Over recent months, the New Hampshire Supreme Court has delivered two significant rulings concerning the Statewide Education Property Tax (SWEPT) and state funding for local schools. SWEPT, a tax collected locally but imposed by the state, contributes $363 million annually to New Hampshire’s Education Fund.
The court confirmed SWEPT’s constitutionality in June, overturning a previous ruling that deemed it unconstitutional. However, plaintiffs successfully challenged an exemption for properties in unincorporated communities. This decision may affect businesses previously exempt from this tax.
In July, the court found current education funding inadequate but left legislative solutions open. This decision partially reverses a 2023 ruling requiring increased state aid per student. Justice James Bassett was notably involved in these decisions; he will retire soon.
Governor Ayotte criticized the court’s decision on education funding adequacy. Changes in base Adequacy Aid could require lawmakers to find an additional $500+ million annually.
The impact on small business taxes is uncertain. Lawmakers had proposed reversing tax reductions since 2015 to fund education more robustly, which NFIB NH opposed successfully.
According to Andrew Cline of the Josiah Bartlett Center for Public Policy, businesses are now contributing more significantly to state funds than before due to reduced business tax burdens over ten years.
The issue of school funding and SWEPT has been contentious since Claremont School District et al vs New Hampshire (1993). The state’s role in educational funding remains debated among lawmakers and legal experts.
New Hampshire House Majority Leader Jason Osborne stated that recent court decisions would not change legislative efforts toward educational excellence without imposing broad-based sales or income taxes. Speaker Sherman Packard and Senate President Sharon Carson echoed similar sentiments regarding ongoing school reforms.
