its Article 74 advisory opinions are subject to revision in a true case or controversy between adverse parties. More importantly, because the Senate's questions to the Court concern the constitutionality of laws which do not yet exist, neither the questions nor the Court's answers will have any effect upon the vested rights of the Claremont plaintiffs, or anyone else. The fact that someone's future rights might be affected by an advisory opinion creates no more impediment to the Court's rendering its opinion than it does to the Legislature's passage of the bills now pending before it. Compare, Article 23, Part I, N.H. Const. (retrospective laws prohibited). In this regard, those cases which hold that this Court should refrain from rendering an advisory opinion where doing so would determine the private rights of private parties are completely inapposite. See generally, e.g., Opinion of the Justices, 95 N.H. 557 (1949); Opinion of the Justices, 62 N.H. 704 (1816); Petition of Turner, 97 N.H. 449 (1952). Note that these principles are in no way altered by the Court's retention of jurisdiction in the Claremont case. To begin with, the mere fact that the case remains pending does not itself bestow some type of inchoate future rights upon the plaintiffs. Nor does it grant them a preferential interest vis-a-vis other New Hampshire citizens in determining the form and substance of future legislation. And, finally, it presumably does not convert this Court's role in the Claremont case from an adjudicator of rights and responsibilities accrued under existing law into a floor manager for the legislative process. In this regard, the Court should consider carefully another comment of Mr. Justice Thomas in the ill-fated Jenkins case: "[T]his concept of continuing judicial involvement has permitted the District Court to revise their remedies constantly in order to reach some broad, abstract, and often elusive goal. Not only does this approach deprive the parties of finality and a clear understanding of their responsibilities, but it also tends to inject the judiciary into the day-to-day management of institutions and local policies - a function that lies outside of our Article III competence." Missouri v. Jenkins, 132 L. Ed.2d at 109.
[footnote 6] As Claremont III demonstrates, it is presumably open to the Court to reopen the case any time it so chooses.
[footnote 7] Note that the other advantage of this procedure is that the full, permanent Court gets to rule on Claremont. There is presumably no reason for Justice Thayer to recuse himself from participating in the advisory opinion requested by the Senate. Moreover, since his wife is no longer a member of the State Board of Education and, therefore, the reasons for his recusal in Claremont I no longer exist, Justice Thayer could sit on a reconsideration of Claremont. Although this Court was correct in its ruling in Claremont III that it was constitutionally permissible for Justices Batchelder and Grimes to sit on the Claremont case in place of Justice Thayer, the opportunity now presents itself to have the case considered by the whole Court. In a case of this consequence, the people of New Hampshire deserve nothing less.
[footnote 8] I admit I really don't know how the Court can accomplish this task. Senator Rubens' bill, Senate Bill 508-FN, is not a tax bill; it is a funding bill. Consequently, the only way that the question posed to the Court by Senate Resolution 3, (which asks whether the bill "fulfills the mandates of Claremont") makes any sense is to construe it as asking whether or not it "adequately" funds the requirement of a so-called "constitutionally adequate education." Likewise, Questions #3 and 4 in Senate Resolution 4 inquire about the constitutionality of the interim funding compromise under the Governor's ABC Plan. Again, these questions relate to a funding provision of HB 1280-LOCAL which does not purport to change the State's tax structure and, therefore, the questions appear to ask whether or not the State will be fulfilling its duty to "cherish" education during the next two years if it simply increases the amounts it pays to local school districts under the existing Augenblick Formula and gives the amounts so calculated a priority call upon the State's available funds equivalent to the call for bond payments and the like. It would seem, therefore, that unless the Court decides to take one of the we-don't-have-to-answer-these-questions routes discussed above, it cannot avoid jumping into the morass of second-guessing the Legislature's determinations of educational and funding adequacy.
[footnote 9] If Claremont were reconsidered, the ABC Plan could be found constitutional for the additional reason that it is not a State tax and, therefore, it does not have to be applied uniformly throughout the State. Such a conclusion, in turn, could be arrived at by either of two routes. First, there is the question of the purpose of the tax. In Claremont II the Court stated that, "We find the purpose of the school tax to be overwhelmingly a State purpose." Claremont II (slip opinion, p. 3). This finding was based upon the holding of Claremont I that, "part II, article 83 [of the Constitution] imposes a duty on the State to provide a constitutionally adequate education to every educable child in the public schools in New Hampshire and to guarantee adequate funding." Claremont I, 138 N.H. at 184. If, therefore, this Court were to reverse Claremont I and interpret Article 83 in the way in which it was intended - merely as a non-justiciable admonition to all government officials to hold certain values dear - the supposed State purpose of school taxes would evaporate. See, e.g., Holt v. Antrim, 63 N.H. 284, 286 (1886) ("Local education is a local purpose for which legislative power may be delegated to the towns. The amount of money to be raised for school-houses and other educational purposes is determined, under some restrictions, by municipal corporations".)
