Deal For $10.3B N.H. Budget Includes Cigarette Tax Cut | DiscountCigarettesBox.com Tobacco News

Deal For $10.3B N.H. Budget Includes Cigarette Tax Cut

New Hampshire House and Senate negotiators agreed Thursday on a $10.3 billion budget for the two years beginning July 1 that includes a last minute deal to drop the cigarette tax a dime.

Negotiations fell apart Wednesday night, but House and Senate leaders met privately on Thursday and hammered out a deal that gave the House the tax cut it wanted in exchange for the Senate getting its education-funding plan and a bill to streamline the shoreland protections permitting process.

Negotiators plan to sign off on the budget package Friday. It will be voted on next week.

The package includes a companion bill that implements a number of policy changes, including the proposed shoreland regulation changes. The school funding plan is contained in a separate bill.

The Senate had resisted dropping the cigarette tax from $1.78 per pack to $1.68 and had voted 13-11 on June 2 to kill a House proposal to cut the tax rate. But House Speaker William O'Brien renewed the push for the cut Wednesday night. O'Brien and other supporters argue it will spur business along New Hampshire's borders.

Supporters point to a New Hampshire Grocers Association study that said a tax cut would increase tax revenue because it would increase cross-border sales. Opponents argued the state would lose money it could ill afford to lose when spending on services was being cut. The proposal adopted by negotiators puts the cut in place for the next two years so long as revenue from the levy doesn't drop below receipts for the two years ending June 30.

"New Hampshire legislators have delivered a victory to the cheap cigarettes industry at the expense of the state's kids and taxpayers by agreeing to a budget that cuts the state cigarette tax by 10 cents per pack," said Matthew Myers, president of Campaign for cigarettes-Free Kids. "If this cigarette tax cut is enacted, more New Hampshire kids will start to smoke, more New Hampshire residents will die from smoking cigarettes and New Hampshire taxpayers will pay the bill for higher cigarettes-related health care costs."

The House had set an overall limit on what it would spend of $4.4 billion from state taxes on state operations and school aid. The compromise spends $2 million less than that limit, said Senate Finance Chairman Chuck Morse, R-Salem. He said the budget spends 11 percent less than the current budget.

"It lives within our means, reduces spending, reforms state government, does not raise any taxes or fees," he said. "I think it's going to be tight out there, but I believe we're going to provide the services we need to provide."

State Rep. Lynne Ober, a Republican negotiator from Hudson, noted that negotiators took great care to ensure property taxpayers would not pay more because the state is ending its subsidy for local public pension costs. The budget package shifts those costs onto employees instead.

Colin Manning, spokesman for Democratic Gov. John Lynch, said Lynch has not decided if he will sign or veto the package.

"We understand given the difficult financial times we are in that tough choices will have to be made," said Manning. "The governor does have some concerns which include the cuts to higher education, public safety and the safety net for our most vulnerable citizens and the ability of state government to perform core functions."

Lynch's recommended budget cut spending about 5 percent for most agencies. The major exception was the Department of Corrections, which would get a 2 percent increase under the compromise but that is $13 million below the amount recommended by Lynch.

Big losers would be college students and hospitals. The House had made deep cuts to state aid to the University System of New Hampshire and the Senate cut their aid even more to provide scholarships for private college students. The compromise restored about $2 million to the system, but the aid level will mean layoffs and tuition rate increases.

The compromise also included deep cuts to payments to hospitals, especially in reimbursements for caring for the poor. Cuts in state aid mean hospitals also lose matching federal funding.

The New Hampshire Hospital Association immediately called upon Lynch to veto the budget.

"It will increase the cost of health insurance for businesses and individuals, threaten the availability of essential health care services that our communities depend on, and result in the loss of jobs and economic stability," said association president Steve Ahnen.

House and Senate Republican leaders had promised to write budgets that did not raise fees or taxes, which meant deep cuts had to be made. Perhaps 500 state workers will be laid off as a result. The final number wasn't clear because some cuts to agency budgets give managers flexibility in how they achieve a given dollar amount of savings.

The compromise includes money restored by the Senate that the House had cut for services for the mentally ill and disabled. The Senate also had added money not in the governor's budget for services for disabled residents on a waiting list. The compromise includes the wait list funding.

The budget partially restored funding for services for youth with behavioral problems. About 90 youth with the most severe problems will receive services. The budget does not fund services for about 330 youth with less severe problems currently receiving services and countless others who got help if they were truant.

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