NOW COME the Honorable Representatives of the New Hampshire House of Representatives, Rep. John Alger, Rep. Jon Beaulieu, Rep. Robert Boyce, Rep. C. David Corbin, Rep. Howard Dickinson, Rep. Michael Gilman, Rep. Maurice Goulet, Rep. Godfrey Howard, Rep. James Johnson, Rep. Constance Jones, Rep. Richard Leone, Rep. Karen McRae, Rep. Paul Mirski, Rep. Edward P. Moran, Jr., Rep. Ed Putnam, Rep. Marshall Quandt, Rep. Bernard Raynowska, Rep. Thomas Rice, Rep. Ralph Rosen, Rep. George Rubin, Rep. Tony Soltani, Rep. Nancy Stickney, Rep. Gary Torrenson, Rep. Phil Weber and Rep. Kenneth Weyler (Petitioners), and submit this Memorandum of Law in Support of their Petition to Intervene and Motion for Reconsideration.

On October 15, 1999, the Court ruled that "the phase-in provision (of HB 117) is unconstitutional," and that "[b]ecause the phase-in is not severable from the education property tax but, rather, is integral and essential to it, we hold that the statewide property tax provision cannot stand." However, the Court also ruled that this "does not require invalidation of the entire piece of legislation."

It is the position of the Petitioners that the remainder of HB 117 was not severable from the phased-in property tax, and also should have been struck down. The history over the sixteen months between the issuance of Claremont II and the passage of HB 117 is that the determination of the "cost" of an "adequate" public education is inextricably intertwined with finding the amount and nature of new taxes and tax increases that would garner the support of a majority of the Legislature. It is "impossible to tell therefore, whether the legislature would have adopted any part of [HB 117] independently" of the phased-in property tax. Public Service Co. v. State, 101 N.H. 154, 163 (1957). Consequently, the Court erred in not striking down all of HB 117.

As explained below, the Court’s Order of October 15, 1999 has created an uneven playing field in the Legislature by locking in the "cost" of "adequacy" at a number so high that a broad-based tax must be used to fund it, thereby profoundly impairing the Petitioners’ ability to frame and vote upon education and tax legislation. As a result, if the Court does not reconsider its Order of October 15, 1999, and strike down all of HB 117, then, despite the Court’s pronouncement that "we were not appointed to establish educational policy, nor to determine the proper way to finance its implementation," Claremont II, 142 N.H. 462, 475 (1997), the Court will have done, albeit indirectly, the very thing that it has said that it will not do.

As legislators, the Petitioners have a right to, and direct interest in, seeing that this Court’s October 15, 1999 Order, which profoundly limits their ability to frame and vote upon education and tax legislation, was properly decided. However, the plaintiffs and the Attorney General apparently "agree that if the property tax portion of the Act, including the phase-in is struck down as unconstitutional the remaining provisions of the Act are severable ... ." Thus, it appears that the rights and interests of the Petitioners that have been impaired will never be addressed by this Court. Accordingly, the Petitioners seek to intervene to protect their rights and interests.

The Court’s ruling that the phased-in property tax was severable from the remainder of HB 117 was based on two grounds: (1) that "both parties agree that if the property tax portion of the Act, including the phase-in, is struck down as unconstitutional, the remaining provisions of the Act are severable," and (2) "the legislative history supports this agreement." However, any agreement between the parties cannot substitute for or supersede the legislative intent because that would allow the parties to re-write the law in contravention of Part II, Article 2. Moreover, the legislative history does not support this agreement. Accordingly, the Court should reconsider its order of October 15, 1999 and strike down as unconstitutional all of HB 117 because the court erred in ruling that the phased-in property tax was severable from the remainder of HB 117.

Part II, Article 2 vests the supreme legislative power in the Legislature:

It is well established that this power is vested exclusively in the Legislature. See, e.g., Opinion of the Justices (Tax Plan Referendum), 143 N.H. ___ (1999) (power of general state legislation is non-delegable). Allowing any agreement between the Attorney General and the plaintiffs to substitute for or supersede the legislative intent, in interpreting HB 117, would contravene Part II, Article 2 because, obviously, any agreement between the parties would not necessarily have to reflect the intent of the Legislature and, as a result, the parties’ agreement would re-write the law. Consequently, to the extent that the Court relied upon any agreement between the parties as to how HB 117 should be interpreted to rule that the phased-in property tax was severable from HB 117, the Court erred.

It is no answer to say that there would be no violation of Part II, Article 2 because the Attorney General was acting in a representative capacity for the Legislature. It is too well settled to require citation that after-the-fact testimony by a legislator cannot be used in interpreting a statute. Thus, even if all of the legislators who had voted for HB 117 were to now "agree" that it was their understanding that the phased-in property tax was severable from the remainder, that would not be a legitimate basis for the Court to rule that the phased-in property tax was severable from the remainder.

