The House, Wednesday, June 24, 2009

Speaker NorelliThe Committee of Conference on HB 1-A, making appropriations for the expenses of certain departments of the sate for fiscal years ending June 30, 2010 and June 30, 2011 recommends that the House recede from its position of nonconcurrence with the Senate amendment and concur with the Senate amendment and that the Senate and the House adopt the following new amendment to the bill as amended by the Senate and pass the bill as so amended. The question before the House is on the adoption of the Committee of Conference Report on HB 1. The Chair recognizes the member from Keene, Rep. Robertson.

Rep. Timothy Robertson (D - Ches 6)Thank you, Madam Speaker. I am a little disappointed that we can't speak to them all at once so I don't have to come back here to talk on HB 2 so I will try to be short. I have never been able to do that, but I do try. If you didn't pick up the Sentinel Source which is the newspaper in liberal Keene, the most eastern part of Vermont, you would go to the next to the last paragraph and I will read parts of it. In 2003, the Institute on Taxation and Economic Policy, a non partisan organization with corporate foundation support, issued a report showing that state and local taxes on the richest 1% of New Hampshire families add up to 1.9% of their incomes on average. That's for people who earn $1 million a year or more. I understand there are quite a few in here that have that problem, you poor guys are paying 1%. People with annual incomes between $34,000 and $50,000 pay 5.4% of their earnings in state and local taxes on average. Poor families, people earning less than $20,000 a year pay 8.1% of their incomes in state and local taxes. I don't understand why we can't deal with that problem in this budget. I am told that if we did something rash like pass a graduated income tax or an income tax period, the Governor......

Speaker NorelliThe member needs to suspend when the Speaker requests. I would remind the member that it is HB 1 that is before us and that there are no revenues in HB 1.

Rep. Timothy Robertson (D - Ches 6)I got them confused, I guess. Maybe I should be talking about the jail problem. I went up to Berlin last week, Thursday, ten of us from my committee, Republicans and Democrats. I would say, as of today, there are 726 inmates. There are 132 correction officers, there are 80 inmates living in a gymnasium night and day, never outside, never outside the gym, one guard. Might be a fight at night, never happen, these are all good people. They wouldn't be in prison in that big room if they weren't good people. That one guard has a hell of a responsibility. Now, a year ago there were 510 inmates, that's 200 less. There were the same amount of correction officers, 132, and they had no one in a gym. The prison was built for 500 people. It's designed for 1,000, but there is one slight problem. They never put on the second half of the prison. It was designed, but it was never built. Now, this coming December, there will be 800 inmates. We are going to let 12 guards go, correction officers. There will be 120. By that time there will be 92 inmates in the gymnasium. There isn't a court suit in the last, I don't know how many years, where a prison population was kept under those circumstances where a lawsuit was brought that the inmates didn't win with tremendous expenses and the courts saying you will build a prison today to take care of that problem. Now, above and beyond that, I feel you're just waiting for somebody in that gymnasium to be murdered. Ninety-two angry unhappy people who have been convicted of serious crimes, rubbing at each other, bothering each other, disagreeing with each other. There will be fights. Now, you're the correction officer, the one, you've got to go in and stop that fight. Good luck and I hope that nobody dies, but when they do, I hope that we will all have guilt feelings for have voted for this bill. It is our responsibility to keep people in humane conditions. They broke the law, they are doing their time, but we don't treat them like they belong in Guantanamo. Thank you for your attention and I shall return.

Speaker NorelliThe question before the House is on the adoption of the Committee of Conference Report on HB 1. The Chair recognizes the member from Newcastle, Rep. William Smith.

Rep. William Smith (R - Rock 18)Thank you, Madam Speaker. We used to speak of the New Hampshire advantage and one of the implications of the remnants of this advantage was shown recently in an article in the Wall Street Journal which showed a map of the United States and the amount of unemployment that each state would have. There were 13 states that were under the 7% unemployment rate in the United States, so a quarter of the states. Of those, New Hampshire was one. There was no other state east of the Mississippi that had that low of an unemployment rate. The rest of the states, the 12 states that were also under 7% were all west of the Mississippi and in the heartland in the center of the country. The unique position of New Hampshire on this side of the Mississippi is a direct result of a pro business policy, which in the past this state has had. It has attracted businesses and businesses that are attracted, of course, employ people. There is in this budget and in the previous budget a philosophical debate that is going on with respect to what the role of the state should be versus what the role of the individual in our society should be. Specifically, the 10% increase in the overall spending in this budget, which includes 7.7% increase in the general and its related expenses categories, on top of the 17.5% from the previous budget, represents a change in the philosophy of the role of government in our state. What is at stake in this budget discussion is actually a decision as to what kind of state we choose to live in. Are we going to continue to place our primary reliance on the individual and the family or are we going to adopt the view that it is the government that is the central force in our society and therefore become essentially indistinguishable from all our neighboring states which have already adopted that strategy as reflected in their unemployment numbers? If we adopt that view, we can expect that we will be indistinguishable in unemployment levels in the future from our neighboring states and for that matter, in the European countries which have similar or even higher unemployment. This is really the decision that is before us with this budget. Please vote down the budget so we can find ways to trim further. I know a great deal of effort has gone into cutting the budget, but when the budget is still up another 7.7% at a time when most states are reducing their general fund numbers, we have a great deal of room that we could find additional cuts. That will in fact address the issue that we are going to undoubtedly face two years from now in which we will find a hole of several hundred million dollars which has been reflected in the one time monies that are part of this budget. Thank you, Madam Speaker. Speaker Norelli: The question before the House is on the adoption of the Committee of Conference Report on HB 1. The Chair recognizes the member from Keene, Rep. Kris Roberts.

