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In 1998, former Sen. Jim Rubens’ response to the Claremont II decision, aside from his lead in  advocating a constitutional amendment to overturn the Claremont II decision, was to propose increased state aid, targeted to the most needy districts, much as he is now proposing in 2000.      His bill, SB 508, was sent to the Supreme Court for an advisory opinion as to whether it would pass constitutional muster.  Here’s some of what the Court said in their unanimous order:

“In essence, Senate Bill 508-FN (the bill) preserves the system of State foundation aid provided to school districts under RSA 198:27-:37 (1989 & Supp. 1997), but modifies the aid formula to achieve an increased level of aid per "weighted pupil."   … Thus, it appears that the bill is designed to use the increased State foundation aid to supplement the existing system of funding education with real estate property taxes.

“In Claremont School District v. Governor, 142 N.H. __, __, 703 A.2d 1353, 1356 (1997) (Claremont II), we concluded that taxes levied to fund education "are in fact State taxes that have been authorized by the legislature to fulfill the requirements of the New Hampshire Constitution." Consequently, the court stated that "[t]o the extent that the property tax is used in the future to fund the provision of an adequate education, the tax must be administered in a manner that is equal in valuation and uniform in rate throughout the State." Id. at __, 703 A.2d at 1357.

“To the extent that the bill contemplates continued reliance upon unreasonable and disproportionate real estate property taxes existing under the current property tax system to fulfill the State's obligation to fund public education, we conclude that it does not comply with Claremont II and violates Part II, Article 5 of the State Constitution.”[1]

Also on June 23, 1998 the Supreme Court issued a unanimous advisory opinion on the Governor’s proposed ABC plan that would have established a uniform state wide property tax with abatements to those communities that would otherwise become “donor” towns: places that could raise more than enough for an “adequate” education with the state-wide property tax assessed within their own town.  The Court opined that the proposed plan would be unconstitutional.  Here’s some excerpts:

“Part II, Article 5 of the State Constitution provides that the legislature may "impose and levy proportional and reasonable assessments, rates, and taxes, upon all the inhabitants of, and residents within, the said state." In Claremont II, the court concluded that taxes levied to fund education "are in fact State taxes that have been authorized by the legislature to fulfill the requirements of the New Hampshire Constitution," and are not, in fact, local taxes. Claremont II, 142 N.H. at __, 703 A.2d at 1356. Accordingly, the court held that "the varying property tax rates across the State violate part II, article 5 of the State Constitution in that such taxes, which support the public purpose of education, are unreasonable and disproportionate." Id. at __, 703 A.2d at 1357. The court offered further that "[t]o the extent that the property tax is used in the future to fund the provision of an adequate education, the tax must be administered in a manner that is equal in valuation and uniform in rate throughout the State." Id.

“The bill, in addition to defining an adequate education, purports to establish a uniform State education tax rate based upon the equalized value of all taxable real property in the State. The tax rate is determined by calculating the total statewide cost for educating all New Hampshire students and dividing this sum by the total statewide equalized property value. The bill also authorizes, however, a "special abatement" for "[t]he amount of state education tax apportioned to each town ... in excess of the product of the statewide per pupil cost of an adequate education ... times the average daily membership in residence for the town."  As a result of the special abatement, the effective tax rate is reduced below the uniform State education tax rate in any town that can raise more revenue than it needs to provide the legislatively defined "adequate education" for its children. For example, in those towns where there are no children, the special abatement reduces the effective tax rate to zero. Meanwhile, in any town where the property value is insufficient to support the revenue required to educate local children adequately at the uniform State education tax rate, the effective tax rate remains equal to the uniform State education tax rate. Those towns receive a grant from the State to meet the otherwise unfunded costs of an adequate education. Although such towns would be fully funded, the owners of property therein would pay taxes at a higher rate than those in towns with a surplus of revenue, which would receive the special abatement.  …

“Proponents of the bill also assert that the special abatement is designed to protect towns from financially contributing to the adequate education of children in other towns or school districts.  Essentially, the proponents seek to measure proportionality and fairness on a municipality-by-municipality or district-by-district basis, rather than statewide.  But, to the extent that a property tax is used to raise revenue to satisfy the State's obligation to provide an adequate education, it must be proportional across the State.  See Claremont II, 142 N.H. at ___, 703 A.2d at 1357. While good cause or just reasons can be created by public policy determined by the legislature, public policy cannot undermine the constitutional requirement of proportionality.  That is, the purpose of an abatement or an exemption can never be to achieve disproportionality for disproportionality's sake.

Because the diffusion of knowledge and learning is regarded by the State Constitution as "essential to the preservation of a free government," N.H. CONST. pt. II, art. 83, it is only just that those who enjoy such government should equally assist in contributing to its preservation. The residents of one municipality should not be compelled to bear greater burdens than are borne by others.

Id.; see also Claremont School Dist. v. Governor, 138 N.H. 183, 192, 635 A.2d 1375, 1381 (1993) (Claremont I) ("free government is dependent for its survival on citizens who are able to participate intelligently in the political, economic, and social functions of our system"). This obligation cannot be avoided or lessened by the mere circumstance of a town having few children or a town having a wealth of property value, including wealth generated by the presence of heavy industry. Cf. Barksdale v. Town of Epsom, 136 N.H. 511, 514, 618 A.2d 814, 816 (1992) ("[a] citizen cannot claim tax aggrievement merely because he or she does not personally add to the public education expense"); Union Transit Co. v. Kentucky, 199 U.S. 194, 203 (1905) (taxpayers cannot refuse to pay simply because they do not receive equal share of benefits; childless citizens must pay share of school tax).

“It should not be forgotten that New Hampshire is not a random collection of isolated cities and towns. Indeed, all of us live in a single State. The benefits of adequately educated children are shared statewide and are not limited to a particular town or district.  We live in a highly mobile society such that a child may be educated in Pittsfield and, as an adult, reside in Moultonborough. That adult may serve or influence the town or State as an elected or appointed official, a business or civic leader, or in various other endeavors. The benefits of that citizen's public education and contributions to community may be felt far beyond the boundaries of the educating town or district.  Therefore, it is basic to our collective well-being that all citizens of the State share in the common burden of educating our children.

“In conclusion, while the bill proposes a tax based on an equalized valuation and initially assigns a uniform rate, clearly some taxpayers would pay a far higher tax rate in furtherance of the State's obligation to fund education than others, due to the special abatement.  Application of the special abatement guarantees that property owners paying the full rate bear an increased tax burden compared with property owners who are not assessed the full rate. Cf. Opinion of the Justices, 99 N.H. 525, 527, 113 A.2d 547, 548 (1955) (even though uniform rate applied, taxes produced are unequal and disproportional because effect is to tax one taxpayer upon one percentage of income while taxing another upon a different percentage).  Because such disproportionality is not supported by good cause or a just reason, it violates both the plain wording of Part II, Article 5 and the express language of Claremont II.

“In interpreting the constitution as we do today, we are mindful that those who crafted the words of Part II, Article 5 had lived under the taxation policies of the British Crown. The framers were thus cognizant of schemes of taxation which were oppressive, unpredictable, and grossly unfair. It undoubtedly was the specter of unfair taxation that prompted the requirement that taxes be both proportional and reasonable. Our interpretation of this language has been consistent and to advise otherwise now would be the first step down a dangerous path leading to frustration of the document upon which our government rests. The language of our constitution commands that taxes be no less than fair, proportional, and reasonable.”[2]