Can the Deliberative Session of Town Meeting in a Senate Bill 2 Town Change the Intent or Purpose of a Petitioned Warrant Article?

Cady v. Town of Deerfield

In Cady v. Town of Deerfield, decided January 18, 2017, the New Hampshire Supreme Court dealt with the question of the extent to which the deliberative session of the Town Meeting in a Senate Bill 2 municipality may amend a warrant article.  A Senate Bill 2 town is one which has adopted the provisions of RSA 40:13 and which accordingly conducts its town meetings in two sessions:  the first session is deliberative in nature and consists of “explanation, discussion, and debate” on each proposed warrant article; and the second session involves voting by official ballot on each of the warrant articles, as amended at the first session.

In Cady, the Town of Deerfield’s deliberative session considered two petitioned warrant articles, the first of which was to make the Welfare Director an elected position at a salary no greater than $5,000 per year; and the second of which was to make the Police Chief an elected position to be paid $65,000 per year, subject to cost of living increases.  The deliberative session of the Town Meeting changed the petitioned warrant articles to “express an advisory view that the position of Welfare Director [Police Chief] be an appointed position as it is at the present time.”

RSA 40:13, IV(c) provides that warrant articles may be amended at the deliberative session, provided that “no warrant article shall be amended to eliminate the subject matter of the article.”  Cady argued that changing the petitioned articles, from making the Welfare Director and the Police Chief elected positions to having them remain as appointed positions, improperly changed or eliminated the intent or subject matter of the petitioned articles.  The Court rejected this argument, finding that the plain meaning of RSA 40:13, IV(c) prohibited only amendments that “eliminate” the subject matter of a warrant article, not amendments that change the “intent”  of a warrant article.  In addition to the plain meaning of the statute, the Court was also persuaded by a 2016 bill that was rejected by the Legislature.  That bill would have modified the language of RSA 40:13, IV(c) to provide that: “No petitioned warrant article shall be amended to [eliminate] change the subject matter or the intent of the article.”  (Words that were proposed to be added to RSA 40:13, IV(c) are in bold and words to be removed appear in brackets and are struck through.)

Thus, unless and until the Legislature amends RSA 40:13, IV(c), the deliberative session of a Senate Bill 2 “or official ballot” municipality may change warrant articles so long as the basic subject matter is not eliminated, even if the intent or purpose of the article is changed. This applies both to the deliberative session of a Senate Bill 2 town and to the traditional town meeting in a municipality that has not adopted the “official ballot” form of town meeting. 

THE ABOVE IS APPLICABLE ONLY TO NEW HAMPSHIRE MUNICIPALITIES.  MAINE HAS A SUBSTANTIALLY DIFFERENT BIFURCATED WARRANT ARTICLE PROCEDURE.

Social Media Policies and the First Amendment

Over the last several years, the National Labor Relations Act has driven much of the discussion around the legalities of social networking policies. Since 2011, for example, the NLRB’s Office of General Counsel has issued three reports concerning employer social media policies, all of which emphasize the importance of drafting social media policies narrowly so as not to infringe on activities protected under the NLRA.  For municipalities and other public employers, however, an equally important consideration when preparing and enforcing social media policies is the First Amendment.

Social Media Policy in the City of Petersburg

As a case in point, the Fourth Circuit Court of Appeals recently held in Liverman v. City of Petersburg that a city’s social media policy was overbroad under the First Amendment where it prohibited in “sweeping terms” the dissemination of any information that had a tendency to discredit or reflect unfavorably on the city or its employees.  The policy applied to the city’s police department and prohibited officers from making “negative comments” on the operations of the department, which the policy explained did not constitute protected speech. Another provision prohibited officers from making comments online that “disrupted the workforce” and further discouraged officers from posting any information about their off-duty activities. The policy explained that violations of the policy would be judged on a case-by-case basis. 

