Fred S. Teeboom

1. Nashua adopted a budget cap by its charter through a city-wide referendum in year 1993. The cap on spending was enforced over a 25-year period, with only a few “override” votes, until city government decided to permanently exclude about $17 million from the cap for sewer expenses through the adoption of an ordinance.

2. I filed a Writ of Mandamus in the New Hampshire Superior Court against the city, soon joined by Alderman Dan Moriarty, claiming the sewer budget exclusion violated Nashua’s spending cap. Contrary to an expedited decision, we found ourselves embroiled in a protracted court fight that ultimately decided in our favor on the merits of our lawsuit, i.e. the sewer budget exclusion violated the spending cap.

3. New Hampshire laws were revised effective July 5, 2011, to authorize cities and towns to adopt a cap on taxes or spending, subject to an override provision. The clear and unambiguous intent of the New Hampshire Legislature was to protect previously legally adopted tax or spending caps “of any kind” with a grandfather provision, regardless of whether the language of such previous caps matched the language of the 2011 statutes.

4. Ignoring this grandfather provision, the court also found the override provision of the Nashua cap did not conform to the 2011 statutes and was therefore unenforceable. But without having called a supplemental hearing on this question and without the city having claimed the validity of the override provision as a defense, Judge Chargles Temple declined to definitely declare the Nashua spending cap invalid.

5. Nonetheless, immediately following the publication of the court’s decision, Mayor Jim Donchess declared the Nashua spending cap unenforceable and ordered it discontinued.

6. I appealed, but the New Hampshire Supreme Court, with a 3-2 split decision, ruled the grandfather provision in the 2011 statutes invalid, thereby threatening the validity of all (a total of seven) tax and spending caps adopted by New Hampshire municipalities prior to July 5, 2011.

7. The enactment of SB52 into New Hampshire law, effective Aug. 20, 2021, again expresses the legislature’s unambiguous intent that tax and spending caps legally adopted by municipalities before July 5, 2011, are valid, legal and fully enforceable after that date. Thus, as of Aug. 20, 2021, the Nashua spending cap is again valid and fully enforceable.

8. Furthermore, SB52 addresses a technical issue relating to budget items not subject to the cap. According to the 2011 statute, a tax or spending cap adopted by cities or towns may allow specific enumerated budget items such as grants to be excluded from the cap provided such exclusions are adopted by their local charter.

9. SB52 further stipulates that any municipal action that redistributes excluded budget items from within the limit of the capped budget to outside such limit requires a supermajority vote.

10. The net effect on Nashua is that as of Aug. 20, 2021, the spending cap is back, same as written in year 1993. With the further condition that budget items excluded from the cap, if authorized by state law, can be adopted by our charter.

11. Exclusion of budget items from the cap cannot be adopted with exclusively a local ordinance.

12. All exclusions currently written in the Nashua Revised Ordinances (other than capital improvements and bonded debt when exempted under the override provision) are no longer valid, since none have been adopted by the Nashua charter.

Fred Teeboom is a former ormer Alderman-at-Large for the city of Nashua and the author of the Nashua Spending Cap.

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