Southern New Hampshire restaurant owners hope state lawmakers reject a proposal that would allow communities to tax their revenue.
To close a budget gap that could reach $300 million by July 2011, two bills passed by the House and Senate seek to raise the money in various ways. To offset a loss in state aid to cities and towns, communities would be able to adopt their own taxes on restaurants and hotels.
"I would be horrified if that was to happen," said Sue Bonomo, owner of J. Michael's Family Sports Pub in Windham. "I definitely would not be in favor of that."
Bonomo was one of several local restaurateurs who said the proposal would devastate their small businesses at a time when many eateries have seen a substantial decrease in business because of the slumping economy.
Letting Windham tax her proceeds while still paying the state's 9 percent rooms and meals tax would be too much of a financial burden, she said.
"For me to absorb another 1 or 2 percent would be significant," Bonomo said.
For Bill Andreoli, owner of MaryAnn's Diner in Derry, allowing communities to tax restaurants just adds insult to injury.
"Right now, I believe we are paying one of the highest meals taxes in New England," he said. "I think it's unfair."
A report by the National Conference of State Legislatures said only two other states and the District of Columbia have a rooms and meals tax higher than the one imposed by New Hampshire, which increased 1 percent less than a year ago.
"It's a little unfair to go after restaurants again," Andreoli said.
House Finance Committee Chairwoman Marjorie Smith, D-Durham, said the proposal was introduced to help communities affected by the loss of state aid.
"None of this money goes to the state," she said. "It would all be designed to help cities and towns — if the cities and towns want it to do so."
The proposal has encountered strong resistance from restaurant and hotel owners throughout the state, especially this week as legislators close in on a solution to the state's budget dilemma.
Monday, opponents held a news conference at the Statehouse where Mike Somers, president of the New Hampshire Lodging and Restaurant Association, said lawmakers should abandon the proposal and Gov. John Lynch should veto it if they don't.
A day later, politicians gathered with restaurant and lodging professionals in Portsmouth to criticize the plan.
But if lawmakers adopt the proposal and communities choose to tax restaurant revenues, the impact would be felt especially hard in Southern New Hampshire's border towns, Andreoli said.
Restaurants would be forced to charge more for meals to make up the difference, prompting some customers to decide it might be less costly to dine in Massachusetts, Andreoli said.
"It would be too expensive for people to go out and eat," he said. "It makes everyone have to go up on their prices."
When prices increase, customers start pointing fingers at restaurant management, Andreoli said.
"Who do they blame? They blame us," he said. "They don't consider it's the state or someone else doing it to them."
The cash-strapped state needs to solve its budget problems without hurting restaurant owners, Andreoli said.
"If they are going to do something like that, impose a sales tax or pass gambling," he said. "It's getting tougher and tougher. People who don't do as well as us are going to close their doors."
Rick Korn, owner of Rick's at Pond View and Rick's Cafe and Grille, both in Kingston, said "the economy is the number one problem" in the restaurant industry right now.
Forcing New Hampshire restaurateurs to pay another tax would have a big impact on their businesses, he said.
"It would just be another expense for our customers," he said. "Everything is going up and I don't think anyone would like it. ... It certainly would hurt."
But Jim McMahon, owner of Tiffany Gardens bed-and-breakfast in Londonderry, said allowing communities to adopt their own rooms and meals taxes doesn't seem unreasonable.
"I can see how towns could use the money," he said. "I don't think I've had anyone who didn't come because of the state tax. I just think that is the cost of doing business."
The Associated Press contributed to this report.
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