Secondly, there is the question of what makes a tax a State tax. Claremont II held that the purpose of a tax is "dispositive of the issue of the character of the tax." Claremont II (slip opinion, p. 3). This is despite the fact that "each municipality controls the mechanics of assessment and collection of local property taxes" and that "the property tax, once collected, is managed and expended by each municipality in accordance with its budget and thus does not become a part of the State treasury." Claremont II (slip opinion, p. 3). If, therefore, the Court were to reverse Claremont II and follow those precedents which seem to hold that the character of a tax is determined primarily by the the disposition of the funds, school taxes would again be viewed as they always have been, as local taxes. Compare, e.g., Opinion of the Justices, 88 N.H. 500, 508 (1937) (income tax collected by the State, but distributed "in such a manner that a town or city receives all the tax which its residents pay, less its share of the collection expense" is a
local tax); Boston, Concord & c. R.R. v. State, 60 N.H. 87, 96 (1880) (The disposition made of the tax [on railroads] when collected [by the State] is evidence bearing on ... the question whether the tax is state or municipal."); with Opinion of the Justices, 84 N.H. 559, 564-6 (1930) (tax on gas and electric utilities collected by the State, but distributed in part "to the several towns where the physical property is situated" is a State tax).
[footnote 10] Unfortunately, the terminology used by the Legislature in HB 1280 gives this Court a special, but perverse, incentive to hold the ABC Plan constitutional without reconsidering Claremont. Claremont says that all school taxes are state taxes. Even assuming that this conclusion is wrong, the Legislature will have mooted the issue if the ABC Plan is held constitutional and HB 1280 is passed into law. This is because the conclusions of Claremont will have been incorporated into an act of the Legislature. In other words, the property tax system used to fund education will be a State tax, not because the Constitution supposedly makes it so, but because the Legislature has decreed it to be a "state education tax." Similarly, the preamble to HB 1280 expressly affirms the State's responsibility to "ensure each child a constitutionally adequate education." The likely result of this verbiage is that, if the bill becomes law, the Court will no longer need to rely upon questionable constructions of the Constitution to support the supposed "right to an adequate education"; it will merely turn to the Legislature's own handiwork. Thus, the Legislature itself will have made Claremont a self-fulfilling prophesy.
[footnote 11] Note also that the abatement device doesn't benefit only the so-called "property- rich" municipalities. To the extent that it creates a successful incentive for any municipality to increase its property values, that increase is also reflected in the total State property valuation, which, in turn, lowers the State education tax rate - for everyone.
[footnote 12] Note, however, that the fact that the revenues to be raised by the state education tax are "dedicated" to a specific use - education - does at least clearly identify the overall purpose of the tax. This distinguishes the ABC Plan from most tax schemes, where the funds collected are simply deposited into the State treasury and made available for general public purposes. Where the tax revenues are dedicated, a match between the purposes of the tax and the purposes and/or effects of the exemption sufficiently establishes the constitutionality of the latter and there need not be any independent policy justification for the exemption itself. See Opinion of the Justices, 132 N.H. 777, 786 (1990) (Brock opinion) (tax credit unconstitutional where "the resulting tax would depend on attributes unrelated to the object of the tax").
[footnote 13] Note also the example the Court gave of a constitutional distribution of revenues despite the fact that it varied from town to town: "In this respect, the relief granted is very like that as to school money. Certain public duties are imposed upon all towns, but the state aids the poorer ones in the discharge of some of these obligations. So long as such aid is distributed upon a fair and equitable basis, it is merely an exercise of the legislative function of determining where, in the aggregate, the burden incident to the performance of public duties shall rest." Id. at 580.
[footnote 14] Note that the public purpose of ABC's abatement provision need not be the same as the public purpose of its subsidy provision in order for both to be constitutional. As I pointed out above, the incentive feature of the abatement scheme is designed in part to increase the available pot of funds for education, which is the same purpose of the subsidy provision. However, the abatement provision may also be looked at from another public policy perspective. One of the things that the ABC Plan does is to remove a substantial chunk of real property from the tax base of each municipality. In the terms of our hypothetical, $15.00 per $1,000 of real property valuation in each and every New Hampshire community is no longer available to be taxed to support local functions. To the extent that the municipalities differ among themselves in the total value of their properties, they are differently impacted by the ABC Plan's withdrawal of property from their respective tax bases. In this case, the "property-rich" communities get hit worse than the "property-poor" communities. (Note, however, that what makes a community rich or poor in terms of total property valuation is not just a function of the worth of its properties; it is also a function of geography. For example, a town having 10 square miles of property valued at $1 million per square mile has the same total property valuation as a town containing 20 square miles valued at $500,000 per square mile.) One of the things that the abatement device accomplishes is to compensate those communities who will be disproportionately burdened by ABC's impact upon their tax base. This notion of using the revenues generated by a statewide tax on property withdrawn from the local tax rolls in order to restore the status quo ante in the affected municipalities was expressly acknowledged as a permissible public policy in the 1930 Opinion of the Justices which sustained the constitutionality of the timber and utility tax/rebate plans discussed above. See 84 N.H. at 578-9. [For another example of a form of quid pro quo justification for a tax exemption, see Opinion of the Justices, 95 N.H. 548 (1949).