At issue in the case was a Facebook exchange between two officers while off-duty, which criticized the way rookie cops were being promoted to instructors based on special interests rather than experience. After the learning of the exchange, the department disciplined the officers for violating the social media policy. The discipline ultimately made the officers ineligible for promotion to open sergeant positions.  The officers subsequently sued and claimed that the city’s social media policy infringed on their free speech rights. 

The Fourth Circuit found that although social media presents novel issues, it is the scope and restriction on speech that matters under the First Amendment – not the medium of the speech. Here, the court found that there was no doubt that the social media policy regulated the officers’ rights to speak on matters of public concern, as it was effectively a “blanket prohibition on all speech critical of the government employer.” Because the policy imposed a significant burden on expressive activity, the court looked to whether it was justified by real, not merely conjectural harms to the department’s operations.  The court acknowledged that divisive social media use had the potential to undermine the department’s interest in maintaining camaraderie among officers and trust within the community, but it nonetheless found that these concerns were too speculative to justify the policy’s sweeping restrictions and chilling effect on protected speech.   Having found the policy itself unconstitutionally overbroad, the court turned to the officers’ discipline and found that it, too, was unconstitutional.   The court found the officers’ posts dealt with issues of public import and were not merely personal grievances.  According to the court, whether the officers were correct in their views was not the issue, because the issue they addressed in their posts – i.e. the risks posed by inexperienced supervisors – was a matter of public concern.

For municipalities, this decision highlights the need to consider the restrictions contained in social media policies and the potential chilling effect of those restrictions on protected speech (and, similarly, the exercise of rights under the NLRA).  Wherever possible, municipalities should avoid restrictions that are ambiguous, vague, or susceptible to interpretation, as they are more likely to be viewed as unlawfully overbroad.  Municipalities can further reduce that risk by providing examples of the specific conduct prohibited under the policy.  Although doing so provides no guarantee, it is more likely to result in a narrowly tailored policy that avoids running afoul of the law.

Maine Municipal Law Update: Biennial Budget, Marijuana Legalization & Opportunity Agenda

Maine's Biennial Budget

Legislative work continues to steadily flow in Augusta, Maine as more bills are taken up by policy committees and many of them are meeting passage or being killed. In addition, the state’s biennial budget is slowly inching forward as the Appropriations & Financial Committee has accepted non-controversial initiatives, and will soon tackle the more contentious ones.

The Marijuana Legalization Implementation Committee

In the meantime, the implementation of adult-use marijuana legalization continues to pose interesting and as-yet undecided policy questions to the Marijuana Legalization Implementation Committee (MLI) and the State House’s respective party caucuses.

The MLI has thus far held a series of public hearings allowing any and all members of the public to voice a range of opinions around marijuana policy, including the state’s preexisting medical program. However, only LD 243 has been taken up in MLI. This bill, after being extensively worked by the committee received a 16-1 “ought to pass as amended” vote.  It is now poised to establish a “hub and spokes” model of licensing that would be centered on the Department of Administrative and Financial Services (DAFS) with major “spokes” extending to the Bureau of Alcoholic Beverages and Lottery Operations (BABLO) and the Department of Agriculture, Conservation, and Forestry (DACF). BABLO, an organization that exists within DAFS, would regulate packaging and retail, while DACF would regulate cultivation. 

The Committee will continue to meet regularly through the end of session and continue through the interim period between sessions.  The Committee is likely to hold several more large public hearings throughout the spring that will cluster individual bills based on their proposals and the different aspects of legalization implementation.

Opportunity Agenda

In other news, Legislative Democrats unveiled the “Opportunity Agenda” last week, a counter-proposal to the most recent LePage biennial budget. The program is touted by Democrats as providing the largest property tax cut in history, funded partially through new revenues created by adult-use marijuana legalization.

Lis Pendens Only Available when Title to Real Estate is Involved

In the pending case of Brunswick Citizens for Collaborative Government, et al. v. Town of Brunswick, (Cumberland County Superior Court) the Petitioners claim that the Town of Brunswick failed to follow its Charter procedure to hold a public hearing and potential referendum election after receiving signed petitions.  

