Municipalities Are Gearing Up to Sue the State Over Retirement Costs

By David Darman on Thursday, July 16, 2009.

The new state budget has only been on the books for just two weeks and its already facing its second legal challenge.

The Municipal Association, Association of Counties and the state School Board Association are poised to sue over a policy change that would force communities to pay more toward the pensions of local retirees.

The Governor and top lawmakers counter that this budget is better to communities than critics claim.

NHPR’s David Darman has more.

The state’s new budget requires communities, counties and school districts to pay 5 percent more toward the retirement of local workers for this year.

Next year, they’ll be expected to kick in another 5 percent.

Cordell Johnston of the New Hampshire Municipal Association says that amounts to an unfunded mandate to the tune of 27 million dollars.

The constitution says the state shall not mandate any new expanded or modified programs to the municipalities in such a way that it necessitates additional local expenditures.

Since the late 70s, communities have paid 65% of the employer contribution for teachers, firefighters and police officers.

The state has paid the rest….35%.

Local officials say changing the terms of the deal will lead to one thing….higher property taxes.

That complaint doesn’t get much sympathy from Governor John Lynch.

Lynch insists that in total dollars communities aren’t suffering.

The fact is that cities and towns in 2010 will actually receive more than they received in 2009. And they’ll be getting in the next biennium another 123 million dollars for education funding. So I think we’re doing a good job living up to our commitments to cities and towns…

But as some local leaders say the Governor can tell that to a judge.

Betsy Miller of the New Hampshire Association of Counties says the situation at the local level isn’t what Lynch claims.

We’re getting less. We’re getting lower Medicaid reimbursements. There are all sorts of things going on in the budget that is going to cause an increased cost at the local and county level.

Those projected problems come on top of the very real loss of about 50 million dollars worth of revenue sharing.

Top lawmakers say the suspension revenue sharing was a tough decision.

But one that had to be made.

Democrat Maggie Hassan is the Senate Majority leader.
We all need to work together over the next few years and it’s not possible to fund what we need to fund in this state during this economic crisis without everybody coming together and sacrificing. And you know, lawsuits may be a response to that but I’m hoping we can move past them.

The Municipal Association has no timetable, but has begun raising money for the legal fight.

They say they’d like to have as much as a half million dollars at the ready.