However, Commissioner Arnold testified that no town can collect any taxes until the DRA reviews and approves the town's budget or assessments and then sets the town's tax rate. The school districts would argue that the DRA has the authority to delete any local appropriations it finds to be unlawful and then adjust local revenues. The DRA has authority in the tax rate-setting process that goes far beyond simple mathematical calculation.

The Superior Court wrapped up its analysis by stating that, "The property tax, once collected, is managed and expended by the municipality in accordance with its budgets, the property tax does not become part of the state treasury." However, as discussed above, the local school districts must use their money to operate their schools in accordance with the state's Minimum Standards and other statutes.

Evidence was presented at trial that makes the Superior Court's distinction between money that becomes "part of the state treasury" and money that goes directly to fulfill a state obligation a semantic one.

The Superior Court compared the Business Profits tax with the school tax to demonstrate that the school tax was a local tax , while the Business Profits tax was a state tax. The school districts contested the Superior Court's comparison. The Superior Court found that the state has no means to remedy incorrect local school tax assessments. However the DRA and the state Board of Tax and Land Appeals have authority to order comprehensive muncipality-wide tax assessments and to take other remedial action.

The Superior Court concluded that the local districts determine the amount of money to be raised and have "full authority to vote as much as they wish," while the Business Profit Tax Rate is set by the legislature. The Superior Court again ignored the fact that a local district has no choice but to set a tax rate that will raise funds sufficient to assure compliance with the state's Minimum Standards and other education statutes enacted by the legislature.

Having concluded that the school property tax was a local tax, the Superior Court found that property taxes are uniform within a school district and therefore meet the state's constitutional requirements of uniformity within the taxing entity.

The New Hampshire Supreme Court in its 12/17/97 Claremont II decision stated;

"Determining the character of a tax as local or state requires an initial inquiry into its purpose. We find the purpose of the school tax to be overwhelmingly a State purpose and dispositive of the issue of the character of the tax.......

Providing an adequate education is thus a duty of State government expressly created by the State's highest governing document, the State Constitution......

That the State, through a complex statutory framework, has shifted the responsibility for supporting public schools to local school districts does not diminish the State purpose of the school tax.

For the purpose of analysis under part II, article 5, therefore, the taxing district is the state.......