CONCORD — A Senate committee heard testimony yesterday on raising the heating oil tax, while rejecting a House-passed plan to increase the cigarette tax.
The action comes with the Legislature pressed in the closing weeks of the session to figure out how to pay for state services.
Pending are decisions on whether to roll back tax breaks for businesses enacted last year and upping the gas tax.
Casino revenues seen as alternative to tax hikes
The outcomes are far from certain, with a Republican-controlled Senate taking a hard line on taxes while trying to convince the Democratic-controlled House to go along with licensing a casino as an alternate way of funding programs.
“A lot of these issues could come to a head the second week of June in a committee of conference in a hot room in the Legislative Office Building,” Americans for Prosperity state director Greg Moore said.
Moore was pleased yesterday with the Senate Ways and Means Committee’s rejection, 3-2, of the House-passed cigarette tax increase, but mindful it can come back when House and Senate conferees huddle over the budget.
“We’re going to fight every one of these tax increases,” Moore said.
Sens. Chuck Morse, R-Salem, and Jim Rausch, R-Derry, voted to kill the 20-cent a pack cigarette tax hike proposed in House Bill 659 on a straight party-line vote in committee.
“In this economy, it’s not appropriate to support a tax increase,” Morse said.
“I didn’t think that was appropriate,” Rausch said.
The full Senate will take up the proposal later this month. The cigarette tax still stands to go up a dime July 1 from $1.68 a pack under current state law, without legislative action.
The House-backed cigarette tax plan could remove the pricing edge small retail businesses in Southern New Hampshire have over competitors across the border in Massachusetts, Moore said.
“It’s critical to maintaining the New Hampshire advantage,” he said.
There are other taxes in play.
Senate Ways and Means has a hearing scheduled Tuesday on HB 617, phasing a 12-cent gas tax hike over three years for regular gas and six years for diesel, a concession to trucking interests. The tax is now 18 cents a gallon. Proponents want it to pay for road and bridge work.
Meanwhile, the heating oil tax increase, HB 185, would help fund fuel tank cleanups.
It’s a 25 percent increase in the penny a gallon tax — to 1.25 cents. But Moore said, in combination with the gas tax proposal and other legislation that could impact power bills, that means trouble for people paying their bills.
“We look at this as an overall war against energy consumers,” Moore said.
Rausch and Sen. Russell Prescott, R-Kingston, said they are still reviewing the heating oil tax proposal.
Rausch said the increase would only be about $2 a year for the average homeowner and would amount to an insurance policy for them.
“The cost is probably worthwhile,” he said.
While Prescott hasn’t made a final decision, he said he is concerned by what he is hearing from constituents.
“My constituents are saying we can’t afford more taxes,” Prescott said. “I’m going to make every effort not to raise taxes.”
Rausch said he’s hearing from constituents primarily about the gas tax hike.
“The one people seem worried about is the gas tax,” he said.
Rausch and Morse are leaders in the campaign to pass expanded gaming.
“It’s very clear our constituents would rather have a revenue source that’s not a tax,” Rausch said. “I kind of hope we win that battle.”
“Obviously, in my district, they support expanded gaming because that’s non-tax revenue,” Morse said. “I’ve been asked to speak everywhere about it.”
The Legislature faces about 15 decisions about raising taxes or fees, Moore said.
Taxpayer group: Cut costs instead
Granite State Taxpayers is opposing tax increases by the Legislature.
“We still feel we’ve got to find more places to cut costs,” chairman Jim Adams said.
Adams credits the formerly Republican-controlled Legislature with doing so the prior two years and says they turned the state’s fiscal situation around by holding the line on spending.
“We need to continue doing that,” Adams said.
Adams remains wary of what might happen if the House rejects the casino plan.
“I’m certain if the House doesn’t pass gambling, they will be looking at more taxes,” he said.
The casino proposal, Senate Bill 152, is under review by a joint House committee. This week, lawmakers are hearing about potential community impacts.
The budget also matters.
Morse, chairman of the Senate Finance Committee, said senators will have a good picture of the budget by next week. He expects the Senate will act by the first week in June.
“The tough decisions have to be made after that,” he said.
The House approved increases in gas and cigarette taxes are in trouble, Morse said.
“There’s opposition to them,” he said. “I don’t think they’re going to pass.”
While it’s an open question what will happen with state taxes, Moore said people — and businesses — can still make a difference. His advice: “Call their elected officials.”
Adams agrees and doesn’t think the tax fight will stop if the Senate says no on some House-passed bills.
“I don’t think we’ve seen the end of it,” he said.
So, it’s up to people and businesses to fight higher taxes, if they don’t want them, in Adams’ view.
“I do think businesses and people can get hold of their senators and their representatives and tell them we don’t need more taxes,” he said. “We need less spending.”