Tax, fee increases dot House budget plan

The state House of Representatives – despite objections from groups saying that it would be hurting small businesses and other taxpayers – voted on Wednesday to increase a number of taxes and fees in order to balance the budget.

Among the increases was a 45-cent hike in the cigarette tax and a 4 percent increase in the real estate transfer tax.

Republicans charged that Democrats, by pushing a $10.4 billion budget — 16 percent higher than the last biennium’s — were spending too much, and its revenues estimates were unrealistically optimist by some $100 million.

Revenue projections, they said, didn’t account for the dip in the real estate market, and budget opponents were particularly suspicious of a projected increase in business tax revenues. Those defending the estimates said that the change was based on higher-than-expected revenues from the first quarter, and noted that revenue projections were too cautious in the past. Besides, they added, detractors were not saying where they wanted to cut.

The real debate, however, was on the accompanying trailer bill to the budget, which enumerated the revenue increases.

“This represents the tax in tax-and-spend,” said Rep. Neal Kurk, R-Weare, in arguing against the bill, which passed on a 202-151 vote.

Kurk said that the bill amounted to some $220 million in tax increases and fees, or $142 for every person in the state, which was “putting its hands into citizens’ pockets.”

The closest votes came on the cigarette and real estate transfer taxes. The cigarette tax hike, which after the proposed increase would rise 140 percent in three years, raised the ire of storeowners along the state’s borders. They feared that the difference in the amount of the tax between New Hampshire and its neighboring states would not be large enough for someone to pay for the gas to make the trip.

But supporters said that the higher tax would not only raise the needed revenue, it would discourage smoking, which would cut health-care costs “containing the promise of lower expenses in the future,” in the words of Rep. Christine Hamm, D-Hopkinton.
The House ended up beating back an attempt to remove the proposed tax increase on a 165-197 vote.

The added real estate transfer tax would be used for a $6 million dedicated fund for the Land and Community Heritage Investment Program. The House previously wanted to place a fee on deeds and other real estate filings, but the Ways and Means committee switched that idea to a tax increase after county registers of deeds around the state raised various collection and constitutional problems.

The increase would raise the tax from 75 to 78 cents per $100 in assed valuation.

Hamm argued that the fund makes “considerable sense” because when the transfer tax was first conceived, it was dedicated to help buy agricultural easements. Besides, she said, conserved land would increase the value of property, making it easier to sell at a higher price.

Attempts to fund the program out of the general fund have led to short falls ever since LCHIP was created.

“If we care about keeping in that what we love in New Hampshire, we have to be willing to put our money where our mouth is,” Hamm said.

But Rep. Andy Peterson, R-Peterborough, argued that the transfer tax is already one of the highest in the nation, and if you add on property taxes, people will need more money in taxes to buy a home over the first few years than their down payment.

“We are overly taxing one thing, and we can’t go back to that cash cow again,” he said

But attempts to delete the tax failed by a 162-197 vote.

The trailer bill also contained several fee increases. For instance, the state Department of Environment Services fee for plan review of terrain alteration will double under the proposal, along with wetland fees.

In other legislation the House passed bills:

• Taxing milk 2.5 cents a gallon to provide $3 million in milk supports for dairy farmers.
• Increasing the rate that nursing homes get from the state,
• Requiring that employees’ family health insurance plans cover adult dependents 25 years or younger. (The Senate has already passed a similar bill.)
• Funding the capital budget, which borrows $60 million so as not to raise the gasoline tax or delay construction projects.
• Increasing hazardous-waste generation fees by 3 cents a pound.
• Increasing by $5 the license fee and renewal fee for meals and rental licenses, which now have to be renewed every two years.
• Requiring that restaurants have someone trained in food safety.
• Raising the capital threshold for acute facilities having to apply for a certificate of need process from $1.17 million to $2.5 million. – BOB SANDERS