Clearly, what legislators cannot do directly cannot be done indirectly through the Attorney General. Accordingly, even if the Attorney General’s agreement with the plaintiffs that the phased-in property tax was severable from the remainder of HB 117 was done at the behest of all of the legislators who had voted for HB 117, that still would not be a legitimate basis for the Court to so rule.

Finally, because the Attorney General has recently taken the position that his office need not defend the Legislature when the constitutionality of a statute is called into question, see Petition of Michael Mone, 143 N.H. 128 (1999), but can, instead, take whatever position he wants, it should not be assumed that he was acting in a representative capacity for the Legislature when he reached the agreement with the plaintiffs.

In sum, whether or not the Attorney General and the plaintiffs agreed that the property tax portion of HB 117 was severable from the remainder of HB 117 is of no moment because the Attorney General and the plaintiffs have no authority under the Constitution to legislate, which is precisely what would result if the Court were to allow their agreement to substitute for the intent of the Legislature. The only thing that matters, in determining the issue of severability, is the legislative intent.

The Court’s ruling that the phased-in property tax was severable from the remainder of HB 117 was also based upon its finding that "the legislative history supports this agreement." However, the only "legislative history" offered by the Court to support its contention that the Legislature intended the remainder of HB 117 to stand alone is a brief exchange between two representatives during a floor debate, in which one representative indicated that he had been "told by legal scholars ... that the concept of severability is implicit in the bill ... ." This smidgen of subjective evidence is far outweighed by the objective evidence that the Legislature would not have adopted the remainder of HB 117 without the phased-in $6.60 property tax. See Public Service Co. v. State, 101 N.H. 154, 163 (1957) ("impossible to tell whether the Legislature would have adopted any part of the [bill] independently").

In the fall of 1998, the Legislature passed HB 1075, which "defined" an adequate public education. Notably, HB 1075 did not establish the "cost" of an "adequate" public education. From that point until HB 117 was passed in the spring of 1999, the Legislature considered a multitude of bills that would have established, based upon the definition in HB 1075, the "cost" of an "adequate" public education, and how that cost would be funded. Thus, it appears that the Legislature did not consider the "cost" of an "adequate" public education to be capable of determination without inclusion of the funding source or sources. Otherwise, the Legislature would have defined the "cost" of an "adequate" public education at the outset or independently, and then determined how to fund that cost.

Moreover, although the definition of an "adequate" public education remained fixed by HB 1075 during this period of time, the "cost" of an "adequate" public education varied between these bills. What also varied between these bills was the amount and nature of new taxes and tax increases proposed to fund the "cost" of an "adequate" public education.

For example, HB 109, the most well known alternative to HB 117 and more popularly known as the Hager-Below income tax, which as its moniker suggests relied primarily on an income tax to fund public education, defined "the average base per pupil cost " as $2.700.00 and provided that:

Apparently, this resulted in a total "cost" of $5,000.00 per pupil, which totaled approximately $950 million.

HB 117, which of course was based on a phased-in state-wide property tax, used a different formula to define the "cost" of "adequacy," which resulted in a total "cost" of "adequacy" of $825 million. Thus, the legislative history confirms what common-sense tells us: legislatures, even where "entitlements" are concerned, do not pass spending bills in a vacuum. Rather, the determination of the amount of the entitlement is inextricably linked to the amount and nature of the revenues to be raised to fund the entitlement. In the plaintiffs’ own words, the $825 million in HB 117 was "based entirely upon a political desire to keep the State’s financial obligation below a certain level."

Even risking losing sight of the forest through the trees by confining inquiry to the four corners of HB 117 leads to the same result. There is no severability or "savings" clause in HB 117. Compare, Opinion of the Justices, 88 N.H. 484 (1937) with Opinion of the Justices, 106 N.H. 202 (1965). Given that, at the time of drafting and through passage, the plaintiffs’ attorneys were warning the Legislature that they considered the phased-in property tax unconstitutional, and that they would bring that issue back to court promptly should it pass, it is reasonable to conclude that the Legislature, knowing how to write a severability clause, would have included one if the intent was that the phased-in property tax was to be severable from the remainder of the statute.

Moreover, HB 117 established a "tax equity and efficiency commission," which manifests that the amount and nature of new taxes and tax increases proposed to fund the "cost" of an "adequate" public education was "integral and essential," Carson v. Maurer, 120 N.H. 925, 945 (1980), to the statute. This is confirmed by language in the prologue to HB 117 stating that "determining the cost of an adequate education" is fraught with "imprecision, subjectivity, and difficulty," and that "[t]here is no single, empirically correct method of establishing the cost of an adequate education."

