Tuesday, June 18, 2013

In Important Decision, New Hampshire Court Invalidates Tax Credit Scholarships To Sectarian Schools

In Duncan v. State of New Hampshire, (NH Super. Ct., June 17, 2013), a New Hampshire trial court judge in a precedent-setting 45-page opinion held that New Hampshire's Education Tax Credit program violates the state constitution's ban on compelling any person to support sectarian schools (Art. 6) and its "No Aid" clause (Art. 83), insofar as the state allows scholarship funds generated by the program to be used at religious schools. The court relied on a newly-enacted statutory amendment broadening taxpayer standing (RSA 491.22 I) to allow all the taxpayer plaintiffs in the suit to maintain the action.  Departing from interpretations of the federal and some other state constitutions, the court also held that even though the state constitution's "No Aid" clause refers to expenditure of "money raised by taxation," it also applies to funds contributed to scholarship organizations for which businesses receive a tax credit.  The court said:
Money that would otherwise be flowing to the government is diverted for the very specific purpose of providing scholarships to students....
[Articles 6 and 83] broadly obstruct, or bar, the provision of, or diversion of, "public funds." or tax monies, to financially aid "the schools of a religious sect or denomination."
The court held, however, that the program of scholarships funded by contributions for which businesses received tax credits may continue so long as scholarships are awarded only for attendance at non-religious schools. The Cato Institute reports at length on the decision. (See prior related posting.)

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