My Turn: Raiding dedicated funds is already unconstitutional
Re “Raiding funds shrinks faith in government” (Monitor editorial, April 3):
What’s needed here is not a constitutional amendment, but rather respect for, and if necessary, judicial enforcement of an existing provision of the New Hampshire Constitution that permits only “proportional” taxation and allows flat fees to be collected only for identified special purposes.
Our state Constitution requires that all taxes be “proportional,” which the New Hampshire Supreme Court has repeatedly said means “ad valorem,” i.e., based on the value of the class of property being taxed, at a uniform rate. Excise taxes, e.g., taxes assessed at fixed dollars or cents per taxable item, are generally not permitted in New Hampshire, except for the “road toll” (gas tax) which is authorized by a special constitutional provision.
However, the court has also said that the Legislature may impose “fees” for special services, which may be imposed at a fixed amount per taxable item. But to pass muster as a fee, it must be related to a special service of value to the payer, and all proceeds from the fee must be devoted to supporting that service, except for an amount that reasonably reflects the state’s cost in administering the special program.
Traditionally, that “administration charge” had been calculated by the Legislature as 125 percent of the program’s budgeted direct administrative expense.
Raiding the Land and Community Heritage Investment Program trust funds to support General Fund appropriations would seem to be a perfect example of what’s not constitutionally permitted. LCHIP funds are raised for a special purpose – to support conservation projects – by a special flat fee of $25 imposed on the recording of certain kinds of real estate documents. As such, it is not an ad valorem tax, since the amount of the fee bears no relation to the value of the property (or transaction) reflected in the document. Raiding the LCHIP trust for funds raised from the recording “fee,” and converting those funds to General Fund uses would sever the revenue from the special purpose for which they were raised, in effect converting the source of those funds from a permissible flat fee to an impermissible excise tax.
This limit on the state’s taxing power seems to have been conveniently forgotten or overlooked in recent years of fiscal stringency. Has the time come when some suitable person or group should remind the administration and Legislature of it, by challenging the LCHIP raid through appropriate litigation?
(Attorney Martin Gross of Concord is senior counsel at Sulloway & Hollis and a longtime student of the New Hampshire Constitution.)