This is also confirmed by the remarks of Speaker Sytek on page 1131 of the House Record of April 29, 1999:

Thus, up until virtually the very last minute, the numbers in HB 117 were being "tweaked." This being the case, it is "impossible to tell whether the Legislature would have adopted any part of the [bill] independently." Public Service Co. v. State, 101 N.H. 154, 163 (1957).

In sum, the subjective evidence offered by the Court in its Order of October 15, 1999 to support severability is far outweighed by the objective evidence that the Legislature would not have adopted the remainder of HB 117 without the phased-in $6.60 property tax. The phased-in property tax is not severable from the remainder of HB 117.

Although the Petitioners have found no New Hampshire precedent directly on point, state courts in other jurisdictions have recognized that impairment of legislators’ powers to vote on matters within their constitutional sphere constitutes an injury to their rights and interests sufficient to confer standing. See Colorado General Assembly v. Lamm, 700 P.2d 508, 516 (Co. 1990) (legislators who possessed the constitutional power of appropriating funds for executive branch agencies had standing to challenge governor’s sua sponte transfer of funds from one executive branch agency to another); Hendrick v. Walters, 865 P.2d 1232, 1237-38 (Ok. 1993) ( state senator had standing to challenge legitimacy of governor’s holding of office without ever having taken statutory oath of office because the senator could be called upon to vote on invalid executive appointments and vetoes).

Consistent with the holdings conferring standing of legislators when their voting power has been impaired, this Court has recognized the standing of the New Hampshire Aeronautics Commission when its power to set zoning restrictions adjacent to the Manchester airport was challenged. Manchester Airport Authority v. Romano, 120 N.H. 166 (1980). In Manchester Airport Authority, this Court considered whether airport zoning regulations promulgated by the Aeronautics Commission constituted a taking in violation of the Fifth Amendment to the United States Constitution. The issue was raised by condemnees in an eminent domain proceeding initiated by the Manchester Airport Authority. In remanding the case for further fact finding, this Court held that it was "proper to remand so that ... the State Aeronautics Board may be served with notice of the pendency of this action. Because of their obvious interest in the outcome of this litigation, they should be given leave to intervene." Id. at 168.

Establishing tax and education policy fall squarely within the Petitioners’ constitutional sphere. See Part I, Article 28 ("no ... tax... shall be established, fixed, laid, or levied ... without the consent of the people, or their representatives in the legislature, or authority derived from that body"); Part II, Article 5 ("full power and authority are hereby given and granted to the said general court ... to impose and levy proportional and reasonable assessments, rates and taxes, upon all inhabitants and residents"); Claremont II, 142 N.H. 462, 475 (1997) ("we were not appointed to establish educational policy, nor to determine the proper way to finance its implementation"); Coleman v. School District of Rochester, 87 N.H. 465, 471-72 (1936) ("any educational policy or rule declared by the legislature or promulgated under authority delegated by it may not be reversed or vacated judicially on the ground that it must be regarded as impolitic"); see also City of Franklin v, Hinds, 101 N.H. 344, 346 (1958); State v. Jackson, 71 N.H. 552, 554 (1902); Farnum’s Petition, 51 N.H. 376 (1871); Trustees of Dartmouth College v. Woodward, 1 N.H. 11, 114 and 121 (1818).

Like the New Hampshire Aeronautics Commission, the Petitioners’ lawfully constituted powers are in issue and, as discussed below, have been profoundly impaired by the Court’s October 15, 1999 Order. Their interest as legislators in seeing that the Court’s Order was correct is obvious. Accordingly, the Court should allow the Petitioners to intervene.

Although it can be argued that the Legislature is free to correct a judicial misinterpretation of a statute, that is often not true, which plainly is the case here. As explained below, the Court’s Order of October 15, 1999 has created an uneven playing field in the Legislature by locking in the "cost" of "adequacy" at a number so high that a broad-based tax must be used to fund it, thereby profoundly impairing the Petitioners’ ability to frame and vote upon education and tax legislation. As a result, if the Court does not reconsider its Order of October 15, 1999, and strike down all of HB 117, then, despite the Court’s pronouncement that "we were not appointed to establish educational policy, nor to determine the proper way to finance its implementation," Claremont II, 142 N.H. 462, 475 (1997), the Court will have done, albeit indirectly, the very thing that it has said that it will not do.