Rep. RobertsThank you, Madam Speaker. I just need a second so that I make sure to separate HB 1 from HB 2. Madam Speaker, members have been told that we have very little time; we must pass this budget now. If we don't pass this budget, we are going to lose federal money. If we don't pass this budget, our options are only going to get worse. Maybe I'm an idealist and maybe I am politically naive, but when it comes to supporting the health and welfare of the people of New Hampshire, I would much rather be politically naive and idealistic than be wrong because they have to pay the price for my error. Most Americans will endure a great deal of hardship as long as we know the truth. For that we must trust them with the truth. Captain Sully, the pilot who landed the airplane in the Hudson River and made sure everyone was off safely stated, "People want to feel reassured, I think, that all the things we value, all our ideals, still exist - that they're still there, even if they're not always evident," and if we work hard enough that we will make the decisions based on realistic not wishful thinking that we will succeed in making our world a little bit better. This budget is based on wishful thinking. This budget has the ability to alter the core culture and value of our state. This budget has the possibility of driving our best and brightest young adults out of the state for decades. We must make the hard decisions. We must get it right. This budget isn't right. Some have stated that we must pass this budget or the world as we know it will end. I would say that some people say, "We would want the world to end as we know it, we want the world to get better." It will end for many people in New Hampshire because for some, their world has already been altered. Keene, Berlin, Claremont, Hinsdale, Benton, Tamworth, Lincoln, Gorham, Colebrook and Franklin are some of the towns with a median income, in real dollars, of $37,000 or less - real dollars, not extrapolated, up to a family of four. Two of these communities have incomes in real dollars of less than $30,000. According to the United States Department of Agriculture, every single one of these median family income families in these communities are between $10,000 and $20,000 below what would be expected to live in a normal lifestyle, nothing fancy, just normal. In 2005, almost 22% or 43,000 families in New Hampshire didn't even make enough money to cover their monthly bills. That was 2005, at the height of our growth. These families have learned to make choices. They understand the difference between needs and wants. It is really important that we, as legislators, understand the difference between needs and wants. We are in a serious crisis. It isn't the end of the world, but we must develop a budget based on need if we are going to build a foundation for a greater future. This budget doesn't do it. I read a quote in the newspaper yesterday, "I can't see any responsible member of this legislature voting against this budget." I was taught that responsibility meant identifying the problem, confronting the problem and fixing it now. It does not mean pass it over two years to the next legislature; otherwise, you are just part of the problem. When I leave this well, I will follow the advice of John Quincy Adams, "Always vote for principle. Though you may vote alone, the sweetest revenge in the end was your vote was never lost."

Speaker NorelliThe House will be in order. The question before the House is on the adoption of the Committee of Conference Report on HB 1. The Chair recognizes the member from Stratham, Rep. W. Douglas Scamman.

Rep. W. Douglas Scamman (R - Rock 13)Madam Speaker, before I start giving my speech, I want to correct today's record. You announced earlier that I was taken off of the Committee of Conference on HB 2. I never was put on so I don't know how I was taken off, but I just wanted the record to show.................

Speaker NorelliI am sorry, because you were the alternate, so my clarification is that I had to remove Rep. Kurk twice.

Rep. W. Douglas Scamman (R - Rock 13)I think probably that will show that what I am saying is a good reason for us to take an opportunity to correct several major problems that are in this budget as it is because we are making mistakes and we have made some very severe mistakes in HB 1 and HB 2 as we bring them forth before you. The first thing I want to say is that I absolutely will never vote for a budget that once again bonds building aid. Why when we have about a half a billion dollars worth of one time money would we start borrowing money so that in the future we will have an increased amount of interest and bond payments to pay back? I noted this morning in HB 25 that it said the Treasurer recommended that we only borrow up to 130 million and that we only borrowed only 118 million and 90 million means 208 million we are authorizing to be bonded with this legislation that is before you. Someone may get up and say that we set up a dedicated fund for that and they are right, they did by law set up a dedicated fund. 3%, I think, of the rooms and meals tax is dedicated to pay this off. The meals and rooms tax was in the general fund. It was paying for building aid out of the general funds and we just take it out of our general funds and say we are going to pay for something that wasn't in the budget which is no longer in our budget. The money was appropriated in HB 2 and we are going to go forward and think bond counsel's not going to understand that we set up a special fund but it lowered the amount of money that we would be raising in a regular general fund. How could we cut building aid? If we go back and reopen this budget so that we can do a little better job, how do we fund it? I think we have all read in the papers very clearly in the last few days that the SEA has offered 67 million in renegotiations that can be taken out of the budget that is going forward. Not all of that will be general funds, but I can tell you that would be a major step towards funding the 91 million. I don't know how anyone, at least in my mind the way it works, can vote to put any money into LCHIP at this time. It is a wonderful program. At this time we when we need money to give to the needy that Rep. Roberts spoke about, more money which is in the budget, we shouldn't be raising other taxes when we already have a tax that could give us another 4 or 5 million to go towards this. There are many small items that we could reduce in the budget and many have been suggested by us throughout the process. I would ask you to think very seriously about let's not magnify the problem in two years by bonding something that is an ongoing expense. One of the big mistakes we made was introducing a brand new 9% tax on campsites without any input, without any knowledge that it was coming forth. I think you are penalizing people who work hard, don't have a lot of money. They bring their own housing. They bring their own food and they have to pay 9% tax. I would ask you to please vote with us and give us the opportunity to take that amendment out of the budget. The 10% gambling tax that came in at the end is a tax that has been before this body many times. Every time it comes forward, we have public hearings and we have an opportunity to think about it, people impress upon us.....

Speaker NorelliWould the member please suspend? I would just remind everybody once again that the question before the House is the report on HB 1.

Rep. W. Douglas Scamman (R - Rock 13)The funding from this tax should not be used in HB 1. I think we need the opportunity to reduce it and that's why I would ask you to vote against HB 1 so that we can go forward and balance the budget in other ways. I enjoyed this morning listening to the young lady from Portsmouth and in the end we thank people for doing what they have done for us and for keeping us free. We also heard from DJ about the young man who just died from Salem and he died so that we could be free. I've always said, ever since I have been here, I've had family that has died in war. I've had a lot of friends that have died in war and they died so that when I'm up here I can vote the way I think no matter what. There were many times that my leadership was not happy with me over twenty-six years, except for six years when I was Speaker. What I am asking, the issues are pretty well debated and I'm not going to list many other issues that I don't agree with because I don't think they rise to the level to vote against the budget. These issues rise to the level that we should not vote for the budget. If you people on this side of the House agree with me, we should have the opportunity to correct the three issues which I talked about. I ask you to think about those people who have died serving this Country and ask you to realize that they should not have died in vain and to vote with us to have another opportunity to correct these few major things that are inappropriate. I would ask you to vote "No" when it comes time to pass HB 1 because we need to correct these mistakes. Speaker: Norelli: The question before the House is the adoption of the Committee of Conference Report on HB 1. The Chair recognizes the member from Stoddard, Rep. Eaton.