The case involves a piece of property that the Town Council had voted to sell. The point of the petitions was to hold a referendum election so the Town would retain the property. The case was brought as a Rule 80B Appeal and a Declaratory Judgment action. It explicitly does not involve title to real estate. It was not so noted on the Complaint nor was that checked in the civil cover sheet.  Nonetheless, the plaintiffs obtained a notice of lis pendens from the Clerk and recorded it in the Registry of Deeds, describing the property at issue in the lawsuit. The Town of Brunswick filed a Motion to Cancel the Lis Pendens arguing that a lis pendens under the law, 14 M.R.S. § 4455, only applied where title to real estate was specifically involved. The Court agreed and ruled that it was appropriate to cancel the notice of lis pendens. The Court noted that a lis pendens is a specific statutory procedure used to put title examiners on notice of issues involving the title to real estate.  It is not a general tool for advising the world of the pendency of lawsuit, in an improper effort to discourage the sale of real estate.

Preti Flaherty represents the Town of Brunswick in this case.

Let's Talk Municipal Finance - Issuing Bonds

In my previous installment, I discussed several financing alternatives available to municipalities and certain other governmental entities to supplement revenues from their tax base or user fees. One common option is the issuance of bonds, either independently, or through a pooled issuance. 

The Issuance of Bonds

The first step to issuing a bond is the approval process at the local level.  The process varies depending on the municipality or governmental entity’s charter, enabling statutes, and other protocols that may be applicable to the issuer. It may require a formal recommendation from the governing officers followed by a vote of approval at a meeting of the residents of a municipality, or an approval only from the governing  body of a governmental entity.  Municipalities should note that their ability to incur debt is not unlimited.  For example, municipal debt it is capped by statute at an aggregate of 7.5% of the municipality’s last full state valuation, subject to certain exceptions for, by way of example, debt incurred for school purposes, storm or sanitary sewer purposes or for energy facility purposes.  Certain bonds, such as those for school purposes, may be funded primarily through payments from the state rather than from tax revenues at the local level.

Independent vs. Pooled Issuance

A municipality or governmental entity may choose to issue bonds completely on its own or through a pooled issuance, such as those with the Maine Municipal Bond Bank or New Hampshire Municipal Bond Bank. Bonds issued independently are done so via either a “directed sale” using a financial adviser or a “negotiated sale” using an underwriter.  The use of a pooled issuance, however, can help decrease costs and achieve a higher credit rating, which translates to lower interest rates.  According to the Maine Municipal Bond Bank, while the average cost of an individual municipality’s issuing a bond on its own would be approximately $15,000-18,000, a pooled issuance costs a municipality only about $2500 to $5000 (the cost of local bond counsel).  

Following a pooled issuance, however, the municipality is subject to on-going administrative fees while the bond is outstanding, which are not incurred by the municipality if it chooses to issue the bonds independently. If the municipality or governmental entity chooses to issue bonds using a pooled issuance, it must go through an application and approval process with the entity facilitating the pooled issuance and, if approved, follow the issuance schedule of the facilitating body, which often limits the number of issuances each year.

Regardless of whether a municipality or governmental entity decides to issue bonds independently or as part of a pooled issuance, it is subject to certain obligations following the issuance of the bonds until their maturity date. These obligations include, in the case of tax-exempt bonds, adopting a post-issuance compliance policy intended to maintain the tax-exempt nature of the interest on the bonds.  The municipality or governmental entity may also be required to enter into a continuing disclosure agreement or continuing disclosure certificate, which require the issuer to comply with certain Securities and Exchange Commission reporting requirements.

In my next installment in this series, I will discuss anticipation notes, which are commonly issued directly through a bank.  Anticipation notes are a short-term financing alternative used in anticipation of upcoming bond proceeds or tax revenues.