The Portland Constitution Fee is proposing an modification to the town’s constitution that will give the college board the facility to find out the full quantity of its finances. That call is at present vested within the Metropolis Council, which should stability the wants of the faculties towards different municipal priorities and weigh the impression of budgetary will increase on the tax charge. Below the fee’s proposal, the college board would be capable to decide over half of the town’s mixture finances with out wrestling with these competing values.
That’s an issue. Town is now going through a fiscal disaster. Permitting the college board to set its personal finances in a vacuum dangers crowding out different precedence expenditures and undercutting the council’s potential to manage property tax will increase.
However let’s put that coverage challenge to at least one facet and give attention to authorized uncertainty and danger, and their very actual penalties. The proposal for so-called “college finances autonomy” clearly poses novel points: The fee’s counsel, Perkins Thompson, suggested that the “higher argument” is that it violates Maine regulation. They warned {that a} ruling hanging it down may have an effect on the validity of expenditures made in reliance on the unlawful finances.
The college board’s counsel, Drummond Woodsum, acknowledged there are arguments favoring totally different authorized views and the proposal just isn’t with out authorized danger however mentioned that state regulation leaves room for it when coupled with a referendum. They didn’t tackle what would occur if the courts reject their evaluation.
Boiling it down:
• The legality of the proposal is unsure and should be determined by the courts.
• It would take many months for the Maine Supreme Judicial Courtroom to make that willpower.
• There’s a vital danger that the proposal might be discovered to be unlawful. No lawyer value her salt would opine that the chance just isn’t materials.
• If the proposal is adopted in November by Portland’s voters, it’s prone to be challenged within the courts.
Consultants in municipal regulation should advise the constitution fee and the council on the impact the pending litigation may have on operations of the town and the college board, each earlier than and after fiscal 2024 tax charges are set and taxes are assessed primarily based on the brand new process. For instance, will metropolis attorneys be capable to challenge “clear” opinions in bond financing if the legality of tax assessments is in query? If not, what’s going to the impact be on the town’s potential to challenge new bonds?
Those self same consultants ought to advise on what occurs if the courts discover the revised finances course of unlawful. The fee’s counsel mentioned that expenditures beneath an unlawful finances wouldn’t be “legitimate.” Are expenditures made by the college division topic to recapture? What can be the impact on taxes already assessed and paid?
Part 504 of Title 36 of Maine Revised Statutes offers some steering on the final query. It’s captioned “Unlawful Evaluation; Restoration of Tax” and offers that an unlawful evaluation just isn’t void, however “any particular person paying such tax might convey his motion towards the municipality and shall recuperate the sum not raised for a authorized object, with 25 p.c curiosity and prices.”
So taxpayers may probably sue the town for any taxes they pay to fund an illegally assessed college finances, plus 25 p.c curiosity. Class motion, anybody? Given a $130 million college finances, that’s not a pleasing thought, irrespective of how unlikely.
I’m not an professional in municipal regulation however was for a few years the top of Drummond Woodsum’s collectors rights and reorganization follow. I’ve been across the barn sufficient occasions in advanced litigation, together with disputes involving bonds, to take litigation danger severely and to understand the real-world results of pending litigation.
The constitution fee can not in good religion go ahead with the proposal and not using a thorough evaluation of those points, and should disclose these dangers to Portland voters. The chance of fiscal chaos have to be fastidiously weighed.
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