Category: Uncategorized

By Rep. Marjorie Porter, D-Hillsborough

http://indepthnh.org/2018/03/05/look-to-lawmakers-as-income-inequality-in-nh-keeps-growing/

For me, one of the unexpected perks of serving as a state rep is being called to substitute for a colleague on a different committee. I get to see how other committees are run, and what issues they must deal with in the bills that come before them. If I’m lucky, I will get to hear testimony from experts on a topic new to me. I can listen to the arguments pro and con before committee votes are taken. I learn a lot that way, and get a better understanding of the complexities of governing.  It’s like getting a free college education, which helps to make up for the ridiculously low salary.

Recently, I got to substitute on the Ways and Means Committee, a first time for me. In fact, I got to be there twice within just a few weeks, and it was indeed edifying.

Ways and Means deals with the state’s revenues and how we raise them—or reduce them as the case may be. Revenue estimates, taxes and fees, tax credits and tax reductions—but because so many of my colleagues have signed the Americans for Prosperity (AFP) anti-tax pledge, never EVER a tax increase. (Greg Moore, New Hampshire’s AFP director, spends a lot of time at the state house, and keeps a close eye on everyone.)

The committee chair was very welcoming, and so were the other committee members. They even tolerated my asking questions so I could better understand what I was hearing and voting on.

On the first day, the committee dealt with several bills that would increase, or decrease, the tax credits given under different circumstances. I was struck by how cautious folks from both parties were being about the potential unintended consequences that might result from decreasing revenues too much too soon.

That’s why I was so surprised about the outcome of HB 1686, relative to applications for and the use of education tax credits.

Some background is needed here. In 2012 the legislature established a tax credit for businesses that contribute money to a scholarship fund, administered by an independent scholarship-granting organization, and used to pay the tuition of children who attend private, religious, or home schools. Businesses receive a tax credit for 85% of what they donate. There is a $5 million cap on the total amount of annual contributions.

It seems businesses are not eager to take advantage of this tax credit, so contributions have been low. So far, less than $800,000 has gone into the fund, with 85% of the scholarships granted being used at religious schools.

I don’t think this was the result the law’s sponsors had hoped for. In January 2017, NHPR reported the legislature was looking for ways to expand the program. HB 1686 seems to be that way.

The bill allows individuals who pay the interest and dividends (I&D) tax to also contribute to the scholarship fund and receive the 85% tax credit. This is the first time ever a tax credit would be given for the I&D tax. It potentially opens the door to a very large increase in the fund—and a very large decrease in the state’s revenues.  But surprisingly, there was strong support from the otherwise cautious Republican committee members.

Puzzled, I asked why, when we had turned down other tax credit bills because of the potential revenue loss, this one should be supported. The answer was quick to come. The cap had not been raised—it remained at $5 million—so there would be no impact on revenues. Others also had concerns, and raised questions that were unanswered. It was clear, at least to me, that more information was needed, but a vote was taken anyway.

By a 13-10 margin the committee recommended the bill ought to pass.

Over the course of the next several weeks, some of those lingering questions did get answers. The $5 million cap was not the figure used when the budget was crafted last year. Instead, they used an estimate of the actual contributions made. A sudden increase in donations would definitely be felt as a loss of revenue.

Surprisingly, cap itself is flexible, not fixed. If contributions to the fund reach 80% of the cap, the cap goes up.  It can, and will, be raised if contributions come flooding in.

And flood in they just might. According to a report written by Carl Davis at the Institute on Taxation and Economic Policy in Washington, and reported in the Concord Monitor, these types of education tax credit programs are very popular tax shelters for high-income taxpayers. That’s because they can actually make money by combining the education tax credit with the federal deduction for charitable giving. A good accountant is sure to recommend the program to her wealthy clients—in fact, she wouldn’t be performing her duty if she didn’t. This tax credit will definitely be used.

Indeed, the Monitor reports, Georgia’s “…$58 million in ETC tax credits was snapped up within hours in 2016.”

After this information came to light, the committee met again.  A reconsideration of the vote was asked for. Given what we now know, and given the potential for a quite large decrease in revenue over the next several years if this bill were to pass, shouldn’t we reconsider? It was disappointing that the answer was no.

The bill comes before the full House for a vote this week.

The Interest and Dividend tax brings close to $100 million a year into the state coffers. If fully utilized, this tax credit could reduce that by close to 40% over the next ten years.

But I guess it won’t much matter, if the Senate has its way. They are recommending doing away with the Interest and Dividends tax altogether.

This, after we cut business taxes twice in the past few years. Big, out-of-state businesses benefit most from these cuts too.

We hear a lot in NH about how we can’t afford things because we must live within our means. We can’t afford to fully fund the developmental disabilities waitlist because we must live within our means. We can’t afford school building aid because we must live within our means. We can’t afford to spend more money to combat the opioid crisis, pay the state’s share of Medicaid expansion, contribute to public employee retirement, boost workforce development, fund the university system, raise the amount of the education adequacy grant, fix our crumbling infrastructure, and help reduce property taxes, because we must live within our means.

