CONCORD – The House Ways and Means Committee yesterday voted to pass a raft of taxes that raise nearly $80 million on everything from pet shop licenses to capital gains.
With the Legislature struggling to close a projected $220 million budget gap, Ways and Means Chair Rep. Susan Almy, D-Lebanon, said the committee "is trying to bring forward as many options as are viable."
The committee also voted to repeal the controversial LLC tax, which became a political liability for Democrats who passed it.
Under the plan outlined for House Finance Committee members yesterday, seven tax changes would go into place by June. Some would apply in the current fiscal year, which ends June 30. All would be in effect through the following year.
Gov. John Lynch proposed the 20-cent hike in the tobacco tax, which would raise an estimated $12 million through June 2011.
Lynch's budget balancing plan also calls for $85 million in spending cuts, payback of $25 million by the university system and restructuring and refinancing about $45 million in state debt.
If all the Ways and Means taxes were to pass, they would eliminate the need for most cuts Lynch has proposed, which fall hard on Health and Human Services and local communities.
The House Finance Committee will take up the taxes next week as it finishes work on the entire Lynch budget plan in Senate Bill 450.
Lynch spokesman Colin Manning was not enthusiastic about the Ways and Means plan.
"The governor has put forward a comprehensive strategy to address the revenue shortfall, which includes spending reductions, a restructuring on debt and a small increase in the tobacco tax. That's what he's focused on now in working with the Legislature," he said.
Sen. Lou D'Allesandro, D-Manchester, who favors expanded gambling to boost state revenues, said the Legislature rejected many of these same taxes last spring.
"This is a rerun of the budget last year, all of this stuff. As Yogi said, 'This is deja vu all over again,' and then some," D'Allesandro said.
The Senate rejected budget cuts in March and passed a bill to raise revenue by legalizing slot machines at six locations. The House killed the bill last week.
The big items the Ways and Means committee approved were:
-- A new capital gains tax, raising an estimated $30 million. The tax rate would be 5 percent, on financial gains from the sale of all assets other than a primary residence.
-- An estate tax, imposed on assets over $2 million upon the death of the owner. The tax rate would be 8 percent, raising an estimated $2 million in this biennium and $25 million every two years thereafter.
-- The insurance premium tax, raising roughly $23 million. The tax would be raised back to the 2 percent level it was at in 2006 when it began a series of annual quarter-point declines.
-- A new electric generation tax, with a repeal of the electric consumption tax.
The net gain in revenues would be $5.5 million, and would be paid primarily by Seabrook nuclear plant, fossil-fueled and natural gas-fueled plants.
The committee voted to expand the tobacco tax to include products except premium cigars at the new tax rate, raising an extra $3.5 million.
It would also take $2.5 million from so-called dedicated funds, such as those that pay for police training, boating access and hazardous waste cleanup. Lynch proposed taking $2 million.
Most votes were split along party lines as Republicans objected to the increases.
A commission to study business taxation and to repeal the LLC tax drew bipartisan support.
D'Allesandro, who chairs the Senate Finance Committee, said he prefers expanded gambling to higher taxes.
It will bring construction and long-term jobs as private capital is used to build new casino and racino facilities, he said.
A Legislative Budget Assistant's Office document discussed at a Senate Finance hearing yesterday showed the loss of more than 1,770 private-sector and 40 state jobs if all budget cuts Lynch proposed take effect.
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