Is there room for school aid in tax?

CONCORD – A Nashua lawmaker is proposing to make good on $83 million in school building aid payments by dedicating part of the state’s tax on room rental and meals to it.

Democratic state Rep. David Campbell said the plan would be a way to keep the state’s promise for building aid while allowing for enough state-backed debt to finance its own public work projects.

“This is a way to get us through the next biennium,” Campbell said Thursday after he and Rep. Candace Bouchard, D-Concord, chairwoman of the House Public Works and Highways Committee, offered the proposal to the Senate Capital Budget Committee.

“This allows the discussion to take place in the state Senate, where it belongs,” Campbell said.

As proposed, it would dedicate one-half of 1 percent from the room and meals tax to pay for bonds covering the state’s share of school construction projects.

“It would be up to the Senate to decide if it should raise the tax or use one-half of 1 percent of the existing tax,” Campbell said.

The state budget proposals of Gov. John Lynch and the House of Representatives would each raise the room and meals tax to 8.75 percent from 8 percent.

Starting in 2012, Campbell called for setting a $50 million cap on how much the state would pay in a year for school construction work.

Campbell said the state could issue 20-year bonds backed by the revenue source.

These specific purpose bonds would not count toward the state’s debt limit.

Lynch had proposed that the state include school building aid as part of the two-year capital budget. He said the payments are to cover school construction work, and state-backed bonds, rather than cash, should be used to cover them.

In June, the Legislature agreed as a cost-cutting move to bond payments in this matter for the 2008 and 2009 fiscal years.

The state didn’t need to do it for 2008, but the Lynch administration is still planning to bond the $40 million payment due by June 30.

The House of Representatives turned down Lynch’s proposal after Bouchard’s committee warned it would consume up to 60 percent of the capital budget.

Aides to Lynch and state Senate leaders have criticized the House for failing to account for the building aid payments either in the capital budget or the $11.5 billion state budget plan they passed last week.

For the long term, Bouchard and Campbell said legislators should create a commission to study the state’s role and come up with a permanent way for state support.

“We need a solid bridge to a new system and this would provide that,” Campbell added.