Legislative Update - 06/19/09

—P. J. O’Rourke

At 1:05 a.m. on Friday, June 19th, following several days of wrangling over the state budget, the Committee of Conference on HB1 and HB2 finally arrived at a budget—but not before creating a lot of heartache for the people of our state in the way of some serious tax increases. At one point early in the day on Thursday, the deficit had grown to as much $197.7M thanks to additional spending that had even exceeded spending in the Senate version of the budget. But after revising the revenue estimates, raising several taxes, and instituting a handful of cuts, the conferees came to an agreement on an $11.6B budget.

The state budget does not include a tax on refinancing mortgages, a much-publicized entertainment tax, a capital gains tax, an estate tax, or an attempt to eliminate the BET credit against the BPT. But what the budget DOES include—and perhaps the most devastating aspect of it all—is more than $600M in one-time money that simply will not be there when the legislature crafts the next budget in two years. According to Rep. Norm Major, one of our alternate conferees, in order to offset the reliance on the one-time money, the committee should have looked toward as much as a 10% cut in spending, or $500M over the next two biennium.

When we return to the majority in two years, we will face a gargantuan task in trying to balance a budget that relied heavily on one-time money and in undoing the many wrongs of the previous four years. When our constituents or the members of the state’s business community face a reduction in income, they do not expand their business or increase family spending, they cut back — and the State of New Hampshire should have done the same! The budget will go to the Senate first, on Wednesday, before we get the opportunity to vote up or down on both HB1 and HB2. Given the increase in taxes, the use of one-time money and the lack of serious spending cuts, we will OPPOSE the budget as written and we ask you to vote no.

We have included some of the major points of this budget and, of course, we will have much more information for you at the forum on Tuesday (see box). We will also hold a Republican caucus at 8:45 a.m. on Wednesday as usual, prior to the House session.

Rooms and Meals Tax—raised to 9%, even higher that the House and Senate versions and now includes camp grounds, who alone will be taxed over $9M!

School Building Aid—For the second biennium in a row, the Democrat majority has bonded school building aid ($90M), once again passing on operating costs to the credit card, leaving our children’s children picking up the tab. This is an unnecessary and aggressive approach given the current economic climate.

Boat Fees—Fees for all boats have been doubled for what is supposed to be six years, at which time they would return to their current levels—but we all know that sunsets are actually repealed in one line item in subsequent bills.

Limited Liability Corporations (LLC)—They will take a big hit in this budget by being subject to the Interest and Dividends tax, regardless of whether or not they have transferable shares.

Gambling winnings—The conference committee reinserted the 10% tax on gambling winnings, collected inside or outside New Hampshire. We will be taking a further look at this tax because of the fact that non-profits in the state will have to become tax collectors for NH.

Retirement system—The system remains on the verge of bankruptcy, this time by having new state employees contribute more to their share of retirement, while teachers and Group II members do not—ensuring continued disputes and financial insolvency for our fledgling system.

Tobacco Tax—They increased the tobacco tax by another $.48 per pack, the fourth increase in five years, bringing the total tax to $1.78 per pack.

Registration fees—They increased registration fees by $30-$75, depending upon the weight of the vehicle. This tax hurts the elderly who may only occasionally use their vehicles.

Charter Schools—While they were funded at Senate levels, an amendment was adopted by the committee which would ask the commissioner of DOE to find a way to see how enrollment laws could be changed without risking federal dollars—the conference committee all week discussed its dismay over having to increase enrollment at public charter schools and did discuss ways to eventually roll back the enrollment once the stimulus dollars disappear.

Spending reductions—Republicans on the committee offered several spending reductions over the week of negotiations, some of which were adopted and some not, including: cutting USNH budget, reducing HHS incentive funds, reducing judicial branch, reducing the state’s share of municipal retirement contributions, ordering additional layoffs or cuts to personnel related costs, reduce family resource center, cutting the CCSNH budget by $1.5M a year and several others.

Concealed Weapons—They increased the fee for out-of-state concealed weapon permits from $20 to $100. One final note to be aware of, a lawsuit has been filed by a coalition of more than 200 health care agencies and doctors who have been insured by the state Joint Underwriting Association (JUA) seeking to stop the state from taking more than $100M of the $150M held in the state-established medical malpractice fund for use in balancing the budget.

If there is an injunction forthcoming that prevents the state from using that money in its budget, it could be back to square one. We will keep a close eye on this story.

I would also like to remind everyone that the NH State Republican Committee will host Gov. Haley Barbour of Mississippi for a fund-raiser on Wednesday, June 24, from 5:30 p.m.until 7 p.m.at C.R. Sparks in Bedford. Contact the state committee at 225-9341 for details.

Have a great weekend. I look forward to seeing you at the Budget Forum.

-Sherm