Rep. Daniel Eaton (D - Ches 9)Madam Speaker, two years ago I rose to this podium and said that the conferees on HB 1 were proud to present to you a balanced budget. This time, Madam Speaker, during what is the greatest economic catastrophe in living memory, with the state's fixed cost rising every day, with caseloads at agencies growing due to the economy, revenues coming in at 2004 levels, Madam Speaker, I rise to tell you I am proud that we survived the Committee of Conference and got to "Yes." That was not an easy task with the Senate and the House very divided on very significant and sometimes controversial issues. The gentleman from Keene rose a little while ago to speak about his concerns on the budget. I know the Mayor of the city of Keene had concerns about the budget. After looking at this budget, what this budget does in the consequences of not passing this budget, the Mayor of Keene took the time to come to the Speaker's Ice Cream Social yesterday to ask every member of his delegation to please support the bill before you. No budget bill is easy. No budget bill is perfect and as the gentleman from Portsmouth said to many of us earlier, in his career in politics, he's voted on somewhere in the vicinity of 45 to 52 budgets and he never liked voting for any one of them. Sometimes you do what is needed not what is preferred. The budget before you today that the Committee of Conference has brought forth decreases state general fund expenditures by 3.46%. We distribute rooms and meals tax revenue of $117 million. We have allowed the liquor commission to maximize profitability and give them flexibility to be able to do that. We have established the Division of Community Corrections within the Department of Corrections and with luck, with hard work, with some promise and maybe with a couple of new appointees to the Parole Board, Representative Robertson's concerns will be partially addressed. It's a start. We estimate approximately $177 million from enhanced FMAP - Federal Medical Assistance Percentages coming through. The counties will receive almost $45 million additional dollars. I sat, Madam Speaker, right over there in the front of Section 1 exactly 20 years ago when someone who I trust, someone who I personally like and have incredible respect and admiration for was on that podium and as we started this debate, that gentlemen stepped down to this podium. They were introducing HB 1 during what was a regional economic recession, not a national economic crisis, and at that time, and I will apologize if I get the number wrong, it was either 6 or 8 significant substantial tax increases were introduced to balance this budget. I very clearly remember the words of the former Speaker. He said, "There is something in this budget for everyone in this room to not like, but the consequences of not passing a budget to the people of the State of New Hampshire into the cities and towns are so substantial it is time for every one in this room to be a statesman." Bite the bullet and do what needs to be done. The consequences today of not passing HB 1 starts out and I am only going to go by past history. I was here when Governor Gallen had a continuing resolution. I was here when Governor Benson had a continuing resolution. Each time it was approximately September that they completed their work so let's take the easy mark of three months. If this budget does not pass today, going three months on a continuing resolution without a budget, means roughly $45 million lower that we start. That is your starting point, $45 million below where you are today. That is the optimistic version. That does not count the fact that we will not qualify for much of the federal stimulus dollars that are included. That also means we will not have a budget that allows us to make payments to local school districts. That also means $45 million fewer dollars to go to cities and towns. That also means $45 million fewer dollars to take care of the state employees. That means $45 million fewer dollars to match against federal dollars to take care of rising case loads for the neediest of our citizens across this state. We need to do our work. We need to get our job done. I attended a press conference yesterday where an alternative was offered. It was by a bunch of my friends and I mean that in the truest sense. We all sat in the Finance Committee for the last five months and we worked hand in hand as close as could be and when we got to Committee of Conference we also worked hand in hand in sync. Whether you were a member of the Committee of Conference or a member of Finance, everybody pulled together in a team effort until the last day. Not even the last day, the last half hour. Everybody is good people. I respect them all. Sometimes, as the former Speaker said, "statesmanship trumps politics." In the press conference yesterday, the alternative suggestion was made that we eliminate the Office of Alcohol and Drug Abuse Prevention, that we take back the state employee pay raise that was granted by collective bargaining back to January, that we eliminate LCHIP funding that was established by this body to be a separate fund that would not be subject to our theft as was stated when the bill passed here. The reason the sponsor wanted that was to have a separate fund that we couldn't tackle, as I see a friend laughing. Sometimes history haunts you. The other was to reduce state budget general fund expenditures across the board by 7%, single digit, not a big number, not real important until you look at what 7% does, which is a match in most agencies for millions, millions of federal dollars. Or, if you look in the budget lines, line by line of what we had to go through to bring a budget in at all this year, of the cuts in every single state agency and that was not a Democrat or a Republican pain, that was a universal pain with every one of us. We all looked and nobody liked it, but there are cuts. So, if we can do a 7% cut, I would suggest telling your constituents if their diver's license or their registration is due in November, get in line now. And, if you have a grievance that needs to be brought into court, don't expect it to be before a court judge before two biennium's from now because they are already back logged, they are already short staffed and they can't figure out how to handle the case load that they have now. And, if you have a severe environmental problem, you better start figuring out how you're going to sell your property quick before anybody knows about it and move to a new location because there isn't going to be anyone there to fix it. 7% isn't a number that is a single digit that has no consequence. 7% is utter devastation of state government as we know it. I do appreciate those thoughts being brought forth. It would have been more appreciated if it had been designated line by line. Madam Speaker, everybody worked in a bipartisan fashion to the wire. Everybody in a bipartisan fashion brought forth all of their suggestions and every viable suggestion that could be brought to agreement between two bodies was accomplished. The end result is a budget essentially level funded from last biennium when fixed costs have risen, the case loads have risen and the demand is greater. Madam Speaker, I don't know how that even happened that we got to "Yes", but we did. I ask for your support for the vote on HB 1 and I ask that you truly keep in mind the consequences of not doing it and I ask that you truly keep in mind the words of the former Speaker. Today is the day to put aside your individual problems with any one specific part of the budget. Think of the people at home. Think of the towns, cities and counties. Think of your constituents. Today is the day to be a statesman.

Speaker NorelliThe House will be in order. The question before the House is the adoption of the Committee of Conference Report on HB 1. The chair recognizes the member from Weare, Rep. Kurk.

Rep. Neal Kurk (R - Hills 2)Thank you, Madam Speaker. Madam Speaker, there are three points I would like to make about this budget. I'd like to talk about the good things in it. I'd like to talk about the bad things in it and I'd like to talk about the ugly things in it. Let's start off on a positive note, the good things. Most of the good things that are in this budget are the things that are not in this budget. For example, expanding gambling is not in this budget. House conferees represented the House position effectively and prevailed. There is no refinancing tax in this budget. There is no entertainment tax in this budget. There is no capital gains tax in this budget. I know that was the House position, the Senate prevailed and I am very pleased that the Senate prevailed on that issue. The same thing with the death tax, it is not in the budget. Speaker Norelli: Would the member please suspend? I would remind the member and agree with the member that those taxes are not in the budget and that HB 1 is the bill that is before the House.

