Fees, taxes eyed to balance state's books

New Hampshire Legislature looks to 8% Estate Transfer Tax on estates larger that $2,000.000. Stay tuned on the budget details that should be passed by July 1, 2009.

Foster's Daily Democrat
By: Adam D. Kraus

CONCORD — Maybe you're a smoker, or every so often enjoy a cheap cigar, a meal at your favorite restaurant and, for whatever reason, need a copy of your driver's license or vehicle registration.

It's going to cost you more — if the New Hampshire Legislature agrees on a budget that includes some form of the tax and fee increases approved by the House and Senate.

The Senate wants to increase the $1.33 tax on cigarettes by 45 cents, while the House has eyed 35 cents. The proposals would bring in between $56 million and $66 million over the biennium for the general and educational trust funds.

Both houses agree on taxing cigars and a 30 percent hike to the 19 percent tax on the wholesale price of other tobacco products, with the measure bringing in $6 million over two years for the funds.

Representatives and senators back a .75 percent increase in the 8 percent rooms and meals tax, which would bring in as much as $40 million over two years.

The budget process remains very fluid, those involved stress, so any proposal can change up until both chambers reach agreement, which could come this week.

Neither chamber is behind a sales or income tax, a position that is the backbone of the state's cherished low tax status.

New Hampshire government is heavily dependent on property taxes, but the state's overall tax burden, estimated at 7.6 percent of income, has ranked among the nation's lowest in nearly every year of the past three decades, according to the nonpartisan Tax Foundation in Washington, D.C.

The budget contains proposals to tax capital gains and estate transfers, but the N.H. Center for Public Policy Studies says the state won't lose its "low tax, low fee" advantage.

"Every other state in the country is in the same boat we're in" because of the recession, said Dennis Delay, the center's deputy director. Just about every state is eyeing revenue enhancers in hopes of closing budget shortfalls that average between 10 to 15 percent, he said.

Gov. John Lynch and lawmakers are seeking consensus on a two-year budget, which kicks in July 1, as they try to close what The Associated Press reported last week is a $650 million revenue gap. The shortfall is in the $3.2 billion general fund portion of the budget, while the total spending package is closer to $11.6 billion with federal and other funds included.

Economic slowdowns tend to ratchet up tax burdens, Delay said.

And it appears few, if any, Granite Staters will escape the pain this time around, according to a compilation of some of the proposed tax and fee increases that passed each chamber.

A slew of changes to motor vehicle-related items could be on tap, including:

— A $4 increase for electronic motor vehicle record requests and a $7 hike for others so it costs $8 and $12, respectively;

— Adding $5 to the $10 fee for certified copies of registrations, licenses or driving records;

— Increasing the cost of getting a vanity plate by $15 so it costs $40, with a similar increase to the service fee;

— Adding $10 to driver's license fees, $15 to motor vehicle registrations, with a $15 surcharge for vehicles more than 8,000 pounds, and increasing motorcycle registrations by $10.

The Senate version includes a 75-cent jump on inspection stickers, from $2.50 to $3.25, while the House likes a 40-cent change.

Elsewhere, the $150 charge for the Department of Environmental Services to review subdivision plans and site plan inspections could go up by $150, and the $140 charge for review of sewage or waste disposal plans could go up to $300.

Courts would be able to increase the penalty assessment fee by 4 percentage points, making it 24 percent, and the Department of Safety will be able to charge $100 for the annulment of criminal records.

Plus, boat registration fees are set to double; they currently range from $12 to $46 depending on the boat's size. Registration, agent, ownership transfer and licensing fees would also rise.

It would also cost someone from out of state $80 more to carry a concealed weapon under the Senate plan.

The House and Senate disagree on major areas.

Whereas the Senate's budget relies on more than $200 million in projected revenue from expanded gambling, the House proposal envisions a 10 percent tax on gambling winnings, a 5 percent capital gains and an 8 percent tax on transfers of estates greater than $2 million. The estate tax is projected to collect $10 million.

Proponents say more than 90 percent of those impacted by taxing capital gains — the sales of assets like stocks, businesses and real estate investments — earn $200,000 or more. The measure also increases the exemption for the interest and dividends tax from $2,400 to $5,000.

Lynch is set to present a plan today for $150 million in new revenue, including from a mortgage refinancing tax, that could do away with gambling and the capital gains tax, the governor told the AP.

The Senate has also gotten behind the temporary suspension of the business enterprise tax credit, which is used against the state's business profits tax. That could bring in $40 million.

The House opted to freeze the insurance premium tax, which lawmakers agreed to begin lowering four years ago. That could bring in $5.1 million.

Elsewhere, the House also got behind a 15-cent hike in the gas tax over three years while the Senate is on board with Lynch's plan to modify the E-ZPass discount program and restructure the funding relationship between highways and turnpikes.

The deficit exists despite deeps cuts throughout the budget, particularly to health and human services, said Sen. Jackie Cilley, D-Barrington. And further cuts are challenged by the need to meet residents' rising needs, maintain infrastructure and funding tied to federal stimulus dollars, she said

"We have a choice of building a budget that tries to address the needs of the people of this state or willy-nilly cut this budget in a way that's going to send these problems back in bigger droves to the community," she said.