Moving Toward a Problem-Solving Organization

The information contained in this article is not intended as legal advice and may no longer be accurate due to changes in the law. Consult NHMA's legal services or your municipal attorney.

John Andrews became NHMA Executive Director in February of 1975. Andrews is recognized as steering the organization from an association that focused on education and training to a powerful problem-solving organization for New Hampshire’s cities and towns.

When Andrews began, the NHMA employed five full-time staffers on the third floor of NHMA’s offices located at 11 Depot Street in downtown Concord.  NHMA membership at that time stood at just over 200. Wanting to hear from the people who served in the member towns, Andrews organized a series of regional meetings to hear and listen to municipal concerns. “We just talked about things the Association does, what associations in other states do, and we listened,” said Andrews.

What came out of these face-to-face regional meetings were three distinct program areas where NHMA services were desired by members, namely (1) legal services; (2) a better legislative policy process where NHMA would propose legislation and implement initiatives; and (3) a WATS line. With an 85% increase in dues for 1976, the NHMA carried out these three recommendations.

“We hired a part-time lawyer which we split with the City of Franklin and began legislative policy committees to propose legislation.” These policy committees continued Andrew’s desire to keep in touch with the membership and create a true “grassroots” organization. Due to these improvements, membership grew every year to its present level of 232 members out of 234 cities and towns.

With such growth in membership, program, and staff, the Association began to search for a new home. “We were outgrowing our space. There was no conference room for our Executive Committee to meet,” says Andrews. In 1978, the NHMA moved to the second floor of The Abbott House on North Main Street, which is now the home of the accounting firm of Plodzik and Sanderson.

During the late 1970s, the NHMA began to expand again, trying to solve problems municipalities were having meeting their insurance needs. Worker’s compensation was becoming expensive and difficult to obtain for communities. Following the lead of other state leagues, the NHMA solicited donations from members to perform a feasibility study. The study results prompted the NHMA to establish an insurance pool for workers’ compensation and unemployment compensation, despite the risks. “We started on a shoestring and a letter of credit,” said Andrews. “We knew we had some financial liability if it didn’t work.” The program did work, in fact, returning nearly $50 million to cities and towns since inception to 1991.

In the early 1980’s, cities and towns were getting slammed with tremendous increases in health insurance. Said Andrews,
“The Executive Committee felt if we could do so well with the workers’ comp and unemployment comp, why couldn’t we do it with heath?”

Again, money was collected for a feasibility study and a consultant was hired. Although the possibility of big savings and dividends were not promised, NHMA decided to form a trust. In just two short weeks, members with over 2,300 employees agreed to sign on. “They were buying the hope that over the long term we’d be able to deliver health insurance at a competitive cost and with local control.”

Just as health insurance costs skyrocketed in the early 1980’s, so too did property and casualty insurance costs in the mid 1980’s. Insurance companies increased premiums by 100% to 200%, cut coverages, and refused to insure risks such as police and day-care. Again the NHMA asked, if we can do it so successfully with other risks, why can’t we pool these risks too?” After a short but intensive study, the Property-Liability Insurance Trust was formed. “In every case,” said Andrews, “we’ve been able to return the monies donated for feasibility studies, plus interest, within a year. These programs haven’t cost towns and cities any money. In fact, they’ve made money and they continue to make money for members year in and year out with lower costs and dividends.”

The legislative front has been the site of major NHMA successes over the past decades as well. “We’re very pleased with Article 28-A, that limits state mandates,” said Andrews. “It’s going to save towns and cities a great deal of money and complications.”

Other wins for local government which Andrews points to include the establishment of the Bond Bank, and limiting liability for municipalities in court actions.

As NHMA’s programs and services expanded, so too did the need for new office space. The Association no longer leased office space but instead built The Local Government Center, in 1989, a modern office complex located at 25 Triangle Park Drive in Concord where local officials meet to solve the challenges facing municipalities today and into the future. The Center was co-owned by NHMA and its Property-Liability and Health Insurance Trusts, who also occupy the building.

Among the challenges faced by municipalities, “Interlocal agreements is an area that needs to be more aggressively explored.” Andrews felt that towns could join together and hire assessors, code enforcement officers, and even fire and police forces. But the biggest challenge, according to Andrews, was the burden of the property tax.

