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Dunbarton taxpayers demand one-time tax break from $1 million school surplus

  • Dunbarton residents raise their hands to indicate support for letting 1.06 million worth of excess taxes lapse into the school district's undesignated fund balance during a straw poll at a Tuesday information meeting on June 12, 2018. Caitlin Andrews



Monitor staff
Tuesday, July 17, 2018

State Rep. JR Hoell, representing the taxpayers of Dunbarton, told a superior court judge Tuesday that the town’s school board has no choice but to return $1 million wrongfully collected from residents in the form of a one-time tax break.

And the discovery of the unspent money does not signal an emergency that requires a special town meeting, despite town officials’ call for one, Hoell argued.

“What we don’t have here is an immediate expenditure of money,” Hoell said, speaking to Superior Court Justice Richard McNamara about the rationale given for the meeting request. “The transfer of money from one account to an account to retain it for a five-year period doesn’t seem to meet the requirements of an expenditure.”

The school district requested permission from Merrimack County Superior Court on Tuesday to host a special meeting on Sep. 26 to allow voters to decide what to do with $1.06 million after an independent audit of School Administrative Unit 19 found the extra money paid in from Dunbarton taxpayers.

The district cited RSA 197:3, which states that a school board must petition for a special meeting in cases of emergencies including an immediate expenditure of money. There are only two ways the district can host a special meeting. The first is to petition the superior court and the other is to have 10 legal voters from the town petition for a special meeting. If the 10-person petition is submitted, then 50 percent of the town’s voters must show up to that meeting to constitute a quorum.

The school board had previously voted for the town meeting idea to give residents a say on what to do with the money.

Hoell applauded the effort by the board to seek the opinion of voters but argued that the law doesn’t give them that option.

The board, through its attorney James O’Shaughnessy of Drummond Woodsum, is pushing for the money to be placed in a public trust fund that will be used to even the tax rate over five years.

“Rather than let this money lapse, do we want to hold it in trust so we can expend those funds in a way that allows us to smooth out the tax rate in future years rather than do it all at once?” O’Shaughnessy asked.

“What’s the harm if it lapses? The only harm you mentioned is a fluctuation in the town’s tax rate,” McNamara said.

O’Shaughnessey said the harm is denying voters the chance to decide what to do with the money, given that it’s a considerable sum in a town of 2,700.

“The harm is they weren’t given a chance, and if we don’t give them a chance in a special meeting they have never had a chance of how to decide the treatment of that (money),” O’Shaughnessy said. “So, I think that’s harm to the legislative body that deserves a chance to vote on what to do with those monies.”

At a meeting in June, a majority of 50 or so attendees in a straw poll said they would prefer a one-time tax break, which would equal to about $1,000 for a house valued at $300,000, the Monitor reported.

Goffstown recently found itself in a similar situation with $9.8 million from the same error. Goffstown successfully petitioned the State Department of Revenue Administration to adjust the first-half-of-2018 tax rate with a significant reduction.

There are limited options for what to do with the money in situations like Dunbarton’s, but it should come back to the town one way or another. The money will either be returned as a one-time tax break, spent on taxes over five years or put into an account for school improvements.

Hoell said there is already an established procedure for over collection of taxes, which is to leave it in the unspent account and allow the revenue department to take that into consideration when setting the tax rate, which will mean lower tax bills next year.

“Because returning the accumulated over collection of taxes to the taxpayers is an alternative remedy that will occur without a special meeting, this factor favors this court finding that no emergency exists,” Hoell wrote in his motion to dismiss the petition for the meeting.

McNamara acknowledged that this is a rare case and that he would have to do more research before making a decision.

(Jacob Dawson can be reached at 272-6414 ext. 8325, jdawson@cmonitor.com or on Twitter @jaked156.)