Revision: April 1, 2011, midnight
SB 2 – AS AMENDED BY THE SENATE
03/30/11 1149s
2011 SESSION
10/01
SENATE BILL 2
AN ACT relative to adoption of spending caps by municipalities.
SPONSORS: Sen. Boutin, Dist 16; Sen. Bradley, Dist 3; Sen. Bragdon, Dist 11; Sen. Gallus, Dist 1; Sen. Odell, Dist 8; Sen. Barnes, Jr., Dist 17; Sen. De Blois, Dist 18; Sen. Forsythe, Dist 4; Sen. Groen, Dist 6; Sen. Lambert, Dist 13; Sen. Sanborn, Dist 7; Sen. White, Dist 9; Rep. Infantine, Hills 13; Rep. Greazzo, Hills 17; Rep. Gagne, Hills 13; Rep. Gonzalez, Hills 17; Rep. W. Hutchinson, Hills 9
COMMITTEE: Public and Municipal Affairs
This bill allows cities and towns under a charter, and towns, school districts, and other political subdivisions under the municipal budget act to adopt an annual limit on increases to the municipal budget.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
03/30/11 1149s
11-0413
10/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Eleven
AN ACT relative to adoption of spending caps by municipalities.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Paragraph; City Charters; Vote. Amend RSA 49-C:12 by inserting after paragraph II the following new paragraph:
III. Notwithstanding any contrary provision in paragraph I, the adoption of an override threshold provision to a spending cap included in a charter pursuant to RSA 49-C:33, I(d) shall provide for a supermajority vote of the elected body to adopt the annual budget.
2 New Subparagraph; City Charters; Optional Provisions; Spending Cap Added. Amend RSA 49-C:33, I by inserting after subparagraph (c) the following new subparagraph:
(d) A limit on the annual increases to spending under the city budget adopted pursuant to RSA 49-C:23. Such spending cap shall provide for an override threshold on a vote to exceed the limit on annual increases which shall be by a supermajority as determined in the charter. A spending cap provision in the city charter may provide for specific exclusions for dedicated, enterprise, or self-supporting funds or accounts, capital reserve funds, grants, or revenue from sources other than local taxes.
3 Town Charters; Optional Matters; Spending Cap. Amend RSA 49-D: 3, I(e) to read as follows:
(e) Other matters of local concern may be included in a charter including, but not limited to, conflict of interest provisions which shall be at least as strict as those established in the general laws, citizen powers of initiative, referendum and recall as described in RSA 49-C, [and] the adoption and periodic review of an administrative code, a merit personnel system, a purchasing system, and a town investment policy, and the adoption of a spending cap limiting the annual increases in spending under the town budget. Such spending cap shall include an override threshold on a vote to exceed the limit on annual increases which shall be by a supermajority as determined in the charter. Such spending cap may specifically exclude certain dedicated, enterprise, or self-supporting funds or accounts, capital reserve funds, grants, or revenue from sources other than local taxes.
4 Municipal Budget Law; Application. Amend RSA 32:2 to read as follows:
32:2 Application. RSA 32:1-13, shall apply to all towns, school districts, cooperative school districts, village districts, and any other municipal entities, including those created pursuant to RSA 53-A or 53-B, which adopt their budgets at an annual meeting of their voters, except RSA 32:5-b, which shall apply only in those towns or districts adopting that section pursuant to RSA 32:5-c. RSA 32:14-23, concerning budget committees, shall apply only in those towns or districts adopting that section pursuant to RSA 32:14, I, and shall apply automatically in school districts or village districts located wholly within towns adopting that section.
5 New Sections; Local Spending Cap; Adoption of Local Spending Cap. Amend RSA 32 by inserting after section 5-a the following new sections:
32:5-b Local Spending Cap.
I. This section shall be known as the local spending cap act.
II. In this section, the following terms shall have the following meanings:
(a) “Inflation rate” means the Consumer Price Index for all Urban Consumers (CPI-U), Northeast urban, as determined by the Bureau of Labor Statistics, for the 12-month period ending the fifth month prior to the annual meeting of the local subdivision or, for local subdivisions that have adopted RSA 40:13, the fifth month prior to the second session of the annual meeting.