“It is clearly an anachronism. It doesn’t make common sense to extract taxes on the value of property when that property is just sitting there and not bringing in any revenue. Why tax someone’s house that generates nothing.” Tax reform was the number one priority according to needs study performed, and it still is,” said Andrews.

Andrews worked hard to continue his objective of personalizing the NHMA and keeping in close contact with the membership. “We are their association and have always worked for their interest but we need their input. Local officials cannot afford to sit on the sidelines and not be part of the solution,” said Andrews.

A Little More About Unfunded Mandates in New Hampshire

The grassroots rebellion against mandates in New Hampshire came at the New Hampshire Constitutional Convention in 1984. By a provision of the State Constitution, voters are asked every ten years if they support convening of a Constitutional Convention. Although New Hampshire voters said no to a Constitutional Convention in 1994 and 2004, they said yes in 1984.

In the 1984 Convention, a varied group of delegates coalesced to draft, sponsor, lobby for, and pass to the voters a proposed amendment prohibiting unfunded State mandates on New Hampshire’s local governments. This coalition included conservatives and liberals, current and former local officials, aspirants for higher office and a few ordinary citizens and delegates. In the forefront of this effort was the New Hampshire Municipal Association.

The motivations behind support for an amendment banning mandates were as varied as the ideologies of the delegates supporting passage of the amendment: conservatives wanted state government off the backs of local government; liberals say it was a way to force the State to be responsible for raising the money required to pay for programs it mandated, leading, perhaps, to tax reform; and local officials were just sick and tired of taking the heat for raising local property taxes to pay for programs and responsibilities foisted upon them by the State.

These disparate viewpoints came together in the “perfect storm” to propose the most sweeping Constitutional prohibition against unfunded State mandates that existed anywhere in the United States at the time. With the support of municipal officials, the 1984 Convention overwhelmingly voted for a resolution to prohibit additional mandated costs on the property tax. The 272-62 vote represented a clear understanding of the frustration experience by citizens as well as local officials at mandated increases imposed on town, city, county and school property tax bills. The Convention, however, was only part of the journey ahead on this issue.

The ballot question, appearing as Question #2, went before voters at the November 1984 election and required a two-thirds vote for final passage.  Before long, it became clear that many organizations and institutions whose members or ideological bedfellows supported the amendment would come to oppose it.

The NHMA had limited resources to commit to a statewide campaign in support of Question #2. However, it did commit about $5,000 from its reserves and joined forces with other groups, such as the New Hampshire School Boards Association. Strangely, there wasn’t much opposition to the amendment until the last six weeks leading up to the November election.

A few voices began to rise in opposition. Although every newspaper in the state editorialized in support of the amendment, the Manchester Union Leader did not. The only newspaper with a statewide circulation, the Leader was against the amendment because they believed it would inevitably lead to the adoption of a broad-based income and/or sales tax. Similarly, a group of New Hampshire taxpayers, headed by former Governor Meldrim Thomson, voted to oppose the amendment the week before the election because of the danger that it might lead to a broad-based tax.

On November 6, 1984, the citizens of the State of New Hampshire ratified Article 28-a, a constitutional amendment requiring the State to fund any new programs that it mandates for its political subdivisions. The amendment was approved by a vote of 237,045 to 99,172, a margin well above the two-thirds majority required.

Within four months of passage, the New Hampshire House of Representatives and the State Senate filed a petition for declaratory judgement first on whether or not the amendment was properly put before the voters and second on whether or not it was validly adopted by the citizens of New Hampshire. On August 19, 1985, Governor John Sununu and Secretary of State William Gardner filed a motion asserting the voters understood the language and intent of the amendment, and as a result, validly adopted it. There were few others, except the New Hampshire Municipal Association, that defended the voters wisdom in adoption of Article 28-a. This defense was successful, resulting in a lengthy Superior Court opinion that soundly dismissed all of the petitioner’s claims.  This opinion was never appealed to the New Hampshire Supreme Court and the constitutional amendment stands today as adopted in 1984.

In retrospect, the very first thing that should be noted is that the broad-based tax boogeyman never appeared from under the bed. Contrary to the dire predictions of the Union Leader and the anti-tax groups, the State was never forced to adopt a broad based personal income or general sales tax to fund all the programs and responsibilities that the State would mandate on local governments.