We must live within our means, but we keep cutting those means to the help the biggest businesses and the wealthiest citizens. No wonder NH’s income inequality is the fastest growing in the country.

Marjorie Porter is serving her fourth term in the NH House, representing the citizens of Antrim, Hillsborough, and Windsor. She currently sits on the election Law Committee. She has two grown children of whom she is extremely proud. A retired teacher, Marjorie lives in Hillsborough with her husband and three cats.

To: Counsel for the Public and Consultant Tom Kavet  

I am very concerned about the impact of the Northern Pass project, should it be buried, as planned, down Main Street Plymouth.  I am the third generation owner of Rand’s Hardware, a 110-year-old business right on Main Street in the heart of the Town.  We employ 18 people in our business and are the only hardware store in Plymouth.  Our business includes Blue Seal feeds, a full service rental department, the area’s only plumbing supply wholesale or retail outlet, service for our Stihl lawn and garden equipment and more usual hardware store items, all housed in three buildings, a total of about 20,000 square feet.  

Main Street is the main artery of access to our business both for vehicles and for pedestrians.   Anything that affects Main Street has an immediate impact on our business.  We have worked hard to survive all the competitive forces that have been thrown our way over the years, including, in recent years, Wal-Mart, big box home improvement stores, internet providers like Amazon and smaller regional competitors, like Aubuchon and Tractor Supply. So far, we have survived to continue our tradition of service to our strong customer base. Our ability to serve these customers depends upon their ability to access our business. We are strictly a bricks and mortar operation.  

If a huge project to bury high voltage power lines were to impose itself on our Main Street, we could lose half of our business during the worst of it.  I understand that the project could tie up Main Street for at least 6 weeks, possibly 11 weeks.  For calculation purposes, if it turns out to be 8 weeks, and we lost 1/2 of our business during this busiest time of our commercial year (April to July), we could expect to lose on the order of $100,000 in gross profit.  As I understand it, there is no compensation offered to us as part of the package.   

I am sure of these magnitude of consequences because of a similar experience that our business had in the Nineties, when the Town of Plymouth tore up the sidewalks and pavement on Main Street to install new curbing, paving, sidewalks and street lighting.  The project took place over several months and involved extensive excavation, rebuilding of all sorts of infrastructure both above and below ground, resulting in a huge impact on customer flow.  My guess is that its financial impact was less than what Northern Pass will be, because the project was done in stages and did not affect every business for the full duration. Although Rand’s survived, many of our neighbor-businesses did not.  Main Street ended up with several vacancies and the business “tide” was lowered for all.  Despite the negative impact, the town center did end up as a more pleasant, better looking place that has shown itself to be more conducive to customer visits in the many years since.   Unfortunately, I expect no such “end of the day” positives from the Eversource plan.  

I ask, then, why a for-profit company, Eversource, with a foreign partner, Hydro Quebec, who is simply using NH as a conduit to transmit electricity to MA, CT and RI, with no payment to the State of NH, and none announced for the Town of Plymouth, with no invitation from me, should cost me $100,000 in lost gross profit, without any consultation or compensation?    

In addition, I ask what my customers, who rely on day to day access to our store for products, like horse and poultry feeds, nuts and bolts, rental equipment that they use to conduct their businesses, and plumbing supplies to repair problems, will need to do to accommodate the profit motive of this big-business multi-national organization?  How will they be compensated for their inconvenience?  How far will they have to travel to find a replacement source?  Once they have found a new source, will they ever return to my store as their continuing provider?   

I am sure that the cost to my business will not occur only during the project period.  Rand’s has spent over 100 years earning the shopping habits of its customers.  For that habit to be interrupted over 2-4 months means that they may form new habits that could exclude Rand’s as their main or preferred vendor. Additional hundreds of thousands of lost sales dollars could occur over the years.    

This is pure madness, and I reject the idea that any justice would be served by this arrangement.  For me, this is more than a financial risk.  It is a threat to my lifestyle and the preferred lifestyles of the people of Plymouth and surrounding towns.  We should be allowed to enjoy dealing with our challenges and small victories without having to deal with somebody else’s need to make a profit.  

 As I read the research it is clear to me that there is no impending emergency or civilization-threatening need for the project as it is now proposed. The alternative site, the buried line down I-93, as provided by the newly-designated energy corridor of the State of NH, is the only plan that enjoys the support of the Town of Plymouth, as voted by us. To bring the line down Main Street and Route 3 might be a temporary advantage to Eversource, but a huge pain to the public and a life-threatening menace to businesses like mine.

Thank you for all your efforts on our behalf to see that the real costs of this project are known and incorporated into the decision process of the SEC.  I am available at any time for testimony or further information.  As you can see, I am willing to open my financials in order to see that the understanding of impacts is substantiated. 

 Yours Sincerely,

Steve Rand
NH State Representative, Grafton Dist 8

A. M. Rand Company  (Rand’s Hardware) 
71 Main Street, Plymouth NH 03264