Rep. Neal Kurk (R - Hills 2)Madam Speaker, I am sure that you are aware that the back of the budget, HB 1 contains revenue estimates which are laden with taxes including the increases in taxes that are passed in................

Speaker NorelliI am aware of that and those that are there are certainly open for you to discuss and those that are not are not in there.

Rep. Neal Kurk (R - Hills 2)Well said, Madam Speaker. You have made my point. We've also done something that I think is very intelligent with respect to our corrections facilities. Not only have we closed Laconia, but we have set up a new Communities Correction Division, which if it performs as it has performed in other states, this is not a trial balloon program, we would expect that within six years, our total inmate population would be reduced by pretty close to 1,000 and be down to 2,300 inmates. That represents or will represent some very substantial savings both in operating expenses in the future and the avoidance of significant capital expenses in the future. Another good thing in the budget is that we closed the Tobey School for a whole variety of reasons. The population of that school had dropped to a point where it was economically unviable and it was eliminated. What's bad about the budget? I think the key thing from my point of view is the high level of spending in this budget. Not compared to historical levels of spending. Compared to historical levels, it's modest. But, compared to our current situation when most of the other states in the United States are cutting their budgets, according to a New York Times article by over 2% on average, New Hampshire raises its general fund, education fund, expenses by 7.7% on a comparable basis, comparing apples to apples and ignoring the $223 million of items that were formerly part of the general fund, which in this budget are removed from the general fund and treated separately, such as the Liquor Commission which now has a new liquor fund. If you make the comparison including education funding and general funding, apples to apples, this budget increases general fund spending by 7.7%. That doesn't make sense in these economic times. I recognize that there are more people who need Medicaid. I recognize there are more people who need welfare, but even so, we can provide those needs without a 7.7% increase. As various sages inhabiting the corner office over the decades have told us, low spending means low taxes. If we want to spend at this high rate, we have to raise taxes. I think all of us are aware that neither the federal government nor any state should be raising taxes during a time of economical problems. Standard economics 101 the federal government is practicing it. Apparently, we in New Hampshire, if we pass this budget, have forgotten that economics lesson. There is another issue here that we need to be aware of and that has to do with downshifting. This is part of the bad. There is a lot of downshifting here. If you add it all up, at least on the municipal side, it's very substantial, but the total amount is $131 million. We suspend municipal revenue sharing. Your cities and towns will get $50 million less over the biennium. We reduced the state contribution to the retirement payments that cities and towns and school districts make on behalf of some of their employees. We do it in a way that not only affects school districts but also municipalities, that is $27 million. We suspend public wastewater grants, $10 million of downshift. We have under funded catastrophic aid, we usually fund it at over 90% and we are down to about 70% funding, shorting our cities and towns and school districts by $26 million. Tuition and transportation aid has been cut by $2 million and the municipal share of the rooms and meals tax which would have gone up if the tax were raised is not. It's frozen at 2008 levels for $15 million. It is to be noted that we are increasing expenditures for education by $118 to $120 million and to some extent that offsets the $130 million that will not be going back to our municipalities. However, I think all of us are savvy enough because many of us sit in local governments either on the selectmen or the school board and we know that this budget downshifts most to the municipalities while the school districts, on average, gain. Imagine if you are a selectman. You're the one who has to propose cuts or suffer tax increases. If you're on the school board, it's quite a different story. Downshifting is a bad idea because ultimately local property taxes are raised. Now the ugly. There is $407 million of one time money in this budget. Excluding what we have done with one time money in 2009, I'm just talking about 2010 and 2011, when we start our budget for 2012 and 2013, regardless of anything else, we are $407 million in the hole. $160 million of that comes from the federal stabilization money which goes to education. $145 million of that comes from the federal Medicaid match increase. $45 million of that comes from the medical malpractice that we are taking to balance our budget and $45 million of that $110 million is used to balance the 2011 budget. $20 million is unallocated stabilization funds. That's the federal money and then there is a small amount for the self insurance reserve reduction and police standards and training fund reduction which we have taken on a one time basis. Total $407.2 million. Those of you who love income taxes probably are salivating about this because the greater the hole in the budget the more likely it is we are going to have to raise taxes, especially if one party is in power next time. With that kind of a hole, unless the federal government decides, which it very well may, to extend the federal Medicaid percentage for another year or two, what's the obvious choice? Well, we can go back to the gambling well. Unlikely, the House is really opposed to that. Maybe it's time to consider an income tax as one prior speaker said. Acting now to put off for a couple of years that significant a hole, I think is very inappropriate and it's the primary reason why I think we should be voting against HB 1. What happens if we vote against HB 1? We can have a continuing resolution and despite what a former speaker said, a continuing resolution can be crafted in many different ways. We don't have to spend at the current level. We can spend at a lower or higher level. We could if we wanted to, put revenues into effect through the concurrent resolution. We can, as a Republican concurrent resolution does, postpone the date of the first payment of school aid until after the end of the continuing resolution period. No bugaboo need be brought up that says we cannot function normally with a continuing resolution. So, if you think that the bad and the ugly outweighs the good then I urge you to vote "No" with me and press the red button on concurrence with the conferees report on HB 1. Thank you, Madam Speaker.

Speaker NorelliWill the member yield to a question? The member yields, Rep. Vaillancourt you may inquire.

Rep. Steve Vaillancourt (R - Hills 15)Thank you, Madam Speaker. I actually have two, but lets' try this one and again not dealing with taxes, but only with revenues. I have heard so much about downsharing, downshifting with the loss of revenue sharing and other things that I honestly went to the basement of the State House yesterday and spoke with, well it doesn't matter what his name is, but he is the expert that does all of these spreadsheets. Mr. Beardmore I think his name was. He gave me this sheet which shows me that everything being equal, the state is sending $1,172,000,000, etc. this year whereas next year it will send $1,191,000,000 on which is an increase of $18.7 million and two years out an increase of $12.7 million. So when we think of downshifting, the state is actually, all things being considered, sending more, $18 million more next year and $12 million more two years out. Where am I wrong?

