According to Article Part I, article 28-a of the New Hampshire Constitution, “[t]he state shall not mandate or assign any new, expanded or modified programs or responsibilities to any political subdivision in such a way as to necessitate additional local expenditures by the political subdivision….”
However, there are three very important exceptions to this prohibition. The political subdivision may vote to accept the new, expanded or modified responsibility. Alternatively, the state may provide the funding for it. The third exception, as explained by the New Hampshire Supreme Court, flows from the fact that article 28-a was adopted in 1984. Therefore, the Court has determined that the prohibition does not apply to obligations that existed in or before 1984.
This opinion is the latest in a growing line of cases regarding the third exception in which the Court has declined to find an unfunded mandate. It involved a complex series of statutes adopted by the legislature between 1998 and 2007 defining the obligation of New Hampshire’s ten counties (a) to pay portions of Old Age Assistance (OAA) and Aid to the Permanently and Totally Disabled (APTD) for the indigent elderly and disabled in nursing homes, (b) to make a Local Medical Assistance Contribution (LMAC) relating to the same people, and (c) to pay a share of the cost of medical care for persons eligible for nursing home care but who receive care under a Home and Community Based Care (HCBC) waiver. Counties, as well as municipalities, are protected by article 28-a.
The Court started by noting that article 28-a “was designed to provide a safety net to save cities and towns from the burden of coping with new financial responsibilities, not of their own creation, and to permit them a stronger grasp of their fiscal affairs.” To that end, the article “was designed to prohibit the State from placing additional obligations on local government without either obtaining their consent or providing the necessary funding.” A mandate requires the presence of two factors. The obligation must be “new, expanded or modified” since 1984, and it must also impose upon local government an additional fiscal obligation. To make this determination, the Court looks at the entire program to see its “net effect.” Unless the net effect is an increase in expenditures, there is no mandate.
The Court looked at various aspects of the OAA, APTD and HCBC payment obligations to see whether any of them were new and resulted in increased county expenditures. (The LMAC payment obligation had been repealed by the time of this opinion and thus the Court deemed it moot and did not rule on it.)
Before 1984, the counties were responsible for paying 50 percent of the OAA and APTD costs not covered by federal Medicare payments. The legislative changes at issue originally included a sunset provision, which the counties argued was intended to end the payment obligations. Further legislation repealed the sunset provision, thus extending the counties’ responsibility, but the Court found no mandate because “the effect of the sunset provision, if it had not been extended, would have been to reset the amount of the obligation, not eliminate it.”
The Court also found that, although the counties had not been obligated to pay HCBC costs before 1984 (that is, medical costs for those eligible for nursing home care but who receive care at home), it was not a “new” obligation because these costs were really just a “redirection” of the costs the counties had to pay for medical costs with respect to those eligible for nursing home care.
Interestingly, the Court (with very little discussion) also rejected the argument that the State was bound to the repeal language regarding OAA and APTD because the original bill that included the repeal had required the counties’ approval to take effect. “The legislature, however, has authority to amend any statute, consistent with the constitution. The counties’ agreement, while a statutory precondition for SB 409 to become fully effective, did not prevent the legislature from later amending the statutes to continue the counties’ pre-existing obligation past a time the counties may have believed it would end.”
Turning to the actual cost of the OAA, APTD and HCBC obligations, the counties noted that the legislative changes at issue increased their payment share from 50 percent of the costs not covered by Medicare to 100 percent for the years 2009 through 2013. The counties argued that doubling the percentage of costs they were required to pay was an “expanded or modified obligation” in violation of article 28-a. However, the statute included a provision that, for the years 2009 and 2010, “no county shall be liable for total billings … in an amount which would be greater than the amount of liability projected for that fiscal year” if the former statute were still in effect. In other words, the statute capped the counties’ payment obligations for those two years at the amount they would have been required to pay under the previous law. Thus, the Court found that, “…even presuming that the change in the county obligation from fifty to one hundred percent of the non-federal share is a new, expanded, or modified obligation,” the net effect for those two years placed no additional fiscal obligation on the counties and it could not be considered a mandate.
For the remaining three years under the statute (2011 – 2013), the law states that caps on total billings to the counties “shall be established by the legislature.” Although the Court did not dispute that the counties might be faced with a net increase in costs in those years, and although it agreed that the declaratory judgment the counties had requested “is meant to relieve parties of uncertainty about their rights,” it declined to rule on the issue. To find a mandate, the Court must be faced with a “clear and substantial conflict with the constitution.” Noting that the actual amounts of the counties’ payment obligations for those three years were not yet known, the Court declined to rule on the constitutionality of that requirement. Thus, it remains to be seen whether the Court will find a mandate if the legislature establishes a cap for those years that is higher than the counties’ prior payment obligations.