Preserving New Hampshire In the News

The House Ways and Means Committee yesterday voted to increase the real estate transfer tax to fund the conservation and historic-preservation program known as LCHIP. The committee also voted to raise the tobacco tax 45 cents, to $1.25 a pack, to balance the state budget.

The committed voted 12-5 to approve the real estate tax increase and 12-8 to approve the tobacco tax increase, voting mostly along party lines. Republicans opposed the tax increases as policy measures and also objected to the process; instead of being presented to the House as individual bills, the tax increases will be included in a package of policy changes that will accompany the state budget.

If approved by the Legislature, the real estate transfer tax would rise 30 cents per $1,000 on the sale price for both the buyer and seller, or 60 cents total, to $7.80 per $1,000. That means on a $200,000 home, the buyer and seller would each pay $1,560 in transfer tax, with $120 going to the Land and Community Heritage Investment Program.

The tax increase would resolve the biennial struggle over how to fund LCHIP, a popular program without a dedicated funding source. Lawmakers frequently praise LCHIP but cut funding in budget crunch time. In the last budget session for example, Gov. John Lynch proposed $10 million for the program over two years, but lawmakers trimmed it to $1.5 million, later adding a $500,000 supplement.

The transfer tax increase could raise roughly $12 million for LCHIP over the two years of the next budget cycle, which begins July 1, said Rep. Susan Almy, a Lebanon Democrat and the chairwoman of the ways and means committee.

That amount would continue to rise in the future as property values increase - a distinction from an earlier proposal to pay for LCHIP with a flat $40 surcharge on all documents filed with the county registers of deeds.

That registry surcharge passed the House earlier this month. But the ways and means committee decided to scrap that idea after registers of deeds objected that the surcharge would create complications, Almy said. In many cases, out-of-state banks handle the payments on registry documents. If those banks sent in payments based on the old fee schedules and failed to note the increases, the registers of deeds could have a difficult time collecting, Almy said, and land transactions could be stalled.

The tobacco tax increase could generate nearly $70 million in additional revenue each year, Almy said.

Rep. Norm Major, a Republican who served as chairman of the committee during the past two sessions, said the transfer-tax increase could harm low-income homebuyers. He said he opposed the increase on the cigarette tax because it might discourage out-of-state buyers, especially those from Massachusetts, where the tobacco tax is $1.51 a pack. If the difference between a pack dropped from 71 cents to 26 cents, Major said, Massachusetts buyers might be less likely to drive to New Hampshire to buy cases of cigarettes - and alcohol, lottery tickets and other items.

The New Hampshire Housing Finance Authority, a nonprofit organization that assists low-income residents in obtaining affordable housing, believes the increase in the real estate transfer tax would be too small to affect the affordable-housing market, Almy said.

Major also objected to the inclusion of the two bills in the trailer bill that accompanies the state budget, instead of sending them to the House for individual votes. "That really is not kosher," he said. "It's wrong."

Almy and Rep. Chris Hamm, the committee vice chairwoman, said the timing of the legislative calendar - including delays earlier in the session in the printing and sponsoring of bills, and looming action deadlines - makes sending the bills back to the House individually impossible. However, each proposal had a public hearing in committee, they said.