Rep. Neal Kurk (R - Hills 2)I haven't seen those numbers Rep. Vaillancourt so I am not in a position to answer that question. The numbers that I have do not include all of the money that goes to the cities and towns. It deals with the money that is in this budget that is not going to the cities and towns. For example, municipal revenue sharing, the state retirement contribution reduction and the other things that I mentioned, those are monies which in other budgets have gone to the cities and towns, but in this budget are not. To me, that is downshifting. Remember, as we share revenues with the cities and towns, they go up each year. They are supposed to go up each year. The rooms and meals revenue sharing is supposed to go up each year so I would expect that revenue sharing in total would increase. What this budget does is take it away so that the amount of the increase at the very least is less than it would have been had this budget not been adopted and we had tried to protect our cities and towns. Let me offer one suggestion for those of you who are concerned about going back to a second Committee of Conference on this budget. I mentioned before that we had proposed, this was a House position and Senate adopted it, that we had proposed to reduce the state's share of the retirement contributions that are made by our school districts and for police and fire employees from the municipalities. Currently we pay 35% of that share. In this budget we reduce it to 30% in 2010 and 25% in 2011. 60% of that money is a hit on the school district. 40% of that money is a hit on municipalities. If we go back to a Committee of Conference, I can propose a way that would increase revenue for the municipalities and shift the burden to the school districts since they are getting $118 million additional through adequacy they can afford this additional hit and we can save approximately $9 million that is now going to be paid by the municipalities. That downshift can be avoided. There are things that we can do that are either revenue neutral or positive if you send this back to a Committee of Conference and have a continuing resolution should it be necessary. I would remind folks that I have seen Committees of Conference that went out into the corridor, reached an agreement and we were voting on the Committee of Conference Report on the same day that we had turned it down, a new committee report in fact. In this budget, I don't think that it would take more than a day for the conferees to work this evening and tomorrow, the last day without suspending the rules, we would have a new Committee of Conference Report for you. So there are ways to do that Rep. Vaillancourt and I don't believe it's a downshifting.

Speaker NorelliWill the member yield to a follow up? The member yields.

Rep. Steve Vaillancourt (R - Hills 15)Somewhat of a follow up, somewhat of a tangential question, but again on revenues not on tax increases. I had to become somewhat of an expert on the rooms and meals redistribution formula in my previous life when I was calculating how much the Manchester Civic Center would take from rooms and meals. As I understand it, the rooms and meals tax has been frozen for the next two years but I think you said it would have gone up. As I understand it, the rooms and meals tax distribution only goes up if rooms and meals revenues go up and they did not go up this year. They are down substantially so in fact the rooms and meals share going back to the cities and towns would not have gone up even had we not frozen it. Am I wrong?

Rep. Neal Kurk (R - Hills 2)Let me state the situation as I understand it. We are freezing the rooms and meals revenues at the 2008 not the 2009 rate. If the tax increase that is in this budget were to pass, then an additional $15 million during this biennium would have gone to the cities and towns in rooms and meals revenue sharing. That will not happen as a result of the fact that this budget freezes the rates at the 2008 level. To me, because cities and towns count on there being an increase to offset their increased expenditures due to inflation, to me, that is a downshift. We are telling the cities and towns that we made you a promise, we were going to share this revenue with you and now we are reneging on that promise. I don't think that is a desirable thing to do.

Speaker NorelliWill the member yield to another question? The member yields, Rep. Tupper you may inquire.

Rep. Neal Kurk (R - Hills 2)I am delighted to yield to my singing companion.

Rep. Frank Tupper (D - Merr 6)Thank you, Madam Speaker and thank the gentlemen from Weare for taking my question. How would you rank the elimination of LCHIP relative to Sergio Leone's The Good, The Bad and The Ugly?

Rep. Neal Kurk (R - Hills 2)I rank that as one of the uglier things in this budget even though I am proposing its elimination. I feel like I'm in a position that Sophie was in, in Sophie's Choice. Which of my children will I kill? Which of my children will I save? Ultimately and some of you who remember her will understand this, at the end of the day Teddy Nardi was right, people over trees. We are at that point in my view where we need to come back with a budget with very substantial cuts. We need to eliminate LCHIP because as important as it is, and I can't think of a program that's as important, helping people, meeting our responsibility to people who are truly in need is more important than that. I am very sorry to have to be in this position but having been put in that position by our crisis; I sadly come to that conclusion.

Speaker NorelliWill the member yield to a follow up? The member yields. Rep. Tupper: Thank you, Madam Speaker. So, even though this is dedicated revenue, you would dip in to strip it out of $4.5 million?

Rep. Neal Kurk (R - Hills 2)The member wishes to rip my heart out completely? The answer is, as much as I fought in helping create this fund that it would be immune from this, sadly I miscalculated. But for the depth of this crisis, that fund would be protected, but in these kinds of times, extraordinary measures are necessary and from a Republican point of view, this is one of those sacrifices that have to be made. Your questions hurt, sir. I'm sorry I had to answer them.

Speaker NorelliWill the member yield to another question? The member does not yield. The question before the House is the adoption of the Committee of Conference Report on HB 1. The Chair recognizes the final speaker, the member from Durham, Rep. Marjorie Smith. The member may proceed.

