New Hampshire legislators have approved a school finance plan that, on paper at least, presents a permanent solution to the state’s long-running problems in paying for its schools.
But lawmakers on both sides of the aisle said last week that they expect to revisit the issue yet again next year.
With Wall Street threatening to lower the state’s bond rating, a projected $240 million hole in the state school aid budget, and a funding formula due to sunset in 2003, the Granite State legislature was under pressure this session to find a better way of financing schools.
The plan leaders agreed on late last month was part of the state’s overall $6.1 billion, two-year budget package. It would set aside $2.3 billion in state aid to schools over two years, raise business and telephone taxes, and reduce—and make permanent—the statewide property tax New Hampshire was already using for schools.
Gov. Jeanne Shaheen called the plan disappointing, but she promised not to veto it. The governor does not have to sign the bill for it to become law.
“For me to veto this legislation and the state budget along with it—when it is clear that there is little prospect for a better package being enacted this year—would be irresponsible,” the Democratic governor said in a June 30 radio address. “That’s why I’ll allow this legislation to become law.”
Breaking With Tradition
New Hampshire is among a handful of states with no state income or sales taxes.
Breaking with that long-held anti-tax tradition, Ms. Shaheen in February proposed adopting a 2.5 percent sales tax to help pay for schools. But the idea died quickly in the Republican-controlled legislature—along with other plans aimed at funding schools with other new taxes.
Lawmakers preferred the business- and property-tax plan because it expanded on existing taxes and reduced the state’s unpopular property tax from $6.60 per $1,000 of assessed property value to $5.85.
“We recognize there will be a shortfall in the next biennium,” said Sen. Jane E. O’Hearn, a Republican and the chairwoman of the Senate’s education committee. “And we recognize it’s a temporary solution, and we’ll have to work at sustaining another source of revenue.”
‘Market Basket’ Proposal
One idea that intrigued some lawmakers this session was a proposal by Sen. Edward M. Gordon, a Republican, to revamp the way the state determines how much money should go to schools. His “market basket” proposal calls for identifying the “essential elements” of an adequate education and estimating the average costs of providing them. The measure died in a conference committee and was sent to the state’s highest court for an advisory ruling.
“We like the market-basket approach, but we have to make sure it provides a balanced meal,” said Mark V. Joyce, the executive director of the New Hampshire School Administrators Association.
For instance, he noted, the plan, which would have provided $103 million less to schools in fiscal 2002 than the budget that was ultimately approved, left out the costs of such basic expenses as transportation and electricity.
“When it comes back in the legislature, we’ll focus on trying to bring a dose of reality into the discussion,” Mr. Joyce said.
The state’s ongoing funding debate stems from a 1991 lawsuit filed by five property-poor towns, which argued that they could not provide students with an adequate education because the state finance system relied too much on local property- tax revenues. The New Hampshire Supreme Court agreed, twice striking down state school funding plans. (“School Finance Ruling Raises New Tax Questions in N.H.,” Jan. 4, 1998.)
Now that the statewide property tax is permanent, the plaintiffs—known as the Claremont coalition—may return to court, according to their lawyer, Andru H. Volinsky.
“We’ll be counseling our clients now on when and how to challenge it, rather than whether to challenge it,” he said.
