2025 N.H. 27, Rand v. State

defendant. attorney general, on the brief, and Anthony J. Galdieri orally), for the general (Anthony J. Galdieri and Samuel R.V. Garland, senior assistant John M. Formella, attorney general, and Anthony J. Galdieri, solicitor

New York (Alice Tsier and Aditi Padmanabhan on the brief), for the plaintiff s. New Jersey (Wendy Lecker on the brief), and White & Case LLP, of New York, York (Michael - Anthony Jaoude on the brief), Education Law Center, of Newark, (Andru Volinsky on the brief), Harter Secrest & Emery LLP, of Buffalo, New Concord (Natalie Laflamme on the brief and orally), 160 Law, PLLC, of Concord John E. Tobin, Jr., of Concord, on the brief, Laflamme Law, PLLC, of

Citation: Rand v. State, 2025 N.H. 27 Case No. 2024 - 0138 Rockingham

page is: https://www.courts.nh.gov/our - courts/supreme - court a.m. on the morning of their release. The direct address of the court’s home reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00 to press. Errors may be reported by email at the following address: editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concor d, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule p. 2 22 as 2

unconstitutional public education funding scheme.” The plaintiffs allege d that permanent injunction that requires New Hampshire to discontinue its in New Hampshire, brought this case. They seek, among other things, “a [¶ p. 2 2] In 2022, t he plaintiff s, individuals and entities owning real property

I. Background

issue. unincorporated places does violate Part II, Article 5, and we affirm on that that the State’s practice of setting negative local education tax rates in certain reverse the trial court on that issue. However, we agree with the trial court legislature’s spending power. Because there is no constitutional violation, we education does not implicate Part II, Article 5. Rather, it is an ex ercise of the retain funds raised by the SWEPT which exceed the cost to fund an adequat e p. 2 2024). We c onclude that the legislature’s decision to permit communities to II, Article 5 of the State Constitution. See RSA 76:3 (2012); RSA 76:8 (Supp. administration of the Statewide Education Property Tax (SWEPT) violates Part (Coalition), appeal the Superior Court’s (Ruoff, J.) ruling that the [¶1] In this case, the State and the intervenor, Coalition Communities

amicus curiae. Massachusetts (Jason Sorens, non - lawyer representative, on the brief), as American Institute for Economic Research, of Great Barrington,

amicus curiae. Glahn, III on the brief), for League of Women Voters of New Hampshire as McLane Middleton, Professional Association, of Manchester (Wilbur A.

Chadwick on the brief), as amic i curiae. Association - New Hampshire, of Concord (Callan Sullivan and Lauren Snow Bissonnette and Henry R. Klementowicz on the brief) and National Education American Civil Liberties Union of New Hampshire, of Concord (Gilles R.

intervenor. and Abbygale Martinen, on the brief, and John - Mark Turner orally), for the Sheehan, Phinney, Bass & Green, PA, of Manchester (John - Mark Turner p. 3 3

administration of the SWEPT is unconstitutional should be affirmed as the trial [¶5] The plaintiffs counter that the trial court’s decision that the

position on this issue. property in unincor porated places for just reasons.” The Coalition takes no to the SWEPT as the property in municipalities and thereby excludes the argues, RSA 76: p. 3 3 and RSA 76:8 “constitutionally classify the property subject II, Article 5. The Coalition presents similar arguments. Moreover, the State lawfully raised tax revenue,” the appropriation of which does not implicate Part The State asserts that the so - called “‘excess SWEPT’ is nothing more than rate across the S tate, and just” and “therefore complies with Part II, Article 5.” “SWEPT rate is proportional and reasonable, equal in valuation and uniform in [¶4] On appeal, the State argues that the trial court erred because the