Rep. Marjorie Smith (D - Straf 7)Thank you, Madam Speaker. There is very little, I think, left for me to say. You have heard people speak about what hard decisions had to be made in this budget. You heard those who oppose the budget list why they oppose the budget and some of what was said does, in fact, leave me speechless. I heard a dear and valued colleague talk about the conflict he faces in this budget and why we would have to cut a program that preserves so much that we value in New Hampshire because we have to support the people and then, in the same breath, I heard that colleague say that we could solve this problem by making a 7% cut across the board in the budget. Tell me where those cuts would be? Would it be in the increases in the lines in the Health and Human Service budget where we recognize how case loads are going up because people need help? Which 7% would we cut from there? Would we cut 7% from our schools? Would we cut 7% from the programs that protect our water or our air? No one has talked about what would happen if this budget didn't pass in terms of the highway fund. We all like highways in this state. The highway fund would be losing money at a $250,000 a clip and in no time at all would be out of money, despite the money coming in under the economic stimulation program. Do we really want that? I don't think so, I don't think so at all. Is this budget something that I am going to put up on my mantel so that I could smile and wave as I pass it? Of course it's not. Working as closely as I could from January until today with a fine group of colleagues, Republicans and Democrats alike, we worked through the budget and got it through the House. We sat and watched and listened carefully to what the Senate did and then we sat down, Republicans and Democrats together, to say what can we do that meets the needs of the citizens of this state? The one thing we know we cannot afford to do is let this budget go down. I was interested to hear some suggestions that have emerged that somehow did not come up in the last six months. We are always happy to hear new suggestions and there will be a time to pay attention to them. We created a subcommittee on our Committee of Conference. Most Committees of Conference don't have subcommittees. We had several. We had one looking just at revenues. We had one looking at cuts and we had two very well respected members of our committee look at those cuts, one from each side of the House. We took some of their advice. We basically took all of their advice in cuts that we had the legal authority to do. It is heartbreaking but what we did was the best that could be done and no one is going to be able to do better in a week or a month or three months. The only thing that could happen if this budget goes down now is that we will be unable to meet the needs of the state, of the citizens of the state whom we came here to represent and they need our help. People who say, aha, this is my chance for an income tax or this is my chance for gambling or this is my chance to eliminate all those lily-livered programs that help people who can't help themselves or this is my chance to cripple the courts or this is my chance to do any of those things. That is not going to happen. What we are going to do here is pass a budget that is as responsible as it can be and all of us will be looking forward to a day when we can say, in a situation in which states around us were unable to function, we found a way to get our state through knowing that there will be a better day coming. Meanwhile, we have done the least harm that we can do. I ask all of you, my Democratic colleagues and my Republican colleagues, to think about what would happen if we do not vote "Yes" and I know that those of you who are able to put policy ahead of politics will vote "Yes" and for that I thank you very much.

Speaker NorelliWill the member yield to a question? The member yields, Rep. Boyce you may inquire.

Rep. Laurie Boyce (R - Belk 5)Thank you, Madam Speaker. I heard another representative talk about a continuing resolution. We can go ahead and give departments money with the legislature. We can do anything we want with a continuation. Is that right?

Rep. Marjorie Smith (D - Straf 7)I don't like to disagree Representative, but that's not right. We cannot agree to spend money that we do not have. It would be irresponsible for us to do that. That cannot happen.

Speaker NorelliWill the member yield to another question? The member yields, Rep. Vaillancourt you may inquire.

Rep. Steve Vaillancourt (R - Hills 15)Thank you, Madam Speaker. I did sign up this morning to ask this question. That's how important it is to me. Rather than carry around that hefty tome, I have copied page 243 for you and for me in dealing with this question. It is a very specific question and having accomplished one of the greatest goals of my life three weeks ago, I am now looking in the budget process to accomplish one of the other greatest goals in my life and I am very confused. This is very important because it is emblematic of how government can make unnecessary cuts. We learned that the state was spending $500,000 a year regulating dog and horse racing. The House passed an amendment to eliminate that and it was removed in the Committee of Conference because a certain Senator had arguments against it but then as I look on page 243 I noticed that the budget for two years out, when this would have kicked in, is exactly $500,000 less than next year and the amendment that the House approved would have let them keep this for next year. It looks like the Committee of Conference has stripped out the wording to require the tracks to pay the entire cost of regulating, yet in the budget, on page 243, I refer you specifically to lines 45, 50, 59 and 60, the monies are cut. Does this mean that if this budget passes today, we will not be able to regulate dog racing, thus dog racing will die if this budget passes?

Rep. Marjorie Smith (D - Straf 7)I can't predict the future about that but I can answer your question Rep. Vaillancourt. On the page to which you refer there is a line 009 that says agency income. The agency income is the result of reimbursements coming to the state for the compensation of stewards and judges and veterinarians. Agency income is shown only for fiscal year 2010 due to the House adding language in HB 2 to require racetracks that want to conduct live racing to pay the entire cost of live races. That was what passed the House. The House when it passed the budget said we can have all the racing that people want at the tracks but that the state shouldn't be subsidizing that racing. During the Senate phase, and I believe it's acceptable to talk about the Senate phase here since its part of this process, the language in HB 2 was removed so that the House's position that the industry should finance itself was removed in the Senate. But the Senate did not move to restore the counting unit to restore any of the funds, so when the bill passed the Senate the House language was removed but the Senate did not add any funds. The Committee of Conference was not asked to either add back the funds or add back the HB 2 language to require the racetracks to pay the entire cost of live races. In the budget, we have funding for the first year and no funding for the second year.

Speaker NorelliWill the member yield to a follow up? The member yields, you may inquire.

Rep. Steve Vaillancourt (R - Hills 15)I have gone to LBA and they have told me that there is no way they could restore this as a technical correction and I have gone to other people and they have told me that there is no way Fiscal could add this back in. I have been told that the only way this could be added back in for this practice of dog racing to continue at state expense would be for somebody to file a bill contrary to what the House has already expressed. Am I correct? Rep. Marjorie Smith: I believe that that would be the correct procedure. There would be time in the next session since the House left the funding in for the first year.

Rep. Steve Vaillancourt (R - Hills 15)Thank you. You have made my decision much easier.

Rep. Marjorie Smith (D - Straf 7)Rep. Vaillancourt, for years that has been my goal.

Speaker NorelliThe House will be in order. The question before the House is on the adoption of the Committee of Conference Report on HB 1. Rep. Eaton has requested a roll call. Is that sufficiently seconded? It is sufficiently seconded. This will be a roll call vote. Will members please take their seats?

Speaker NorelliThe Committee of Conference on HB 2, relative to state fees, funds, revenues, and expenditures, recommends that the House recede from its position of nonconcurrence with the Senate amendment and concur with the Senate amendment and that the Senate and House adopt the following new amendment to the bill and to pass the bill as so amended. The question before the House is the adoption of the Committee of Conference Report on HB-2. The Chair recognizes the member from Keene, Rep. Robertson. The House will be in order.

Rep. Timothy Robertson (D - Ches 6)Thank you, Madam Speaker. I'm being harassed here from the front row again. How come they don't have to speak into the microphone? I won't read what I did before about the unfairness of who we tax in this state. I would just say that I happen to know there is an income tax bill sitting in Ways and Means. I don't understand why it doesn't come out. I don't understand when a state is in the top five as far as millionaires go, we don't want to tax them. I don't understand why I should be loyal to my Governor instead of my constituents who strongly favor an income tax. Us people in Eastern Vermont happen to believe that's the fairest form of taxation. It's not too late. We could even, through an amendment to the constitution, let us tax people at various rates. For instance, maybe we could on the state property tax eliminate the first $100,000 of assessment. I just feel, if you listened to what I said earlier, taxing a person that makes $20,000 8% of their income, I just don't believe we think that's a fair way to do things when people at higher levels are paying less than 2%. I would ask that this committee of wise people who've been looking at this for years, if you look at short history, the greatest Governor this state has had in my lifetime, Walter Peterson..............