(b) “Net fiscal year appropriation” means all appropriations approved by the legislative body for the fiscal year, including the operating budget and all amounts appropriated pursuant to special warrant articles and other individual warrant articles, less estimated revenues and credits.
(c) “Estimated revenues and credits” means the estimated revenues and credits for the ensuing year as shown on the budget certified by the governing body or budget committee and posted with the warrant for the annual meeting pursuant to RSA 32:5.
(d) “Taxes raised for the prior fiscal year” means the property taxes raised for the prior fiscal year as shown on the budget certified by the governing body or budget committee and posted with the warrant for the annual meeting pursuant to RSA 32:5.
III.(a) In any local subdivision that has adopted this section, the net fiscal year appropriation as defined in paragraph II shall not exceed the taxes raised for the prior fiscal year by more than the spending cap authorized when this section was adopted except as provided in this paragraph.
(b) Once the legislative body has approved a net fiscal year appropriation that reaches the limit of the spending cap, each subsequent appropriation that increases the net fiscal year appropriation shall be deemed approved only if it receives an affirmative vote of those present and voting equal to or greater than the override threshold authorized when this section was adopted. If an appropriation that causes the net fiscal year appropriation to exceed the spending cap is approved by a simple majority but less than the override threshold, the appropriation shall be deemed approved only to the amount that is within the spending cap. If an appropriation is initially approved by the legislative body but subsequently disapproved upon reconsideration, that appropriation shall not be counted against the spending cap. Any subsequent appropriation that exceeded the spending cap when voted upon by the legislative body, but that would be within the spending cap when the reconsidered item is removed, shall be deemed approved if it has received a affirmative vote of a simple majority of the legislative body present and voting, even if it was initially deemed disapproved for failure to achieve the override threshold.
(c) For a legislative body that has adopted an official ballot form of meeting under RSA 40:13 or under a charter adopted pursuant to RSA 49-D, appropriations shall be deemed approved in the order that they appear on the official ballot.
(d) Any increase over the prior year’s costs under a collective bargaining agreement entered into pursuant to RSA 273-A shall not be counted toward the spending cap.
IV. The governing body shall inform the legislative body of the maximum amount of appropriations that will result in a net fiscal year appropriation that complies with the spending cap. This information shall be contained in a notice placed conspicuously on the warrant or, in the case of a legislative body that uses an official ballot form of meeting under RSA 40:13 or under a charter adopted pursuant to RSA 49-D, on the official ballot. The governing body may, in its discretion, include an explanation of how the proposed appropriations compare to the amount permitted by the spending cap. Any reasonable explanation shall be sufficient, and any errors contained in such notice, if made in good faith and without an intent to mislead the legislative body, shall not be a basis for invalidating any actions of the legislative body.
V. A spending cap established pursuant to this section shall not apply to appropriations made at any special meeting held due to an emergency pursuant to RSA 31:5, I(a) or (b) or a disaster pursuant to RSA 31:5-a.
32:5-c Adoption of Local Spending Cap Act.
I. The provisions of RSA 32:5-b may be adopted by any local political subdivision of the state whose legislative body raises and appropriates funds through an annual meeting. A 3/5 majority of those voting on the question shall be required to adopt the provisions of RSA 32:5-b. Only votes in the affirmative or negative shall be included in the calculation of the 3/5 majority.
II. The question shall be placed on the warrant of the annual meeting by the governing body or by petition under the procedures set out in RSA 39:3 or RSA 197:6.
III. A public hearing shall be held by the local governing body on the question at least 15 days, but not more than 30 days, before the question is to be voted on. In multi-town districts, a public hearing shall be held in each town embraced by the district, none of which shall be held on the same day. Notice of the hearing shall be posted in at least 2 public places in the town and at least 2 public places in each town of multi-town districts, and published in a newspaper of general circulation at least 7 days prior to the date of the hearing.
