Tax Law

State Net Capitol Journal – New Hampshire Supreme Court Okays Pension Reform Law

Budget & Taxes

NH SUPREME COURT OKAYS PENSION REFORM LAW: In 2013 the Superior Court in Merrimack County, New Hampshire invalidated a 2011 state law increasing the amount public employees — even those who've been on the job over 10 years — have to contribute to their pensions, on the grounds that it would violate a contract between the state and those workers. But last week the state's Supreme Court reversed the superior court's decision.

"The narrow question before us is whether, by enacting RSA 100A: 16, I(a), the Legislature unmistakably intended to establish NHRS member contribution rates as a contractual right that cannot be modified," Chief Justice Linda Dalianis wrote in the court's unanimous opinion. "We hold that it did not."

New Hampshire Attorney General Richard Head, who argued for the state, said the court also pointed to Michigan and Florida rulings in its decision.

"The New Hampshire Supreme Court's opinion is consistent with some of the other states that have ruled on this issue of employee contribution to the retirement system," he said.

Senate Majority Leader Jeb Bradley (R), the main sponsor of the bill mandating the pension contribution increases, was, naturally, pleased with the decision.

"I'm encouraged that the Supreme Court has upheld the right and duty of the Legislature to amend and improve the New Hampshire Retirement System. Unless we can address the $5 billion unfunded liability in our state pension system, both taxpayers and workers would be left with a huge financial burden," he said in a statement. "This decision affirms the Legislature's ability to make the changes we'll need to preserve the New Hampshire Retirement System, protect taxpayers, and maintain employee jobs."

The coalition of public employee unions that filed suit against the pension reform law was, just as naturally, disappointed with the ruling.

"The Court's decision today unfortunately allows public employers to renege on their promise of security in retirement," it said in a statement. (UNION LEADER [MANCHESTER], NEW HAMPSHIRE PUBLIC RADIO)

CA GOV EYING PUBLIC EMPLOYEE HEALTHCARE COSTS: California Gov. Jerry Brown (D) will target healthcare costs for retired state workers in his forthcoming budget proposal, a finance department spokesman said last week. That statement came shortly after the state's controller, John Chiang, announced that the long-term burden of healthcare costs now exceeds the amount available to cover them by $71.8 billion.

"The price tag associated with providing healthcare to retired state workers has quietly grown to rival or even eclipse the funding gap associated with public pensions," Chiang said in a statement. "If we continue to do nothing, we will be sowing the seeds of a future crisis."

While Brown and state lawmakers have taken action to pare down the state's pension costs, the healthcare costs have gone unaddressed. And unlike pension costs, which are funded through long-term investment accounts, healthcare costs are only covered on a year-to-year basis. (LOS ANGELES TIMES)

KS GOV FOLLOWING NJ GOV'S LEAD ON BUDGET WOES? Kansas Gov. Sam Brownback (R) seems to be reading from New Jersey Gov. Chris Christie's (R) playbook when it comes to dealing with his state's budget troubles. Last month he said he was "looking at everything," including a tax increase, to fill a projected $279 million hole in the state's budget for the current fiscal year, which was very similar to Christie's remark the month before that "everything is on the table for discussion" to shore up his state's ailing transportation trust fund. And last month Brownback decided to solve his state's budget problem in part by cutting payments into the state's public pension system, precisely what Christie did back in May. (ASSOCIATED PRESS, LAWRENCE JOURNAL-WORLD, WICHITA EAGLE, NJ.COM, WASHINGTON TIMES, STAR-LEDGER [NEWARK]).

BUDGETS IN BRIEF: UTAH Gov. Gary Herbert (R) has proposed a $14.3 billion state budget that includes the largest increase in per-pupil spending in 25 years, as well as funding for body cameras for all state troopers and his Healthy Utah plan to help the poor afford medical insurance (SALT LAKE TRIBUNE). • Also in UTAH, Gov. Herbert (R) wants to tax e-cigarettes just like tobacco products. His office says doing so could generate $10 million a year for the state (WASHINGTON POST, LEXISNEXIS STATE NET). • FLORIDA Sens. Rob Bradley (R) and Jeremy Ring (D) have filed legislation (SB 172) that would allow cities with troubled pension funds to use additional insurance premium tax revenues to bolster those accounts. The bill is similar to one that failed last year (TAMPA TRIBUNE). • Also in FLORIDA, state revenue estimators predict revenues for the current fiscal year will grow 5 percent more than expected this fiscal year and 4 percent more than expected next fiscal year, meaning the state will have roughly $1 billion more in revenue (NAPLES DAILY NEWS).* Determining a source of revenue to provide at least $1 billion in new revenue annually to maintain and improve GEORGIA's roads and bridges is expected to dominate the legislative session that begins Jan. 12. "It is timely for us to take a serious look at it," Gov. Nathan Deal (R) said at a transportation summit last week. "The question of whether it's going to be new revenue, and the source of that revenue, is the most important question we need to answer" (ATLANTA JOURNAL-CONSTITUTION, LEXISNEXIS STATE NET). MARYLAND's two-year budget shortfall has grown to nearly $1.2 billion due to sluggish economic growth, according to a revised state budget forecast (WASHINGTON POST). • MASSACHUSETTS Gov.-elect Charlie Baker (R) will face a $750 million budget shortfall when he takes office next month, according to the Massachusetts Taxpayers Foundation, potentially forcing him to start his term by making unpopular spending cuts (BOSTON GLOBE, LEXISNEXIS STATE NET). • If oil prices drop below $52.06 this year or $52.56 next year for five consecutive months, NORTH DAKOTA's oil extraction tax will be suspended for two years, potentially costing the state billions in revenue (BISMARCK TRIBUNE). • IOWA Department of Transportation Director Paul Trombino said state lawmakers may debate proposals including an increase in the gas tax, a wholesale tax on motor fuel and higher permit fees for oversized and overweight vehicles next year to generate $215 million the state needs each year to meet its most critical transportation needs (DES MOINES REGISTER).

- Compiled by KOREY CLARK

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