A. Appellate Arguments

II. Analysis

followed. tre ated as a final decision pursuant to Superior Court Rule 46(c). This appeal local tax rates.” The court directed that its order on the SWEPT issues be to retain excess SWEPT funds or offset the equalized SWEPT rate via negative light of its rulings, the court enjoined the State “from permitting communities impermissibly reducing the effective SWEPT rate for those communities.” In tax rates in communities with little to no education expenses, the State is Article 5.” In addition, t he court found “that by setting negative local education impermissibly results in a disproportio nate tax rate, in violation of Part II, concluded, “allowing some communities to retain excess SWEPT funds lowers the effective SWEPT rate paid by those communities.” Thus, the court meaningful dispute that allowing communities to retain excess SWEPT funds motions of the State and the Coalition. The court found that “there can be no the plaintiffs’ motion for partial summary judgment and denied the cross the Coalition each cross - moved for summary judgment. The trial court granted [¶ p. 3 3] The plaintiffs moved for partial summary judgment. The State and

offset SWEPT revenues.” “sets negative local education tax rates in a small number of communities to State does not dispute that the d epartment of r evenue a dministration (DRA) permitted to retain the excess amounts raised by the SWEPT.” Further, the SWEPT exceeds the total amount of adequ acy aid paid by the State have been admitted “that since 2011, communities for which the amount raised by the that state taxes must be imposed at uniform rates.” In its answer, t he State effective rates for this state tax, which violates the core constitutional principle offset the SWEPT with negative tax rates, taxpayers in wealthy towns pay lower funds beyond those necessary to pay for the State’s . . . cost of adequacy or to “[b]ecause of the strategies employed by the property - wealthy towns to keep p. 4 4

clear and substantial conflict exists between it and the constitution. Id. When 23 1. Accordingly, we will not hold a statute to be unconstitutional unless a not declare it invalid except upon inescapable grounds. Polonsky, 173 N.H. at [¶8] In reviewing a statute, we presume it to be constitutional and will

Cranmore Ski Resort, 152 N.H. 399, p. 4 405 (2005). and effectuate the legislative purpose of the statutes. Soraghan v. Mt. do not contradict each other, and so that they will lead to reasonable results statutes that deal with a similar subject matter, we construe them so that they harmony with the overall statutory scheme. Id. When interpreting two not construe statutes in isolation; instead, we attempt to construe them in parts of a statute together to effectuate its overall purpose. Id. However, we do language that the legislature did not see fit to include. Id. We also construe all possible and will not consider what the legislature might have said or add N.H. 393, 395 (2021). We give effect to every word of a statute whenever according to its plain and ordinary meaning. St. Onge v. Oberten, LLC, 174 to the language of the statute itself, and, if possible, construe that language 173 N.H. 226, 230 (2020). In matters of statutory interpretation, w e first look statutory interpretation, our review is de novo. Polonsky v. Town of Bedford, [¶7] Because this appeal presents questions of constitutional law and

We review the trial court ’ s application of the law to the facts de novo. Id. matter of law. Tremblay v. Bald, 176 N.H. p. 4 439, 442 (2024), 2024 N.H. 6, ¶8. exists, we determine whether the moving party is entitled to judgment as a its capacity as the nonmoving party and, if no genuine is sue of material fact judgment, we consider the evidence in the light most favorable to each party in 491:8 - a, III (2010). In reviewing rulings on cross - motions for summary and that the moving party is entitled to judgment as a matter of law.” RSA the affidavits filed, show that there is no genuine issue as to any material fact depositions, answers to interrogatories, and admissions on file, together with [¶6] A moving party is entitled to summary judgment “if the pleadings,

