Steven Rand, & .A.V. v. The State of New Hampshire

Brentwood, New Hampshire civil litigation lawyers represented the Plaintiff seeking ) ruling that the administration of the Statewide Education Property Tax (SWEPT) violates Part II, Article 5 of the State Constitution. See RSA 76:3 (2012); RSA 76:8 (Supp. 2024).



In 2022, the plaintiffs, individuals and entities owning real property in New Hampshire, brought this case. They seek, among other things, "a permanent injunction that requires New Hampshire to discontinue its unconstitutional public education funding scheme." The plaintiffs alleged that "[b]ecause of the strategies employed by the property-wealthy towns to keep funds beyond those necessary to pay for the State's . . . cost of adequacy or to offset the SWEPT with negative tax rates, taxpayers in wealthy towns pay lower effective rates for this state tax, which violates the core constitutional principle that state taxes must be imposed at uniform rates." In its answer, the State admitted "that since 2011, communities for which the amount raised by the SWEPT exceeds the total amount of adequacy aid paid by the State have been permitted to retain the excess amounts raised by the SWEPT." Further, the State does not dispute that the department of revenue administration (DRA) "sets negative local education tax rates in a small number of communities to offset SWEPT revenues."



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Legal issue Does the administration of the Statewide Education Property Tax (SWEPT) violate the New Hampshire State Constitution by allowing communities to retain excess funds and setting negative local education tax rates in certain unincorporated places?

Headnote



TAXATION LAW. STATEWIDE EDUCATION PROPERTY TAX (SWEPT). The Supreme Court of New Hampshire addressed whether the administration of the Statewide Education Property Tax (SWEPT), specifically the practice allowing communities to retain excess SWEPT funds and the setting of negative local tax rates in unincorporated places, violates Part II, Article 5 of the State Constitution, which requires that taxes be proportional and reasonable.



CONSTITUTIONAL LAW. TAX UNIFORMITY. The court considered whether permitting municipalities to retain excess funds generated from the Statewide Education Property Tax resulted in a disproportionate and non-uniform tax rate in violation of the New Hampshire Constitution's requirement for proportional taxation.



CONSTITUTIONAL LAW. NEGATIVE TAX RATES. The court evaluated the State's practice of setting negative local education tax rates in unincorporated places to offset SWEPT obligations, ultimately finding that this practice violated the constitutional requirement for uniform taxation rates statewide.

Key Phrases Statewide Education Property Tax. Constitutional violation. Negative local education tax rates. Excess SWEPT funds. Uniform tax rate.

Affirmed in part; reversed in part; vacated in part; and remanded.