Court Upholds Constitutionality of 2004 Statewide Property Tax Bill

Baines & a. v. New Hampshire Senate President
Baines & a. v. New Hampshire Senate President
No. 2004-707
Wednesday, April 20, 2005

The mayors of Manchester and Rochester filed suit against the president of the New Hampshire Senate, challenging the constitutionality of legislation enacted in 2004 to increase the uniform rate of the statewide property tax. Under the rate approved by the legislature, the amount of education aid received by Manchester and Rochester, and some other municipalities, was reduced. The mayors argued that the legislation was a “money bill” and as such was required by the New Hampshire Constitution to originate in the House of Representatives. They also argued that the legislation differed materially from the bill as passed by the legislature.

Senate Bill 302 was introduced in January 2004 to make technical corrections to the state's education funding formula. It passed in March 2004, after the Senate defeated an amendment to raise the state cigarette tax, and was sent on to the House. It passed the House in May 2004 with an amendment to increase the cigarette tax. Since the House and Senate versions of the bill differed and the Senate voted not to concur with the House version, the bill was sent to a conference committee made up of senators and representatives to iron out the differences.

The conference committee voted to amend the bill to eliminate all of the language passed by the Senate and the House, including the increase in the cigarette tax, and instead voted to increase the uniform rate at which the statewide property tax would be imposed. First the House and then the Senate adopted the conference committee's version of the bill in May 2004.

However, the text of the bill presented to the legislature differed from the conference committee's spreadsheet indicating the targeted aid formula for property poor municipalities. According to the spreadsheet, target aid would be calculated by including railroad property and property subject to the electricity consumption tax, but the text of SB 302 provided that it would be calculated excluding such property.

Under the legislature's rules, bills passed by the two houses go on to the enrolled bills committee. In this case, the enrolled bills committee changed the word “excluding” to “including” and recommended the bill “ought to pass.” Before final adjournment of the House and Senate, the bill was adopted with those changes.

The superior court denied the mayors' petition for a declaratory judgment that the legislation was unconstitutional.

The Supreme Court's decision in this case is instructive of the scope of judicial review of legislative branch actions and the circumstances under which the separation of powers doctrine limits that review. The Court concluded that it could determine whether the enactment of SB 302 violated the state constitution, but declined jurisdiction on whether the legislature violated RSA 14:8 and RSA 20:2-a. These statutes govern the legislature's enrolled bills process and permissible changes to a bill after it has passed both houses.

“Because these statutes concern nonconstitutionally mandated legislative procedures and because the [s]tate [c]onstitution grants the legislature the authority to establish such procedures, the question of whether the legislature violated these statutes is nonjusticiable,” the Court held, noting that the state constitution gives the legislature authority to adopt procedural rules for passing legislation. “The justiciability doctrine prevents judicial violation of the separation of powers by limiting judicial review of certain matters that lie within the province of the other two branches of government,” the Court explained.

However, the mayors' challenge to SB 302 involved other constitutional provisions, such as the requirement that money bills originate in the House, which the Court described as mandatory provisions rather than provisions that delegate authority to the legislature. “Claims regarding compliance with these kinds of mandatory constitutional provisions are justiciable,” the Court wrote, adding, “[I]t is not only appropriate to provide judicial intervention, … we are mandated to do no less.” A legislative act is presumed constitutional “unless a clear and substantial conflict exists between it and the constitution.”

The Court found SB 302 to be a money bill because it raised revenue by direct taxation. This interpretation of the meaning of a money bill has been in practice in New Hampshire since 1784, according to the Court. SB 302 increased the statewide property tax from $3.24 to $3.33 per $1,000 of taxable property. The mayors argued that because it began as a Senate bill, it did not originate in the House. If New Hampshire adhered to the “enrolled bill doctrine,” the Court said, it would agree with the mayors' argument, but “New Hampshire does not subscribe to the enrolled bill doctrine,” which pegs origination with its designation as a Senate or House bill.

In contrast, in New Hampshire, the journals of the House and Senate are considered “conclusive evidence of the proceedings” in the legislature. The Court said the journals showed SB 302 was not a money bill as first introduced in the Senate and that the money bill aspects of it were introduced in the conference committee, a majority of whose members were from the House. The fact that the House was the first body to approve the conference committee changes to the bill was also significant. Therefore, the Court wrote, “we cannot find a clear indication that constitutionally required procedures were not followed.”

The journals also showed that the conference committee's intent was for the language of the bill to conform to the spreadsheet, but were silent on whether it also was the intent of the House and Senate. The Court held that because the journals were inconclusive on the issue of intent, there was insufficient evidence to defeat the presumption that the legislature validly enacted SB 302.