The city of Concord wants a judge to weigh in on whether a proposed tax cap is constitutional. Leaders of three state agencies sent the city a letter in September saying a tax cap set to be voted on by Concord residents next November would not conflict with state laws. City Solicitor Paul Cavanaugh filed an appeal of that decision with Merrimack Superior Court on Tuesday, saying the cap would interfere with the city’s ability to pay into welfare and public safety services or the state retirement system, as required by law.
Finance Director Jim Howard said if the cap passes and is later challenged in court by someone upset that a certain appropriation wasn’t met or an obligation went unfulfilled, the city could be in trouble. He said the city needs to be clear about whether the cap is legally sound from the get-go.
“The entire issue of whether the cap is good or bad beyond that is a separate thing,” he said.
The tax cap, proposed by the New Hampshire Advantage Coalition, requires a change in the city charter. It would tie property tax increases to the increase in the U.S. Consumer Price Index, the national measure of inflation. Councilors could override the cap for bonded items or the city budget with a two-thirds vote.
The coalition had hoped to place the initiative on the ballot for this year’s election. The city council voted instead to put it on the 2009 ballot for city elections. Cavanaugh said that will give the court plenty of time to review the proposed amendment.
Any changes to a city charter must be reviewed by Secretary of State Bill Gardner, the attorney general’s office and the Department of Revenue Administration. On Sept. 8, members of the three offices signed a letter saying they “do not object to the proposed amendment to the existing city charter.” State law allows the ruling to be appealed in superior court.
Assistant Attorney General James Kennedy said yesterday that he hadn’t seen the city’s recent filing and couldn’t comment further on the September letter, which he signed. Since he began reviewing charters in 2006, he has not seen any decisions challenged in court, he said.
Cavanaugh’s filing argues that the change could prohibit the city from meeting state mandates.
“The city is subject to significant financial obligation imposed by the state Legislature and city charter,” the appeal said. “Any proposed charter amendment which seeks to limit city spending or taxes must ensure that no impairment of the city’s ability to carry out its mandatory obligations will occur.”
It also said that the amendment goes against the tax scheme laid out by the Legislature, which never allowed for caps, and that the amendment is ambiguous. The amendment calls for a two-thirds vote to override the cap but does not specify if that is two-thirds of the 15 council seats, of the filled council seats or of the councilors present at a particular meeting.
Several councilors said yesterday they thought the cap would interfere with the city’s ability to meet state obligations.
“The (state) statute reads that if someone comes and seeks welfare and they qualify, we have to provide it,” Ward 6 Councilor Allen Bennett said.
In tough times, as is likely this winter, other programs may be cut in order to pay for overruns in welfare, he said. Bennett said a cap could aggravate the situation.
Ward 2 Councilor William Stetson said he worries about whether the cap would make it harder for the city to secure bonds with a low rate if bond agencies know the city has limited resources to pay off debt.
Mike Biundo and Tammy Stevens, leaders of the New Hampshire Advantage Coalition, could not be reached for comment yesterday evening.
A hearing on the motion has been scheduled for 10 a.m. Wednesday.