Top court hears NH tax credit case
CONCORD — The gallery at the New Hampshire Supreme Court was standing room only Wednesday morning as justices took up the issue of the constitutionality of a state law that allows business education tax credits to fund scholarships that benefit private and religious schools, as well as families that home-school their children.
The case involved an appeal by the state in a lawsuit filed by Bill Duncan, founder of Advancing New Hampshire Public Education, in which a Strafford County Superior Court judge ruled the tax credit unconstitutional six months after it became law in January 2013.
Under the program, businesses receive tax credits of up to 85 percent on donations to a private organization that then awards the scholarships.
Attorney Alex J. Luchenitser, representing Americans United for Separation of Church and State (AUFSCS) in Washington, D.C., also a plaintiff in the case along with the New Hampshire and American Civil Liberties Unions, maintained the state law was enacted to circumvent the state constitution, which prohibits tax money being sent to religious schools.
He said the business education tax credit is a complex government program outlined in a 12-page statute that calls for 70 percent of scholarship money to go to students leaving public schools to be home-schooled or to attend private or religious schools.
The plaintiffs contend that Article 83 of the state constitution specifically bars the state from giving tax money to religious schools when it says, “no money raised by taxation shall ever be granted or applied for the use of the schools of institutions of any religious sect or denomination.”
Luchenitser argued the state Supreme Court has repeatedly ruled the state cannot indirectly enact a law to do something it is prohibited from doing directly.
An amicus brief was filed by Gov. Maggie Hassan, who sided with the plaintiffs contending the tax credit is an education voucher program that will undermine funding of public education. Democratic Gov. John Lynch vetoed the 2012 legislation when he was in office, but the Republican-controlled Legislature overrode it.
Regardless of Hassan’s position, the Attorney General’s Office is obligated to defend the statute before the high court.
Assistant Attorney General Richard W. Head told the court the law is constitutional and the money cannot be considered public funds because the government never receives it.
Justice Carol Ann Conboy asked if it were true if there were no tax credit the business would be obligated to pay the business profits and business enterprise taxes to the state.
“That’s true,” Head replied.
Head maintained the state was not making expenditures to religious schools because the business donates the money to a scholarship organization that decides who receives the funds. “The last decision maker is the family,” he said.
Conboy, however, said the scholarship organization knows in advance where the family is going to spend the money.
Attorney Richard D. Komer, representing the Institute for Justice and other intervenors who favored the tax credit, contended none of the plaintiffs had standing to bring the lawsuit. The only person who could do that, he said, was the governor or individuals who could show personal harm.
“Who could show personal harm?” asked Justice James Bassett.
“I don’t know, frankly,” Komer replied.
Prior to the hearing, about two dozen people who favor the tax credit protested on the steps of the courthouse.
Esther Fleurant of Concord held a sign that said “End Education Discrimination” and had four of her seven children with her. A native of Haiti, she said she is a member of the Word of Life Church and favors the law, which would help cover some of the expense of home-schooling four of her children or give them the option of attending a religious school.
Barbara Wilson, headmaster of Cornerstone Christian Academy in Ossipee, the only K-8 private school in the district, said in an email that the high court’s ruling will have wide-ranging consequences, especially for less-populated areas of the state where access to private and religious schools is limited.
She said the lower court ruling meant students in the Governor Wentworth Regional School District were effectively barred from school choice advantages available to students attending New Hampshire schools in more affluent and populated areas.