B. Standard of Review

(B olding and capitalization omitted.) rates to offset SWEPT in unincorporated places violates Part II, Article p. 5 5.” “the trial court correctly ruled that the State’s practice of setting negative tax state, but instead are delivered to town coffers.” In addition, they argue that tax rate that is created when the excess SWEPT payments are not sent to the look beyond the facially uniform SWEPT rate to ex amine the reduced effective State and the Coalition “ignores the heart of this Court’s prior rulings, which down by this Court.” According to the plaintiffs, the position taken by the decision and not simply a repetition of the previous schemes already struck rejected” the contention that “this preferential tax treatment was a ‘spending’ capitalization omitted.) Further, they argue, the trial court “appropriately court “followed this Court’s clear and repeated holdings.” (B olding and 5

grant for the municipality as follows: the department of education shall determine the total education education to all of their pupils by paying tuition to other institutions, Except for municipalities where all school districts therein provide

municipalities. See RSA 198:41, I (Supp. 2024). RSA 198:41, I, provides: under RSA 76:8 to calculate education grant funds that are issued to [¶13] The department of education uses the SWEPT amount determined

II. it to the municipality for the use of the school dist rict or districts.” RSA 76:8, assessors of each municipality . . . directing them to assess such sum and pay commissioner issues “a warrant . . . for the amount . . . to the selectmen or RSA 76:8, I(a). To assess the amount calculated under RSA 76:8, I, the DRA preceding year, less the value of certain qualifying utility and railroad property. property” in the municipality, as determined under RSA 21 - J:3, XIII for the [¶12] A municipality’s tax base is the “total equalized valuation of all

the municipality ’ s tax base.” RSA 76:8, I(b). each municipality by multiplying the uniform education property tax rate by commissioner then “calculate[s] the portion of the education tax to be raised by example, i n tax year 2023, the SWEPT rate was $1.44 per thousand. The DRA all persons and property taxable pursuant to RSA 76:8.” RSA 76:3. For rate “at a level sufficient to generate revenue of $363,000,000 when imposed on state. See RSA 76:3, :8. Pursuant to RSA 76:3, the DRA sets the SWEPT tax [¶11] The SWEPT is an education tax imposed on property across the

N.H. 364, 370 (2001). district must be valued alike and taxed at the same rate.” Sirrell v. State, 146 II, art. p. 5 5. “In order for a tax to be proportional, all property in the taxing within, the said state; and upon all estates within the same.” N.H. CONST. pt. assessments, rates, and taxes, upon all the inhabitants of, and residents and authority . . . to impose and levy proportional and reasonable [¶10] In relevant part, Part II, Article 5 grants the legislature “full power

rates. section, we put aside certain localities that are assessed negative local tax SWEPT” funds, the State is violating Part II, Article p. 5 5. For the purposes of this trial court erred by finding that by permitting municipalities to retain “excess [¶9] We first address the State’s and the Coalition’s argument s that the

C. Excess SWEPT

constitutionality bears the burden of proof. Id. resolved in favor of its constitutionality. Id. The party challenging a statute’s doubts exist as to the constitutionality of a statute, those doubts must be p. 6 6

by the ratio of total adequate education cost to SWEPT funds raised is the plaintiffs’ expert, re present s that the product o f the SWEPT tax rate multiplied SWEPT rate in the excess SWEPT communities.” Th at data, compiled by a “show[s] how the retention of the excess SWEPT operates to lower the effective [¶15] Nonetheless, t he plaintiffs argue that certain data in the record

the remaining towns, violated Part II, Article 5). over five years for certain towns, while imposing the full rate immediately on an education property tax scheme which phased in the full uniform tax rate (Statewide Property Tax Phase - In), 144 N.H. 210, 213 - 17 (1999) (holding that the state tax for those taxpayers); Claremont School Dist. v. Governor amount of excess education tax revenue, thereby reducing the effective rate of tax bills of taxpayers in “excess” communities, a special abatement in the unconstitutional a proposed education tax scheme which subtracted, from the the Justices (School Financing), 142 N.H. 892, 899 - 902 (1998) (holding disproporti onate tax rates between towns violated Part II, Article 5); Opinion of (Claremont II) (holding that an education property tax involving II, Article 5. See Claremont School Dist. v. Governor, 142 N.H. 4 p. 6 62, 47 0 (1997) from other education property tax schemes that we have found to violate Part assessed to each taxpayer across the state. This scheme is materially different an adequate education in that locality has no effect on th e uniform SWEPT rate funds beyond what is needed to fund the cost of providing the opportunity for implicate Part II, Article 5. That the scheme permits a locality to spend SWEPT paradigmatic legislative spending d irective that, standi ng alone, does not of the school district or districts.” RSA 76:8, II (emphasis added). This is a assessors to assess SWEPT revenue and “pay it to the municipality for the use must be spent. The statute requires each municipality’s selectmen or [¶14] By its plain language, RSA 76:8, II directs how SWEPT revenue

