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Wednesday, August 5, 2009

Raiding Non-Profits

As Democratic leaders in Concord continue to avoid offering a “Plan B” with regards to the state budget in light of the JUA court decision, an editorial in today’s Union Leader raises interesting, if mostly rhetorical, questions as to how they plan to fill the budget hole:
To seize money held by the medical malpractice insurance fund known as the Joint Underwriting Association, the state used a troubling argument: The fund is a nonprofit that exists to provide a public service.

The JUA "was established -- and given tax-free status as a state entity -- in order to provide a service, not a windfall, to doctors," Gov. John Lynch said in a statement justifying the state's raid of the authority's surplus funds.

House Speaker Terie Norelli used the same language, noting that in granting the organization "tax-exempt status, the Legislature certainly did not intend for the taxpayers to subsidize a windfall for doctors."

Citing the group's nonprofit status was intended to buttress the state's claims, but it is concerning. If the state Supreme Court overturns last week's Superior Court ruling and allows the state to take the JUA's money, it could encourage the state to look at other nonprofits. Granted, that would be a stretch. Unlike most nonprofit groups, the JUA was created by the Legislature and its board is appointed by a state department head. But legal precedent is legal precedent. If the court validates the argument that the organization's nonprofit status was one justifiable reason for the state to take its cash, that would give legislators cover for expanding such raids in the future.

The governor, speaker of the House and president of the Senate should clarify that their claim on the JUA's cash reserves rests entirely on their interpretation of the group's status as a state-created entity. A joint statement that the state has no claim on the reserves of private nonprofits would work.

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