Drafting, amending and enacting a bill can be a highly complex and contentious affair that succeeds only because the various sides compromise. The final result reflects the balance of forces in the Legislature, which, in turn, to some degree, reflects the various states of sentiment and intensities of sentiment in the electorate. It is like a contract where one side compromises on certain issues to get some of what it wants on other issues. Stated more succinctly, the majority that passes the statute typically is not of one viewpoint.

When a court misinterprets a statute, a portion or portions of the majority typically get more than they bargained for, while the other portion or portions get less. The problem when a court misinterprets a statute, such as HB 117, that involves a compromise involving intensely contentious matters is that there is little to no disposition on the part of the legislators in the majority to whom the court has given a free victory to restore to the other legislators in the majority what they had bargained for. As a result, because the "losing" side is less than a majority, the Court’s alteration of the law becomes permanent.

Describing the sixteen month legislative process that led to HB 117 as a highly contentious and complex affair would be an immense understatement. At the risk of overly simplifying matters, however, there were at least two substantial blocs of legislators whose views were diametric.

While not monolithic, one substantial bloc of the Legislature saw Claremont II as judicial overreaching that violated the separation of powers, and sought to preserve the extant funding system for public education. In order to avoid instituting a "broad-based" tax, elements of this bloc urged that a constitutional amendment be passed to "overrule" the decision and/or that remedial legislation be passed that would have, among other things, defined the "cost" of "adequacy" at $0.00 (HB 737).

Another substantial bloc of the Legislature saw Claremont II as an opportunity to, in their view, "reform" the State’s tax and education system by passing an income tax, and/or other broad-based taxes (e.g., HB 108, HB 109, HB 116). a large portion of this bloc would have defined the "cost" of "adequacy" as exceeding $1 billion. Ultimately, it was not until sixteen months had passed since Claremont II, and the Court’s refusal to extend the validity of the local property tax had left the State on the verge of a fiscal meltdown, that HB 117 was passed. HB 117 clearly reflected a compromise between these diametric views. By "phasing-in" the "broad-based" state property tax, HB 117 garnered the support of enough fiscally conservative legislators who opposed broad-based taxes and a high "cost" of adequacy to pass.

As noted above, however, when a court misinterprets a statute, one side gets more than its bargain, while the other side gets less. In this case, the Court’s misinterpretation of HB 117 has left fiscal conservatives without the benefit of the bargain they made with the liberals. Worse, the Court’s misinterpretation of HB 117 has created an uneven playing field in the Legislature by locking in the "cost" of "adequacy" at a number so high that a broad-based tax must be used to fund it, thereby profoundly impairing the Petitioners’ ability to frame and vote upon education and tax legislation.

For example, the same Senate that was unable to pass an income tax prior to the Court’s Order of October 15, 1999 has just passed an income tax by a nearly two to one margin. The difference, of course, is that, as a result of the Court’s Order of October 15, 1999, reducing the "cost" of "adequacy" to an amount that would allow a less redistributive or non-redistributive state-wide property tax is no longer a practical option.

Because the fiscal conservatives who supported HB 117 do not, by themselves, constitute a majority, they cannot repeal what is left of HB 117. As a result, the Court’s Order of October 15, 1999 means that the $825 million appropriation of HB 117 is, as a practical matter, untouchable, even though it never would have passed independently. Thus, the Court, despite its assurances that it would leave the setting of education and tax policy to the representative branches, has eliminated as an option reducing the cost of adequacy to a level that would avoid a redistributive property tax.

What this means is that the practical effect of the Court’s Order of October 15, 1999 is that the only policy question that the Court has left to be answered by the Legislature is what broad-based tax or taxes will be used to pay the bill left by the Court’s Order. Thus, the Petitioners’ ability to frame and vote upon education and tax legislation has been profoundly impaired.

In sum, if the Court does not reconsider its Order of October 15, 1999, and strike down all of HB 117, then, despite the Court’s pronouncement that "we were not appointed to establish educational policy, nor to determine the proper way to finance its implementation," Claremont II, 142 N.H. 462, 475 (1997), the Court will have done, albeit indirectly, the very thing that it has said that it will not do.

For the reasons stated, the Court should grant the Petition to Intervene and Motion for Reconsideration.
Respectfully submitted,
By their attorneys,
TARBELL PROFESSIONAL ASSOCIATION

By:_________________________________

Edward C. Mosca
45 Centre Street
Concord, N.H. 03301

(603) 226-3900

Dated:

I certify that a copy of the foregoing Memorandum of Law in Support of Petition to Intervene and Motion for Reconsideration was mailed on this date by first-class mail, postage prepaid, to Philip T. McLaughlin, New Hampshire Attorney General, Andru Volinsky, Esquire and John Tobin, Esquire.

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