IV. The wording of the question shall be: “Shall we adopt the provisions of RSA 32:5-b, known as the local spending cap act, and limit annual spending increases to (spending cap), with (override threshold) vote required to exceed that limit?” The “spending cap” shall be a fixed dollar amount, a fixed percent or a percent derived from the inflation rate. The “override threshold” shall be either three-fifths or two-thirds.
V. Voting on the question shall be by ballot, but the question shall not be placed on the official ballot used to elect officers, except in the case of a legislative body that uses an official ballot form of meeting under RSA 40:13 or under a charter adopted pursuant to RSA 49-D. Polls shall remain open and ballots shall be accepted by the moderator for a period of not less than one hour following the completion of discussion on the question. If a 3/5 majority of those voting on the question vote “yes,” RSA 32:5-b shall apply within the local subdivision for the fiscal year and for all subsequent years until it is rescinded as provided in paragraph VI.
VI. Any local subdivision which has adopted RSA 32:5-b may consider rescinding its action in the manner described in paragraphs I through V. The wording of the question shall be: “Shall we rescind the provisions of RSA 32:5-b, known as the local spending cap act, as adopted by the (local subdivision) on (date of adoption), so that there will no longer be a limit on annual spending increases?” A 3/5 majority of those voting on the question shall be required to rescind the provisions of this section, except in the case of repeal by charter enactment under RSA 49-D. Only votes in the affirmative or negative shall be included in the calculation of the 3/5 majority.
6 Municipal Budget Law; Limitation on 10 Percent Increase. Amend introductory paragraph of RSA 32:18 to read as follows:
32:18 Limitation of Appropriations. In any municipality electing this subdivision, or any district wholly within a town electing this subdivision, the total amount appropriated at any annual meeting shall not exceed by more than 10 percent the total amount recommended by the budget committee for such meeting. Provided, however, that in any town or district which has adopted the provisions of RSA 32:5-b, any increase which would exceed the spending cap may only be adopted according to the procedures for exceeding the spending cap in RSA 32:5-b. In official ballot referendum municipalities, the recommendation of the budget committee made for the first session of the meeting shall be used for determining the 10 percent limitation. These totals shall include appropriations contained in special warrant articles. Money may be raised and appropriated for purposes included in the budget or in the warrant and not recommended by the budget committee, but not to an amount which would increase the total appropriations by more than the 10 percent allowed under this paragraph. The 10 percent increase allowable under this paragraph shall be computed on the total amount recommended by the budget committee less that part of any appropriation item which constitutes fixed charges. Fixed charges shall include appropriations for: 7 Home Rule Municipal Charters; Preservation. Amend RSA 49-B:13 to read as follows:
49-B:13 Separability; Preservation.
I. The provisions of this chapter and of charters created under this chapter are separable. If any portion of this chapter, or of any charter adopted under the provisions of this chapter, or if the application of the chapter or such charter to any person or circumstance shall be invalid, the remainder of the chapter or such charter or the application of such invalid portions to other persons or circumstances shall not be affected by such invalidation.
II. All town and city charters which have been adopted, revised or amended; all charter commissions which have been properly established and elected; all elections properly held; and actions properly taken pursuant to such charters are hereby endorsed, ratified, validated, and legalized, [provided that such charters at the time of their adoption were not contrary to the general laws and constitution of the state] and are fully enforceable.
III. RSA 32 shall not apply to a municipality adopting, revising, or amending a charter under RSA 49-C or RSA 49-D unless that municipality adopts a budgetary town meeting, official ballot town meeting, an official ballot town council, or representative town meeting pursuant to RSA 49-D:3, I-a, II, II-a and III. Except that a municipality may adopt a spending cap as provided in RSA 49-C:33, I(d) or RSA 49-D:3, I(e), notwithstanding the provisions of RSA 32:5-b and RSA 32:5-c.
8 Use of Official Ballot; Vote. Amend RSA 40:13, XIII to read as follows:
XIII. Approval of all warrant articles shall be by simple majority except for questions which require a 3/5 or 2/3 vote by law, contract, or written agreement.
9 Effective Date. This act shall take effect 60 days after its passage.