ATKINSON — Earlier this year, the Hampstead Area Water Company (HAWC) was preparing for a $1.15 million tax increase related to new infrastructure because of a 2017 change to federal tax law. That situation prompted U.S. Sen. Jeanne Shaheen to propose a fix to eliminate the increase, which would have been passed onto ratepayers, according to a statement from Shaheen's office.
The federal tax was hurting projects across the country, so the New Hampshire Democrat partnered with U.S. Sen. Lisa Murkowski, R-Alaska to propose legislation to reverse the provision in the Tax Cuts and Jobs Act of 2017, which placed a tax burden on private water utility providers and their customers, according to Shaheen's office. U.S. Sen. Maggie Hassan is also a co-sponsor of the bill.
State Sen. Chuck Morse, R-Salem, along with the group of commissioners brought the tax issue to Shaheen's attention, and was pleased by the federal legislation proposal.
"Not everyone is a Salem or a Manchester or Derry with their own water system, and there are lots of little (private) systems across the state that this was hurting," Morse said.
In May, HAWC was taxed $300,000 for the construction of a new water tank and faced an additional $850,000 in taxes related to other components for the Southern New Hampshire Regional Water Interconnection Project, Morse explained.
"That's a million dollar tax that could have been another mile of pipeline, and God knows we need it in Atkinson," Morse said.
The project, funded with state contributions through the New Hampshire's Drinking Water and Groundwater Trust Fund and the MtBE Settlement Fund, will bring water from Manchester through Southern New Hampshire to communities in the region.
The tax would not have affected municipal water systems like Salem or Derry, but would have taxed private water companies like HAWC, which is receiving money from the state funds.
The state's contribution to the project would not have been taxed prior to 2017 because of exemptions for what is known as Contributions in Aid of Construction (CIAC), according to Shaheen's office.
Those tax exemptions also extended to grants and capital contributions made by the government or civic entities to help companies and communities make investments in projects that benefit the public, according to Shaheen's office.
The bill would reverse the changes to the law, and restore the exemptions.
Without this change to the legislation "we'd run out of money a lot faster," Morse said. "It's a positive step, but we still have a long way to go."
Morse said that while he knows the bill has a long way to go to be passed into legislation, this is a positive step and he thinks it will gain traction for people from states with private water companies because water is such a vital resource.
“Water infrastructure is vital to economic development and fundamental to delivering clean drinking water. Communities across New Hampshire have been planning projects for years that are now threatened by this new tax,” Shaheen said in a statement. “Congress should be encouraging infrastructure development which is why we need to fix this tax bill that was rushed through Congress. I appreciate Senator Murkowski’s support on this bipartisan, common-sense effort and I urge more members to join us so our communities can make urgently needed investments in clean and safe drinking water.”