Short-handed House backs insurance premium tax cut
The House voted 183-85 March 22 to pass a bill giving property and casualty insurance companies a $40.2 million tax cut between fiscal years 2008 and 2012.
Rep. Ben Parker, R-Londonderry, who chaired the subcommittee that reviewed House Bill 678, said, “Long run, this bill will improve state revenues,” he said.
“It is not often we can reduce a tax and have a high probability of a positive impact,” said Rep. Howie Lund, R-Derry. According to Lund, the average pay in the insurance industry is $58,000.
The Insurance Department reports that 10 carriers have left the state since 1997, shedding 1,000 jobs and 10 percent of the workforce.
The amended legislation would lower the 2 percent tax on premiums by 0.25 percent each year, resulting in a $2.4 million state revenue loss the first year. That amount would climb to $4.2 million in FY 2009, followed by yearly losses of $9.1 million, $11.1 million and $13.4 million.
Lawmakers assumed higher business profits taxes would offset some of the loss, but they had no hard figures.
HB 678 initially chopped the premium tax rate to 1 percent next year.
The Ways and Means committee endorsed a revised bill on March 16, when House leadership projected a budget surplus in the $35 million range. Both legislative houses had been floating rival tax cuts and spending bills to use that money.
But on March 22, Rep. Norm Major, R-Plaistow, head of Ways and Means, told lawmakers only $18.1 million of the excess would be available to the general fund.
The news dampened lawmakers’ support for a range of spending bills.
“When you’re in a hole you don’t dig it deeper,” said Rep. Susan Almy (D-Lebanon), who wrote the minority report to kill HB 678. She warned other industries would come to the legislature looking for subsidies.
“This bill would have to create 900 more jobs than projected to make up for the lost revenue,” she said.
Similar insurance premium taxes vary from 0.5 percent to 4.5 percent from state to state.
House Speaker Doug Scamman ordered the sergeant at arms to lock everyone inside Representatives Hall to save a quorum shortly before the vote. That rare parliamentary move came at 9 p.m., the last half-hour of the last day to send bills along to the Senate.
“It’s appropriate for all bills to have a chance to pass with a majority vote,” Scamman said. House rules require two-thirds support when attendance falls below 267 lawmakers. 268 people voted on the bill. – CHRIS DORNIN/GOLDEN DOME NEWS