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NH Supreme Court hears the voucher tax credit case

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The New Hampshire Supreme Court heard the voucher tax credit case yesterday.  Both sides stated their cases clearly and concisely.  The justices had many pointed questions and Chief Justice Linda Dalianis complimented the legal teams for the quality of their briefs on this legally complex case.  Here is the video of the hearing.

(Supporters of the tax credit did devote time to the question of whether we plaintiffs had the “standing” to bring the case to court in the first place.  We contend that our individual plaintiffs have standing under the law passed by the O’Brien legislature that restores to state taxpayers their long-standing rights to challenge unlawful governmental action – a law some of the same folks, now in the role of tax credit advocates, contend is unconstitutional. However, one of our plaintiffs is a New Hampshire company that the State agreed would have standing in any case, so it is unlikely that any court would throw this case out based the standing issue.)

Tax credit supporters argue that the program does not fund religious schools but funds parents who then choose the school.  It appeared, however, that among organizations supporting the program and the supporters turned out on the supreme court steps yesterday, only religious schools were represented.

Here is a sample of the press coverage.


Proponents of the law argue that money diverted from the state’s coffers is not equivalent to money spent by the state, and even if it were, because that money is spent according to the wishes of parents, it’s not the same as the state giving support to a religious school.

“The credit is being received by the business, who donates that money to a scholarship organization. At that point the business owner cannot direct that money,” argued Associate Attorney General Richard Head. He went on to quote the US Supreme court in a 1983 case from Minnesota, “Numerous private choices are being made and the money flows to the parent and the students.”

Alex Luchenitser for Americans United for the Separation of Church and State led the group arguing against the tax credit, which included the American Civil Liberties Union. That group argued this program does indeed constitute the use of public money, in a way that tax exemptions, or charitable deductions does not.

“It affirmatively aids religious schools and at the same time it takes money away from a particular purpose – public schools – and it does so through a complex government program with lots of rules and regulations,” argued Luchenitser before the court.

Union Leader:

Attorney Alex J. Luchenitser, representing Americans United for Separation of Church and State (AUFSCS) in Washington, D.C., also a plaintiff in the case along with the New Hampshire and American Civil Liberties Unions, maintained the state law was enacted to circumvent the state constitution, which prohibits tax money being sent to religious schools.

[NOTE: AU and ACLU are not actually plaintiffs; they represent the plaintiffs.]

He said the business education tax credit is a complex government program outlined in a 12-page statute that calls for 70 percent of scholarship money to go to students leaving public schools to be home-schooled or to attend private or religious schools.

The plaintiffs contend that Article 83 of the state constitution specifically bars the state from giving tax money to religious schools when it says, “no money raised by taxation shall ever be granted or applied for the use of the schools of institutions of any religious sect or denomination.”

Luchenitser argued the state Supreme Court has repeatedly ruled the state cannot indirectly enact a law to do something it is prohibited from doing directly.

An amicus brief was filed by Gov. Maggie Hassan, who sided with the plaintiffs contending the tax credit is an education voucher program that will undermine funding of public education. Democratic Gov. John Lynch vetoed the 2012 legislation when he was in office, but the Republican-controlled Legislature overrode it.

Regardless of Hassan’s position, the Attorney General’s Office is obligated to defend the statute before the high court.

Assistant Attorney General Richard W. Head told the court the law is constitutional and the money cannot be considered public funds because the government never receives it.

Justice Carol Ann Conboy asked if it were true if there were no tax credit the business would be obligated to pay the business profits and business enterprise taxes to the state.

“That’s true,” Head replied.

Head maintained the state was not making expenditures to religious schools because the business donates the money to a scholarship organization that decides who receives the funds. “The last decision maker is the family,” he said.

Conboy, however, said the scholarship organization knows in advance where the family is going to spend the money.

Attorney Richard D. Komer, representing the Institute for Justice and other intervenors who favored the tax credit, contended none of the plaintiffs had standing to bring the lawsuit. The only person who could do that, he said, was the governor or individuals who could show personal harm.

“Who could show personal harm?” asked Justice James Bassett.

“I don’t know, frankly,” Komer replied.