Speaker NorelliWould the member please suspend? The member has a right to be heard and other members that want to hear have a right to hear. I would ask the members that are in the chamber to please stop their conversations. The member may proceed.

Rep. Timothy Robertson (D - Ches 6)The good Walter Peterson, still a Republican and still favors an income tax and it came, he told me, within one vote of getting passed. When I was here sitting under Governor Shaheen, both Houses, with Republican majorities, passed an income tax. Unfortunately, the Governor, by what she did, killed the Committee of Conference and it didn't happen. I don't know a fair way to tax people except based on their income and I think it's about time we looked at that. I was told and brought up by my parents, good Republicans, that when things got tough, those of us who were still doing well, and there are plenty of them in this state, should be asked to contribute more than those who have lost their jobs or are facing more outgoing than income. So, what I would ask is that we send this bill back to the committee from which it came and ask them to add a fair tax. I don't think people who are making a million should be upset if we took one or two, or three or four or five percent of whatever they make over $100,000. I think most of you would be happy to go home with 95,000 or 950,000. Anyway, thank you for your attention.

Speaker NorelliWill the member yield to a question? The member yields, Rep. Itse you may inquire.

Rep. Daniel Itse (R - Rock 10)Thank you, Madam Speaker and thank you to the Representative for taking my question. Would you believe that I was really pleased when I heard you talk about a constitutional amendment? And, would you believe that the taxes that we are lawfully allowed to raise are enumerated in Part I, Article 6? And, that when it was last amended in 1903, they specifically said that it did not include an income tax?

Rep. Timothy Robertson (D - Ches 6)That is why we would need a constitutional amendment. I understand that, but I am a strong admirer of that great President we had, Eisenhower, who had a tax on millionaires of 92% of their last dollar and I don't' think he was a flaming tax and spend liberal. He was one who thought that if you are doing well, you contribute more. Thank you for your question.

Speaker NorelliWill the member yield to another question? The member yields, Rep. Allen you may inquire.

Rep. Peter Allen (D - Ches 6)Thank you, Madam Speaker. Representative, do you realize that Article 12 of the constitution says that every man shall pay his share? Doesn't that imply a tax on income that's fair?

Rep. Timothy Robertson (D - Ches 6)I would think so, but I am neither a lawyer or a judge or a great student of the constitution. Yes, I would say that definitely says so and I think if we looked around the world we would see the most progressive of those most comfortable countries are doing just that. Thank you for your question.

Speaker NorelliThe question before the House is on the adoption of the Committee of Conference Report on HB 2. The Chair recognizes the member from Manchester, Rep. Pepino.

Rep. Leo Pepino (R - Hills 11)Madam Speaker, good afternoon ladies and gentlemen. I might be a little slow and I don't have too much to say, but I just got some figures and I just got them a few minutes ago. The Finance Committee has worked on this budget for about six months going to the Governor. The Committee of Conference worked on this budget for nine days and they bring this budget in to us today. We had yesterday for information and today for information. Does anybody here believe we can digest all this in a day and a half? Believe me, I don't. Some of these tax changes should have had a bill, public hearing and debate. That didn't happen. Some of these taxes, maybe about a half a dozen of them, went to Ways and Means. We sent them there. From Ways and Means they went to Finance. We sent that there. Every bill that goes out from a Committee that we send out from this House has to come back here with a report. That didn't happen. Why it didn't happen, I don't know. Now, were the rules changed or what? I don't know. I don't have a rule book. I was here eighteen years before and the rule book was my guide. I used it for everything. Some of these changes you can't find in a rule book because there isn't one. Now, I would like to talk about the 10% tax on $600 or more. That's on little old ladies and people playing bingo the way they put it across. It's funny they never had, but once they tied it into the federal regulations and they had all of us get involved, its going to go to every casino in the country, at least 10%. Doesn't sound like much, 10%, but let's put it this way. This little 10% tax is the American dream. When a person walks in to buy a ticket for a dollar, he looks at himself and he says, I've lost my job, my wife isn't working, and I got a chance here to win $50 million or $100 million. Then they come on and say, well if you win $10,000 on a scratch ticket we are going to take 10%. Megabucks shifts back and forth a little bit, but on Megabucks we make about 35% of the money spent. We get our cut of that. Now, on Powerball, for every ticket that is bought in the state of New Hampshire, we get 36%. What they are saying is that they want 10% more on Megabucks and 10% more on Powerball. If you win, I don't know, $20, $30 million on Powerball, say what the heck, it's nothing, little old ladies tax. It will cost you $3 million. This thing could be ringing in millions of dollars a week and nobody is looking at it. They are looking at the little old lady playing bingo for 10% because in the paper it said it is going to the IRS and every casino in the country will be notified of anybody that lives here in New Hampshire that wins any money. That little guy buying his little ticket for his American dream, they all want a cut of that. I just prepared this so I am not prepared for it. Now, we took out the Tobey program for the troubled kids in Laconia and last Thursday at our delegation, our executive committee voted not to fund that. Now, the committee got together, pulled away from the executive committee and they voted to fund it and today we are against this Tobey thing. So, they voted for children last week and against children this week. I am going to ask you when this is presented; I know they are going to ask for a continuing resolution to fix the budget. It worked for Governor Benson and his budget finished with an $82 million surplus. When he was here everybody told him, including the Senate and this House, his budget was full of smoke and mirrors and it would not work, it was a worthless budget. Yet, when his budget expired on June 30th of that year, we were sitting here and they stopped the meeting right there and said, guess what, we just got an $82 million surplus on Governor Benson's budget that was full of smoke and mirrors and wouldn't work. I just brought up one tax and there is plenty more in here. I thank you. I hope you can support that continuing resolution when they bring it up.

Speaker NorelliThe question before the House is the adoption of the Committee of Conference Report on HB 2. The Chair recognizes the member from Haverhill, Rep. Ladd.

