Two taxpayers in separate lawsuits challenged the 2018 budget adopted by the Board of Aldermen claiming a violation of a spending cap provision in the City Charter. The Superior Court ruled that because Nashua’s spending cap did not contain a provision allowing the Board of Aldermen to override the cap, the spending cap provision violated State Law and was therefore unenforceable.
Nashua’s spending cap was first added to the City Charter in 1993. The adopted spending cap requires annual City expenditures to not exceed a yearly percentage increase measured by the Gross Domestic Product Implicit Price Deflator published by the Bureau of Economic Analysis. The legality of Nashua’s spending cap was put into question by a ruling of the NH Supreme Court in City of Manchester v. Sec’y of State, 161 N.H. 127 (2010) that concluded a proposed City of Manchester spending cap was inconsistent with State Law. The Court ruled in City of Manchester that the proposed spending cap was in direct conflict with the Board of Alderman’s authority to adopt a budget by a simple majority contrary to RSA 49-C:12, I.
In 2011 the legislature adopted amendments to RSA Chapter 49-C that requires that where a municipality adopts a tax cap it shall provide that a supermajority of the elected body can vote to override the tax cap. RSA 49-C:33, I (d). In addition, the legislature specifically authorized spending caps on a prospective basis and sought to ratify and declare valid other spending caps adopted prior to 2011, like Nashua’s.
The Superior Court ruled that any spending cap that does not contain an “override” provision mandated by RSA 49-C:33, I (d) would impermissibly restrict the elected body’s authority to adopt a budget. Reading Nashua’s Charter, the Superior Court concluded the Charter does not expressly contain an override provision for its spending cap. Consequently, the Court ruled that Nashua’s spending cap violates State Law and is therefore unenforceable.