Gilford contributes to state lawsuit
July 29, 2009
The Board of Selectmen agreed to contribute financially to a lawsuit against the state that claims the state has created unfunded mandates in shifting retirement costs to towns.
As of July 1, the state's retirement contributions will drop from 35 percent to 30 percent in order to save money for state funded agencies and programs. Percentages are supposed to drop again in July 2010 to 25 percent. The legislature's "downshift" in state costs would reduce the state employer's retirement shares, including those for teachers, police, and firefighters.
"This is purely a political issue for the board to decide," Town Administrator Scott Dunn told selectmen at their meeting last week, calling the state's decision a burden for towns to fully fund. "The local government wants to sue the state and has asked the board if they want to be a part of the lawsuit."
A letter from the New Hampshire Municipal Association, the School Board Association and NH Advantage Coalition has been sent to all New Hampshire municipalities asking for financial support.
"By now, we have all had time to assess the serious financial impact that the 2010-2011 state budget will have," the letter stated. "It will cost your property taxpayers $9 million in the first year and $18 million next year…an amount which many local governments have not budgeted."
The proposed lawsuit claims that the tax shift is unconstitutional and refers to 28-a. [Mandated Programs] of the Constitution, which says, "The state shall not mandate or assign any new, expanded or modified programs or responsibilities to any political subdivision unless such 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."
Representatives asked that members of the state and board contribute "equal to one-half of one percent of what each local government paid into the NHRS (New Hampshire Retirement System) on behalf of local employees with a minimum of $50 for very small employers."
Chairman Gus Benavides asked Dunn what this financial contribution would entail before the board made any final decisions.
"It's open-ended. You can contribute what you want. They want to raise $500,000," but they are not dividing up a set number of money by each town, Dunn said.
Vice Chairman Kevin Hayes calculated that $2,500 would be an adequate contribution based on the number of towns and counties participating.
According to Dunn, the overall cost to the town would be $10,000 to $15,000, while the town's loss, if making additional retirement payments, would be $12,000 to $18,000.
The board unanimously approved this proposed contribution to the impending lawsuit.