Tax credit scholarships survive challenge in New Hampshire

As the Florida teachers union and school boards association announced a lawsuit this morning against the Florida tax credit scholarship, the New Hampshire Supreme Court unanimously upheld that state’s tax-credit scholarship program, arguing the plaintiffs had no standing.

In 2013, the American Civil Liberties Union (ACLU) and Americans United for Separation of Church and State (AU) sued to terminate the New Hampshire program. They argued the program violated the state’s Blaine Amendment, prohibiting aid to sectarian schools and institutions.

Since the scholarships are paid for by donations backed by an 85 percent tax credit, rather than direct state appropriations, the plaintiffs had to argue that tax credits were akin to a government appropriation. It must be noted that the loss in revenue due to the tax credit is also offset by an equivalent reduction in expenditures toward K-12 education as students enroll in private schools.

Citing the U.S. Supreme Court decision in Arizona Christian School Tuition Organization v. Winn (2011), defendants in New Hampshire argued the tax credits are not appropriations and, as such, the plaintiffs had no standing to file suit. They also argued the plaintiffs lacked standing since they could not demonstrate that any individual suffered harm.

Although the New Hampshire Supreme Court did not touch on the Winn decision, it did agree the plaintiffs did not have standing.

The court could not find that the plaintiff’s rights had been “prejudiced or impaired as a result of the program’s implementation.” The court further held that “petitioners fail to identify any personal injury suffered” and that “there is no evidence that by granting tax credits to other businesses, the program alters the amount of taxes [a business] is or will be required to pay.”

Not even potential reductions in revenue to the state or to individual schools as a result of tax credit scholarships was enough to establish standing.

The court found,

“The prospect that [net fiscal losses] will occur requires speculation about whether a decrease in students will reduce public school costs and about how the legislature will respond to the decrease in students attending public schools, assuming that occurs.”

This finding may be useful for defenders of Florida’s scholarship program since its rapid growth isn’t projected to make a dent in the even larger growth of the general student population.

The New Hampshire decision isn’t a complete victory for the scholarship program as the plaintiffs could return to challenge the program again in the future. However, the decision may offer an additional defense to Florida’s tax-credit scholarship program since the plaintiffs may have a harder time proving they’ve been harmed.