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Dunbarton taxpayers to get big one-time tax windfall

New Hampshire Union Leader

July 22. 2018 11:44PM

DUNBARTON — Those owning a home worth $300,000 in town will get a one-time, $1,000 windfall this fall after a judge refused to let school officials hold a special meeting to place more than $1 million of collected but unspent money into reserves.

Merrimack County Superior Court Judge Richard McNamara said school officials seeking the meeting failed to show how it rose to a necessary “emergency” to justify a session outside the March annual meeting.

“The court is not persuaded that the supposed emergency was not foreseeable or avoidable and could not have been dealt with at the annual meeting,” McNamara wrote in a decision issued late last Friday afternoon.

State Rep. J.R. Hoell, R-Dunbarton, had brought a motion to dismiss the petition of school officials that were preparing to hold a special school district meeting Sept. 26 until this decision.

“Justice was delivered to the taxpayers,” Hoell said during a telephone interview. “The court did not find there was any emergency present and that means the taxpayers will rightly see the benefit of this overpayment. The judge clearly saw they had no basis for this special meeting.”

A school audit completed earlier this year found $1.06 million more available in Dunbarton’s fund balance than previously believed, according to information provided by the school district last spring.

School Administrative Unit 19, which includes Goffstown and New Boston, reported in a December news release that an auditor found that since 2011, more than $10 million — $9.1 million of which was paid by Goffstown taxpayers — could have been used to reduce property taxes but was overlooked.

The audit showed SAU officials made errors reporting end-of-year fund balances for several years dating back to 2007, when Dunbarton was still part of the district. The errors resulted in money being retained in the schools’ general fund, rather than being put toward reducing the tax rate.

The audit report showed an additional $9.1 million in Goffstown’s fund balance and $1.1 million in New Boston’s fund balance.

Raymond Labore, SAU 19’s business administrator, resigned after the results of the audit were made public.

The windfall for property taxpayers will come this fall.

McNamara said those promoting the special meeting were ready to move to put $100,000 in capital reserve fund and $959,803 to play tuition expenses for middle and high school students. Both could also be used from there to cover costs associated with a voter-approved $2.2 million renovation of Dunbarton Elementary School.

Lawyers for the school district maintained putting the money in reserves would cause the least disruption to taxpayers.

“This dip and surge in tax bills could interfere with taxpayers’ ability to budget, affect private mortgage insurance policies and payments and wreck havoc with planned mortgage escrow arrangements,” they wrote in legal arguments.

Judge: One-time tax cut is no emergency

McNamara was not persuaded.

“It is difficult to see how a reduction in tax rate can constitute an emergency,” McNamara said.

“The court does not believe that the fact that the money may be returned to taxpayers requires prompt or immediate action to determine whether or not the money would be better utilized to, in substance, provide a rainy day fund to cover tuition in upcoming years.”

A key factor in this decision, the judge wrote, was auditors informed school administrators prior to the March annual meeting that they would have an estimated surplus of at least $600,000. A June audit raised that amount to more than $1 million.

Hoell had filed a petition signed by two dozen residents wanting to block the meeting.

The complaint pointed out the towns of New Boston and Goffstown experienced the same over-collection of taxes and subsequently allowed the funds to remain in the unspent account and returned to the taxpayers.

Ironically, Hoell got what he wanted but Judge McNamara refused to let him become part of the suit.

McNamara ruled Hoell lacked standing.

“A taxpayer must demonstrate that his or her rights are impaired or prejudiced by the action,” McNamara said.

That could only come in this case if a special meeting was held and the money was put into reserves, he explained.

Executive Councilor David Wheeler, R-Milford, said this highlights a proposed amendment to the Constitution that will come before all voters this November.

The amendment would give a taxpayer standing to sue in court over any state or local spending matter and not have to show their rights would be impaired.

“This highlights that amendment question and why it’s needed,” Wheeler said.

Hoell said he’s considering whether to appeal the standing issue part of the ruling to the Supreme Court.

“This is not a left, right or center issue. Right now nobody can take their town to court on anything. We won on the special meeting which is big but this case was all about whether taxpayers have standing and this judge said no they don’t,” Hoell said.

While in the State Senate during the mid-1990s, Wheeler coauthored a change in state law to make it harder to justify holding a special meeting.

“Back in the day selectmen in many towns would deliberately hold back a collective bargaining agreement until after March. Then they would schedule a special meeting where public employees were more likely to show up than cash-strapped taxpayers,” Wheeler added.

“We tightened that up which is how the judge could rule the way he did.”; Reporter Paul Feely contributed to this report.

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