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Moultonboro joins suit against state for retirement contributions

July 22, 2009
MOULTONBORO — The Town of Moultonboro will join in litigation efforts with the New Hampshire Municipal Association in response to the state's vote to shift their share of retirement costs to towns.

Town Administrator Carter Terenzini brought up the letter asking Moultonboro to join the suit with other towns in the NHMA. When the state budget was approved last month, it reduced the state's share of the employer contribution for teachers, police, and firefighters from 35 percent to 30 percent, with plans to reduce it further to 25 percent in the 2011 fiscal year.

The NHMA wrote that this "downshifting" in cost would cause an additional cost to counties, towns, school districts, and cities, a figure they estimated to total at $27 million over the next two years. The NHMA also contends that this action is an "unfunded mandate" and constitutes a violation of Part I, Article 28-a of the New Hampshire Constitution, which states, "The state shall not mandate or assign any new, expanded or modified programs or responsibilities to any political subdivision in such a way as to necessitate additional local expenditures by the political subdivision unless such programs or responsibilities are fully funded by the state or unless such programs or responsibilities are approved for funding by a vote of the local legislative body of the political subdivision."

"It's not horrifically expensive for us because of our number of officers," said Terenzini. "But it's stressing our neighbors."

Terenzini said that the NHMA advised them to send their payment to the state with a letter of protest, asking the state to be ready to reimburse them for the costs. They also asked them to "join with their fellow communities" in litigation, contributing a little over $800. Letters came from the executive directors of the Local Government Center, the School Board Association, and the New Hampshire Association of Counties.

Terenzini said that the town had not budgeted for this but could take that amount out of their legal budget.

"Personally, I think it's a good investment," said Terenzini.

Selectman Betsey Patten moved to authorize the town to join the lawsuit for $816, and the board agreed unanimously.

Later on, in the public comment after the selectman's meeting, resident Peter Jensen asked the selectmen to reconsider their decision. He asked if the money for the retirement fund would not simply be drawn from the same source - property taxes.

"Please reconsider this suit," asked Jensen. "I don't see how we're going to save money - we're going to send money whether the state or the town disperses the money. The only assumption is that the state will disperse the money without collecting more. It seems that it's just a lawsuit that won't buy us anything, unless the suit results in lower spending."

Jean Beadle noted that the Moultonboro School Board had delayed a decision on joining the suit that week for this reason.

Patten explained that it comes down to the state downsizing the cost. The state's contribution to the retirement costs came from sources like fees and tolls, she said, not from property taxes. When the state reduces the percentage that it contributes, local towns, cities, and school districts have to make up that cost by drawing from property taxes.

"Other than school costs, the state does not tap into property taxes," Patten said. "The retirement funding has to come from a source other than property taxes, like fees and tolls. This makes local property taxes higher and higher. The state has to pay; they're doing this against the state Constitution."

Patten said that the NHMA advised them to pay, so that their employees didn't suffer, but to pay under protest. She said that it could be an extra $10,000 in 2010, and a potential extra $25,000.

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