At issue in this case was whether petitioners appealing the denial of property tax abatements could carry their burden of showing disproportionality by proving widespread disparity of fair market values/assessments in and between towns instead of disparity between property owners within the taxing district. The Court held that they could not.
The petitioners own commercial and residential real estate in the city of Portsmouth and the town of Rye. They appealed the denials of tax abatements claiming that the education property tax assessed pursuant to RSA 76:3 and :8 is disproportionate in violation of Part II, Article 5 of the New Hampshire Constitution. The petitioners did not claim that their individual assessments were higher than similar properties in their municipalities, and in fact did not introduce their individual assessments into evidence. Rather, they focused on the alleged unequal property values in their own and other municipalities as resulting in their having to pay an unfair amount of statewide education tax.
The trail court joined the State of New Hampshire as a respondent pursuant to RSA 514:10 because the petitioners challenged the constitutionality of the tax. The State appealed an order of the trial court ruling that tax assessments made under the education property tax, RSA 76:3, for tax years 2002, 2003 and 2004 were unconstitutionally disproportionate as it related to petitioners’ properties. The State argued that (1) the trial court erred by ruling that the petitioners are not required to prove that they are paying more than their proportionate share of the property tax, (2) the trial court erred in determining that the tax, as applied to the petitioners, violated the Constitution; and (3) the trial court lacked jurisdiction to declare the tax unconstitutional.
The trial court relied on Sirrell v. State, 146 N.H. 364 (2001) to rule that it is not a prerequisite of a tax abatement appeal that a property owner present evidence of his or her own property’s fair market value and then a comparison of that value with the municipality’s assessment. Rather, the trial court ruled that the property owner could prove actual harm by proving widespread disparity in and between municipalities and was not required to meet their burden by focusing in on a particular assessment placed on their property. The Court disagreed.
In reversing the trial court, the Court pointed out that Sirrell v. State did not change the burden of showing individual disproportionality in an abatement proceeding. In Sirrell the petitioners sought a declaratory judgment asking the court to find the educational property tax unconstitutional. Here, the petitioners chose to attack the law through the tax abatement process, and as such, are required to meet the burden of showing individual disproportionality.
RSA 76:17 provides that the superior court in an abatement proceeding “shall make such order thereon as justice requires.” “As justice requires” is more than simply determining that a tax is unlawful, because that would merely shift the plaintiff’s tax burden to other taxpayers. The Court stressed that “[s]ince Bretton Woods, [84 N.H. 428 (1930)] we have repeatedly reaffirmed that the issue in an abatement proceeding is whether the government has taxed the plaintiffs out of proportion to other property owners in the taxing district.” It is not enough to satisfy this burden by proving widespread disparity in and between municipalities. In order to prevail, the petitioners must prove that their taxes were greater than they should have been with respect to the taxes of other property owners in the taxing district.