from the general fund, among other things). taxes, tobacco taxes, funds from the lottery commission, and appropriations education trust fund is funded from a variety of sources including business 198:39. See RSA 198:42, II (Supp. 2024); RSA 198:39, II (stating that the The grant funds are drawn from the education trust fund created under RSA

to RSA 198:40 - f. (c) Add the municipality ’ s extraordinary need grant pursuant

tax year; and such municipality reported pursuant to RSA 7 p. 6 6:8 for the next issued by the commissioner of revenue administration for (b) Subtract the amount of the education tax warrant to be

to RSA 198:40 - a, I - III, and from such amount; adequate education for which each pupil is eligible pursuant (a) Add the per pupil cost of providing the opportunity for an p. 7 7

base and issue a warrant to the selectmen or assessors “of each municipality portion of the education tax to be raised by a municipality based on its tax 1 p. 7 74 N.H. at 395. RSA 76:8, II requires the DRA commissioner to calculate the statutory scheme, and thus construe them to be in harmony. See St. Onge, 198:41 (“Determination of Education Grants”) are part of the same overall [¶19] We conclude that RSA 76:8 (“Commissioner’s Warrant”) and RSA

II for “just reasons.” the legislature constitutionally exempted unincorporated places from RSA p. 7 76:8, to make it a municipality: it is not incorporated.” Finally, t he State argues that definition, not a municipality because it lacks the singular, necessary feature asserts that under New Hampshire law, “an ‘unincorporated place’ is, by property in unincorporated places as a matter of law.” Further, t he State only municipalities,” RSA 76:3 and RSA 76:8 “do not impose the SWEPT on persons and property taxable pursuant to RSA 76:8 ’” and “RSA 76:8 references The State reasons that because “RSA 76:3 imposes an education tax ‘on all municipalities and thereby excludes the property in unincorporated places.” 76:8 “classify the property subject to the SWEPT as the property in administration unconstitutional.” The State argues that RSA 76:3 and RSA in a small number of unincorporated places renders the SWEPT’s concluding that the DRA’s practice of setting negative local education tax rates [¶18] We next address the State’s argument that the trial court “erred in

D. Negative Local Tax Rates

Article 5 and vacate the trial court’s grant of injunctive relief on this issue. the trial court’s determination that retaining excess SWEPT violates Part II, throughout the State.” Claremont II, 142 N.H. at 4 p. 7 71. Therefore, w e reverse “administered in a manner that is equal in valuation and uniform in rate SWEPT scheme is constitutional under Part II, Article 5 because it is [¶17] Accordingly, regarding the “excess SWEPT” issue, we hold that the

5. scheme on municipalities are not relevant to the analysis under Part II, Article revenue, as the statutory scheme permits. T heoretical indirect effects of the reflect, at most, an indirect effect of municipalities retaining excess SWEPT conc ludes the constitutional inquiry. T he “effective rates” in the expert’s data administered, taxpayers are actually assessed at a uniform rate. That CONST. pt. II, art. 5. T he plaintiffs do not dispute that under the SWEPT, as t a xes, as “impose[d] and lev[ied],” must be “proportional and reasonable.” N.H. rates” are actually paid by taxpayers. The State Constitution requires that [¶16] However, t here is no evidence in the record that these “effective

per thousand while Hopkinton ’s effective SWEPT rate is $1.4 p. 8 8 per thousand. the expert’s dat a shows that Moultonborough’s effective SWEPT rate is $0.44 “E ffective Equalized SWEPT R ate for Adequacy.” Following these calculations, 8

