N.H. Funding Debate Comes Down to the Wire

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With a court-imposed deadline bearing down on them, New Hampshire legislators last week were still squabbling over the best way to fix the state's school finance system.

The New Hampshire Supreme Court ruled in December 1997 that the current system of paying for education with local property taxes was inequitable--and unconstitutional--and ordered the legislature to fix the problem by April 1 of this year. ("N.H. Lawmakers Still Seeking School Finance Solution," Nov. 25, 1998.)

If the legislature fails to meet that deadline, education groups say, all schools in the state technically would be required to fire by April 15 every professional school employee. Employees would then have to reapply for their jobs after the issue was settled. And school officials could not promise job renewals without a sure source of funding for public schools, the school groups contend.

"Each [finance-reform proposal] has its major supporters and opponents, so that's why things aren't falling into line very quickly," said Paul W. Krohne, the executive director of the New Hampshire School Boards Association. "There remain a lot of questions as to whether or not [the legislators] are going to make it. I join others in questioning whether the deadline can be met."

If the legislature doesn't meet the deadline, Mr. Krohne said, the court could give an extension, but he said that was unlikely to happen. In November, the court denied a request by the governor and the legislature to extend the deadline by two years.

Among other options if the deadline is unmet, the supreme court could impose its own tax system, the schools could close down, or the schools could continue to operate by sending their bills to the state, Mr. Krohne added.

Just last week, the state supreme court ruled against an option that had been favored by the governor to put the question of how to solve the funding issue to the people in a statewide voter referendum.

The Senate finance committee was considering two proposals last week for new broad-based taxes to pay for education. Following a public hearing March 12 and further work sessions, committee members hoped to make a recommendation on the proposals this week to the full Senate, according to Sen. Clifton C. Below, a Democrat on the finance panel.

One of the proposals, co-sponsored by Mr. Below and passed by the House March 4, calls for a combination income tax--which would be the state's first--and property tax to pay for education.

Mr. Below said that some legislators in the past two weeks had begun to examine his proposal closely and make suggestions to improve it. He said he took that interest as a sign of minor progress.

Gov. Jeanne Shaheen

The second plan, backed by Democratic Gov. Jeanne Shaheen as an amendment to the first proposal, was sponsored by Democratic Sen. John A. King. It recommends using a combination of a property tax, legalized video gambling, a tobacco tax, and other taxes to pay for public education.

Treading Carefully

All the uncertainty about who will pay for education next year is affecting how districts are drawing up their new budgets.

On the average, districts across the state are planning on only a 4 percent increase in their budgets for next year, compared with the more typical 6 percent, said Mark Joyce, the executive director of the New Hampshire School Administrators Association.

In addition, he said, "long-term planning has been stalled."

"People are just waiting," agreed Philip F. Nadeau, the chairman of the Merrimack Valley school board. And he added, "it's just wise to wait."

The school board there has postponed proposing an $18 million bond issue to pay for a new elementary school and other needed construction work in the 2,600-student Merrimack Valley district until the state's funding crisis is resolved, Mr. Nadeau said.

"We decided it would be prudent not to try to convince the voters to accept long-term building proposals when we couldn't tell them how they could be funded," he said.

Andru Volinsky, one of the lawyers for the plaintiffs in Claremont School District v. Governor, the case that brought about the supreme court's ruling on school funding, blames Gov. Shaheen for throwing a wrench into what he views as a recent good-faith effort by legislators to fix the problem.

The House's passage this month of the proposal recommending an income tax to help pay for education was "a huge deal" in a state that has never had an income tax, he said. He described the bill as "a foundation on which we can craft a solution."

Mr. Volinsky branded the governor's proposal, on the other hand, as "a slick, political package designed to avoid an income tax."

But Brian P. Murphy, the governor's press secretary, said Ms. Shaheen believes that not having an income tax has been key to New Hampshire's economic success and that the funding crisis can be resolved without instituting one.

At the Brink

He said the governor believes that her tax plan would generate enough revenue to provide students with an adequate education, but that she is open to changing the proposal--short of agreeing to an income tax.

Observers say that, as time runs out, either Gov. Shaheen or legislators will have to give in on positions they have taken publicly.

Some say the governor's proposal is flawed in that it would rely heavily on taxes from video gambling and property taxes, both of which are viewed by some legislators as unreliable funding sources for the long term. In addition, Speaker of the House Donna P. Sytek, a Republican, has said she is opposed to legalizing video gambling.

Others find the House bill equally faulty, given the governor's consistent threats to veto any effort to establish an income tax.

And, according to Mr. Murphy, neither the House nor the Senate is likely to have the two-thirds majority needed to override a veto.

The March 11 court ruling added new urgency for a solution, as it re-emphasized the responsibility of the legislature to come to a consensus, saying that delegating the issue to the voters was unconstitutional.

Mr. Joyce of the school administrators' association said his group was opposed to the referendum option because it would further delay a solution to the finance problem.

"We're at the brink right now," he said, "which could be the entrance to a new, great, equitable funding world--or a deep, dark cave that will set us back."

Vol. 18, Issue 27, Pages 22, 28

Published in Print: March 17, 1999, as N.H. Funding Debate Comes Down to the Wire
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