Portsmouth Herald/AP:

Senior Assistant Attorney General Richard Head told the court that the businesses donate to an independent scholarship organization. In return, they get a credit on their business profits and enterprise taxes amounting to 85 percent of their donations.

But Head acknowledged during questioning by the justices that absent the tax credit program, the business profit and business enterprise taxes in full would go to state coffers.

“This program is clearly an assault on public schools,” argued Alex Luchenitser, attorney for Americans United for Separation of Church and State and a dozen other opponents of the tax credit program.

Concord Monitor:

There seemed no clear consensus yesterday among the justices.

Justice Carol Ann Conboy seemed skeptical yesterday that the cash was anything but public. “The factual reality is,” she said, “without the credit, those taxpaying businesses would be obligated to pay the taxes to the state.”

…Associate Attorney General Richard Head argued that even if Conboy’s point is true, the state does not consciously direct money to religious schools.

“The family is deciding which school receives that funding at the end of the day, whether it be a public school in another district, whether it be a home school, or whether it be a private school, which could be either religious or otherwise,” he said. “The last decision maker is the family.”

But Alex Luchenitser, an attorney arguing against the law, said the program violates Article 83 of the state Constitution, which prohibits tax dollars from being spent on religious education. He said it shouldn’t matter whether the money is generated directly from taxes.

“This court’s decisions have repeatedly held that the state should not be permitted to circumvent the state Constitution by doing indirectly what it cannot do directly,” Luchenitser said.

Justice Jim Bassett asked Luchenitser whether his side would have a problem with the law if it still allowed the scholarship money to be used at religious schools, but only for nonreligious purposes.

Luchenitser said that would be infeasible, as “most of the religious schools in the state are permeated with religion.”

Lynn noted that students at religiously affiliated colleges can apply for federal loans and scholarships, and asked what the difference was. Luchenitser said universities, unlike primary or secondary schools – which the tax credit targets – aren’t often as infused with religious instruction.

Conboy asked several times whether the court should consider the practical ramifications of their decision. She cited a handful of court briefs that argued against the law because it, as she said, “would have far-ranging and, not to be overdramatic, but devastating effects on the public school system.”

Dick Komer, an attorney for the Network for Educational Opportunity, said the impact on the public schools is a decision for policymakers, rather than the court.

Luchenitser and the plaintiffs, which include former Executive Council candidate Bill Duncan, have asked the high court to overturn the lower court’s decision to leave in place scholarships for secular private schools, out-of-district public schools and home-schooling. They argue that lawmakers never intended for it to be severed. Justice Gary Hicks seemed in agreement.

“If we find that it is not fair and in fact unconstitutional as to a major component of its constituents, how can we not strike the whole statute down?” he said.


A central criticism of the tax credit law has been that it requires 70 percent of scholarships to go to public school students. When a public school loses a student, it also loses a portion of state money – roughly $3,700 per student, Luchenitser said, citing a Department of Education estimate. That’s because most of a school’s costs are fixed.

Gov. Maggie Hassan, in a split from the attorney general’s office, has come out against the law. A court brief filed on her behalf in January stated that “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.”

Portsmouth Herald/AP, leading up to yesterday’s hearing:

Dozens of advocacy groups from across the country have weighed in as the New Hampshire Supreme Court prepares to hear arguments on the constitutionality of a business tax credit program that benefits students at religious schools.


Tax credit supporters such as the Becket Fund for Religious Liberty and the Alliance Defending Freedom see the ruling as an attack on religious freedom. Associations representing school administrators, teachers and school boards say the law diverts funds from public schools.

Gov. Maggie Hassan urged the court to uphold the ruling, saying the tax credit amounts to a government subsidy of religious schools. She has made repeal of the entire law a priority, but Republicans last year managed to block repeal efforts.

Hassan says the tax credit puts an added burden on communities and amounts to an education voucher program, which the state Supreme Court struck down.

Concord Christian Academy and others said that to exclude religious schools from the program violates constitutional guarantees of religious freedom and equal protection.

The Anti-Defamation League filed a brief saying the tax credit program violates the principal of separation of church and state.


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