with our conclusion that any statewide education property tax “must be completely offset the SWEPT rate in unincorporated places is in direct conflict [¶23] The DRA’s practice of setting negative local tax rates that nearly or

rate of $0.01 per thousand. SWEPT tax rate of $1. p. 8 85 per thousand, resulted in an effective property tax at negative $1.84 per thousand, which, combined with Hale’s Location’s DRA set a local education tax rate for Hale’s Location, an unincorporated place, SWEPT obligation in certain unincorporated places. For example, i n 2021 the property. Such a negative tax rate nearly or completely offsets taxpayers’ minimal or no public educa tion costs in its budget and contains taxable education tax rate when a locality, generally an unincorporated place, has Municipal and Property Division of the DRA, the DRA sets a negative local RSA 21 - J:35 (2020). According to an affidavit submitted by a supervisor in the [¶22] The DRA sets tax rates for each locality’s local education tax. See

that it does. education tax rates in unincorporated places violate s Part II, Article 5. We hold remaining question is whether the DRA’s practice of setting negative local did not intend to ex empt unincorporated places from the SWEPT. The in RSA 76: p. 8 8 includes unincorporated places, and, therefore, that the legislature [¶21] For these reasons, w e conclude that the term “municipality” found

unincorporated places as part of the calculation. unincorporated places using the value of the education tax warrant issued for requir ing the department of education to calculate grant totals for places from the term “municipality” in RSA 76: p. 8 8, while at the same time RSA 76:8. It would be anomalous for the legislature to exclude unincorporated unincorporated places must be encompassed within the term “municipality” in places being subject to the SWEPT. Therefore, to read the statutes in harmony, includes unincorporated places, RSA 198:41, I, contemplates unincorporated [¶20] Keeping in mind the statutory definition of “municipality” — which

municipality’s extraordinary need grant, if any. RSA 1 p. 9 9 p. 8 8:41, I(a) - (c). cost of providing the opportunity for an adequate e ducation and the reported pursuant to RSA 76:8 for the next tax year” from the total per pupil issued by the commissioner of revenue administration for such municipality determined by subtracting “the amount of the education tax warrant to be total education grant for each municip ality. RSA 198:41, I. The grant total is VI - a (Supp. 2024). T he department of education is directed to determine the “municipality” to mean “a city, town, or unincorporated place.” RSA 198:38, found within RSA chapter 198 (“School Money”), RSA 198:38 defines purposes of the “Adequate Education; Education Trust Fund” subdivision use of the school district or districts.” RSA 76:8, II (emphas e s added). For the . . . directing them to assess such sum and pay it to the municipality for the 9

pay it to the municipality.”). Each municipality raises and spends SWEPT or assessors of each municipality . . . directing them to assess such sum and issue a warrant . . . for the amount computed in paragraph I to the selectmen any SWEPT revenue. See RSA 76:8, II (Supp. 2024) (“The commissioner shall collects. By the SWEPT scheme’s plain terms, the State never actually collects 5. Simply put, the legislature cannot “spend” funds that the State never scheme is a “spending direc tive” immune from challenge under Part II, Article alone, does not implicate Part II, Article 5.” I reject the view that the SWEPT that the SWEPT “is a paradigmatic legislative spending directive that, standing [¶26] As a threshold matter, I disagree with the majority when it asserts

violates Part II, Article 5 of the State Constitution. of setting a negative local education property tax rate to offset the SWEPT respectfully dissent. I do, however, concur with the majority that the practice violated. I would affirm the trial court’s order and, therefore, as to that issue, I effective SWEPT rate in those communities is reduced and Part II, Article 5 is sent to the State, but instead are retained by communities, the taxpayers’ the State Constitution. To the contrary, when excess SWEPT funds are not communities to retain excess SWEPT funds does not violate Part II, Article 5 of [¶25] I disagree with the majority’s conclusion that permitting

BASSETT, J.