In this long-awaited decision, the Supreme Court addressed the validity of a proposed amendment to the Manchester city charter to impose a “spending cap” to limit annual budget appropriations increases from year to year. The amendment contained a formula to regulate permissible increases in appropriations with reference to a consumer price index, subject to possible override by a two-thirds vote of the board of aldermen. Several cities have previously amended their charters to enact such amendments. (Towns without charters cannot impose spending caps on themselves because any policy adopted by a town meeting is automatically modified or repealed by any inconsistent vote at a subsequent town meeting.)
Under RSA 49-B:5-a, a proposed charter amendment is submitted to the Secretary of State, Attorney General and Commissioner of Revenue Administration for review “to insure that it is consistent with the general laws of this state.” The decision is subject to appeal to the Superior Court. In this case, the State agencies determined that the amendment was not unlawful, and the City appealed, claiming that the amendment was not authorized by RSA 49-B or RSA 49-C, which prescribe the contents of city charters. Interested groups of citizens joined the litigation on both sides of the question. The trial court transferred the issues to the Supreme Court without a ruling.
Recent Supreme Court decisions have narrowly construed the scope of power that may be exercised through charter amendment: Hooksett v. Baines, 148 N.H. 625 (2002) (charter could not impose term limits on elected officials); Manchester School District v. Manchester, 150 N.H. 664 (2004) (charter could not make school district a city department). Quoting the School District case, the Court noted that “RSA 49-C sets forth an exhaustive blueprint for [the mayor-board of aldermen] form of government,” adding that “[i]n particular, it mandates that the city’s charter contain certain provisions relating to the city’s budget.” The Court also focused on RSA 49-C:12, I, which indicates that “aldermanic boards conduct ordinary business by the vote of a simple majority.” An express and limited exception to business by majority vote is the requirement for a two-thirds vote for any supplemental appropriation made after adoption of the annual budget. RSA 49-C:23. “Because the amendment constrains the board to either abide by the spending cap or act by a two-thirds majority to override it, it conflicts with the board’s authority to adopt a budget … by a simple majority…. We conclude, therefore, that the spending cap is preempted by RSA 49-C:12, I and RSA 49-C:23.”