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Education tax credit in court – Portsmouth Herald

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The Portsmouth Herald coverage of yesterday’s hearing is complete and accurate, picking out just the right quotes and giving as sense of both sides of the argument and how the judge saw it.

By Joey Cresta

April 27, 2013 2:00 AM

DOVER — The debate over the constitutionality of the state’s scholarship tax credit law is now in the hands of a Superior Court justice.

Judge John Lewis heard the arguments of attorneys on all sides of the issue during a hearing Friday that stretched over four hours in Strafford Superior Court. Three civil liberties groups filed a lawsuit in the county Superior Court in January to block a new law that would give businesses a tax credit for donating to scholarship organizations to send students to private, public or home schools.

The hearing cut through many of the politically charged arguments made both before and after the state Legislature voted to override former Gov. John Lynch’s veto of the so-called “school choice bill” last year. Some have contended the law would take money away from public schools and have compared it to voucher systems, which have already been proven unconstitutional.

There was no mention of the word “voucher” during Friday’s hearing, nor any debate about whether the law hurts public schools. At the heart of the argument is whether the program diverts public money to private, religious schools, and if so, whether religious school funding could be severed from the rest of the law.

New Hampshire tax credit program was not called a “voucher,” but advocates cited what they called “voucher” programs, meaning traditional voucher programs funded with state expenditures, and tax credit funded voucher programs interchangeably to make their points.  And this highlights the issue at the heart of the case: is a tax credit expenditure essentially the same as other state expenditures.  Here’s my take, based on yesterday’s court debate.

“There’s no dispute that some of the money under this program is going to go to a religious school without restrictions,” Lewis said. “The very first thing that’s being questioned is whether or not the money that’s used to fund tuition payments constitutes quote ‘money raised by taxation.'”

Representing the eight named plaintiffs on the case, attorney Alex Luchenitser of the Americans for the Separation of Church and State argued that the scholarship money is taxpayer dollars. The N.H. Civil Liberties Union and the American Civil Liberties Union are also representing the plaintiffs.

“The education tax credit program will take tax funds away from the state treasury, away from the public schools and deliver them to religious schools,” Luchenitser said. “This program uses the tax system to deliver funding for the program. If there was no business profits tax, this program could not exist.”

The plaintiffs’ main argument relies on Article 83 of the state Constitution, which was amended in 1877 to prohibit tax money from being applied to schools of religious denominations. According to legal experts, the prohibition, known as the Blaine Amendment, has origins that are rooted in bigotry and were crafted to discriminate against Catholics.

Associate Attorney General Richard Head, defending the case on behalf of the state, argued that the funds in question do not contain public money and therefore, the law stands up against Article 83. He cited case law suggesting that tax exemptions do not amount to the expenditure of public funds.

Lewis called that logic potentially “troubling,” saying, “If they (businesses) had not decided to make that contribution, where would that money have gone? If the credit isn’t there, the money would go to the government.”

But Head described exemptions as “lost opportunities” for the state and said the money that private citizens choose to send elsewhere cannot be considered public because it never went into the treasury.

If the scholarship tax credits are declared unconstitutional, Head argued, then other exemptions, such as property tax exemptions for religious institutions, also would have to be considered invalid.

Other states, including Pennsylvania, Florida and Arizona, have similar scholarship tax credit laws that have, in some cases, been challenged and upheld in court. The plaintiffs hope the judge will view the case from a uniquely New Hampshire lens, while the defense attorneys sought to have the judge review the case more broadly and with consideration for the precedent set elsewhere that rulings against such programs would violate the Establishment Clause of the U.S. Constitution.

Other speakers Friday included Dick Komer, an attorney from the civil liberties law firm Institute for Justice that is representing the scholarship organization Network for Educational Opportunity as an intervener in the case, and Richard G. Brooks, a New York-based attorney who filed a motion to participate in the hearing.

Brooks is representing a number of religious schools and organizations, and he argued that for the law to be fair and neutral, it must allow scholarships to go to students who want to attend religious institutions.

“The attack on the statute is all about religious schools,” he said. “The nature of the attack was quite disturbing.”

There were also arguments over whether the plaintiffs, including New Castle’s Bill Duncan and state Rep. Rebecca Emerson-Brown, D-Portsmouth, have standing to file a complaint. The judge gave prosecutors two weeks to file a brief in response to questions of standing.

Kate Baker, the executive director for the Network of Educational Opportunity, said 750 students have already applied for scholarships from her organization.

Interested parties on both sides are hopeful Lewis will return his ruling on the case by June 15, which is when the scholarship organization is expected to begin awarding scholarships. According to Duncan, the organization is expected to have scholarships allocated and reported to the state by July 15.

The N.H. Senate last week blocked an attempt to repeal the controversial law, a legislative priority of Gov. Maggie Hassan and other Democrats.

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