NH Governor v. Lawmakers in Tax Credit Lawsuit

The Attorney General of New Hampshire is defending a state tuition tax credit act in court.

In January, New Hampshire Governor Maggie Hassan filed an amicus brief opposing the law. It says, “The governor treasures the diversity of private schools in our state, and fully appreciates their contributions.…But the decision to contribute to a private religious school is a personal decision. It should not be supported by the state’s tax structure, and it should not have the effect of diverting scarce taxpayer dollars from crucial public needs.”

In 2012, the New Hampshire legislature enacted a tuition tax credit bill over the veto of then-Governor John Lynch. Bill Duncan, an advocate for public education, sued, backed by Americans United for the Separation of Church and State and the American Civil Liberties Union. The case is Duncan v. New Hampshire.

In June, Superior Court Judge John M. Lewis struck down the aid for religious schools, because it violated the New Hampshire Constitution; but he allowed benefits to continue for non-religious private schools. The Attorney General appealed to the New Hampshire Supreme Court. So did Bill Duncan, who asked the Court to strike down the entire act.

The State Constitution says, “No money raised by taxation shall ever be granted or applied for the use of schools or institutions of any sect or denomination.”

In his decision, Judge Lewis summed up the Attorney General’s position, “The defendants strongly argue that the program does not involve ‘public funds’ or ‘money raised by taxation.’…to constitute such ‘public funds,’ it is argued, the money involved must be collected from the taxpayers and deposited in the New Hampshire treasury.”

The judge rejected that argument. He wrote, “The tax credit under the program is an ‘archetypal tax expenditure,’ which ‘serves the same function as direct government spending’ and has long been recognized as equivalent to a direct appropriation ‘by public finance economists and analysts for at least half a century.’”

Governor Hassan personally opposes the complete act, but her brief argues only against the aid for religious schools. She spoke against the law when she campaigned for governor in 2012, and she cheered Judge Lewis’s decision.

Duncan argues that the state can not justly apply the remains of the act “when it is unclear—as is the case here—whether the legislature would have enacted a statute without the offending provision. Much of the support for the program came from religious schools. Key goals of the program are frustrated when religious schools can not receive funding.”