Rep. Rick Ladd (R - Graf 5)Thank you, Madam Speaker. It's not often that I get up here but today I'm going to stand here as a local selectboard member, chair of the selectboard in Haverhill. I have struggled with this budget and as we've heard before, it's the bad and it's the worst we are dealing here and I see the capital gains tax out, other taxes out, that's great. I asked the question yesterday in this room, how does this download impact the towns? That's where it is, at the local government. Earlier in this session, coming from the other side of the aisle here, I voted for the gas tax because there is a 12.5% return to the towns. That's out. We have to be thinking about local government. The revenue sharing has now disappeared. We have frozen fees that come back to the towns with the prior year 2008. Retirement costs have now been put back down on local government. In my town we have three fire departments, we have three water departments, one police department and I can go on. How we fund these departments depends upon all the revenues that we build in our annual budget. We are now going to have to go back to the town and readjust. The revenue sharing is out. Now, I heard yesterday that counties and education on the local level are receiving additional dollars. That is correct and if you are in a large city where there is more control over those educational dollars than there are at the small town level where you have a separate school board, you all know that the small towns of New Hampshire, the little towns are the first to get hit, the selectboard, that local town budget. We are going to get hit in Haverhill and already, two weeks from now, we're sitting down and looking at what we're going to have to do. We have several options, but I'm sure the option that we are going to be looking at is where are we going to cut services? The other option if we don't, DRA will increase our property tax bill come November. That probably will happen. Unfortunately, the property tax is a regressive tax. We haven't looked at other forms of revenue in this House this year and as a first timer here, as a freshman, I'm disappointed. So, I would like us to consider or if anybody can answer me how this present budget is going to help local towns with our revenues, please do so. Thank you very much, Madam Speaker.

Speaker NorelliThe question before the House is on the adoption of the Committee of Conference report on HB 2. The Chair recognizes the member from Stoddard, Rep. Eaton.

Rep. Daniel Eaton (D - Ches 9)Madam Speaker, we just had a long debate on HB 1. What is before us now is HB 2 which, if not passed, makes everything that we did in the last vote irrelevant. HB 2 has made a lot of significant changes. It has restructured where fines will go in the court system and in the Department of Safety for streamlining bookkeeping, for saving man hours and the same thing for Fish and Game. There are more compromises in HB 2 than probably anything else along the way as far as numbers go. Again, we worked bipartisan, hand in hand, with what I believe was virtually no significant disagreement through that process to get to the end. What we've said before, pertaining to HB 1, the exact same thing pertains to HB 2. We're meeting the essential needs of our communities, our counties and our individual citizens. To not pass this bill has incredibly dire consequences and has incredible damage potential. Now is the time to follow what your heart, your instinct and your inner statesman told you to do before, which is to go forth and vote "Yes." Let's get this behind us. Let's get it to the Governor and get the state back on track, which will place the State of New Hampshire in the best position of any state in the Northeast, if not East of the Mississippi, in the best position to financial recovery of anyone that we know. I ask you to vote "Yes" on the pending motion.

Speaker NorelliWill the member yield to a question? The member yields, Rep. Hess you may inquire.

Rep. David Hess (R - Merr 24)Thank you very much, Madam Speaker and thank you for yielding to the question. I actually have several. My questions specifically deal with the so called extension of the dividends and interest tax to Limited Liability Corporations and other small business organizations.

Rep. Daniel Eaton (D - Ches 9)Madam Speaker, if I might I was going to ask if I could yield to Ways and Means for this part.

Rep. Susan Almy (D - Graf 11)Thank you, Madam Speaker. Thank you, my honored colleague. You do realize that I am not a lawyer?

Rep. David Hess (R - Merr 24)Neither am I anymore. Thank you, Madam Chair for responding. My question deals specifically with the intended scope and nature of the extension of the interest and dividends tax to Limited Liability Corporations, Associations and Sub-chapter S Corporations, business organizations of that sort. Am I correct in understanding that it was the intent of the Committee of Conference and House members in particular that the extension of the interest and dividends tax to Limited Liability Corporations will apply to distributions only to the same extent that distributions to corporation shareholders are subject to that tax?

Rep. Susan Almy (D - Graf 11)Are subject to that tax as dividends, as I understand what the DRA has assured the Business and Industries Association, yes.

Rep. David Hess (R - Merr 24)But, that is the intent of the members of the Committees of Conference, and should this bill become law, would then be the intent of this body so far as you are concerned? Is that correct?

Rep. Susan Almy (D - Graf 11)As I understand the language that you are talking about, which I say again, that I am not a lawyer, yes.

Speaker NorelliWill the member yield to a follow up? The member yields.

Rep. David Hess (R - Merr 24)On the same vein, do I understand that this tax will not apply to distributions received by individuals which constitute fair and reasonable compensation for personal services that those individuals rendered to those Limited Liability Corporations?

Rep. Susan Almy (D - Graf 11)That, my committee has been working on for several years. Yes, the only proviso being that they are still working together, as you know, to define reasonable compensation in a way that is agreeable to all parties.

Rep. David Hess (R - Merr 24)But, this tax would not....It is the intent that this tax not apply to.........

Rep. David Hess (R - Merr 24)Thank you. Further question, Madam Speaker.

Speaker NorelliWill the member yield to a follow up? The member yields.

Rep. David Hess (R - Merr 24)Is it also my understanding, Madam Chair, that this tax is not intended to and presumably will not be levied on capital gains distributions? In other words, gains on capital investment as opposed to interest and or dividends.

Rep. Susan Almy (D - Graf 11)On that you would be correct, yes, as far as I understand legal language. My interpretation of what a capital gain is, which is what we had in the tax, it would not apply to that.

Rep. David Hess (R - Merr 24)Thank you. Final question, Madam Speaker.

Speaker NorelliWill the member yield to a follow up? The member yields.

Rep. David Hess (R - Merr 24)Finally, Madam Chair, is it your understanding that the Committee of Conference and the House members in particular, understand that this tax, if the bill passes, would not be levied on distributions in liquidation or in repayment of debt? Rep. Almy: I believe that I have seen that in the language. It is not something that we particularly had discussed among ourselves, but I believe that I have seen that in some language. That's as far as I can go at this point, since you have obviously gone into it a lot further than I have on the BIA side.

Speaker NorelliThe question before the House is on the adoption of the Committee of Conference Report on HB 2. The Chair recognizes the member from Fremont, Rep. Comerford.

Rep. Timothy Comerford (R - Rock 33)Thank you, Madam Speaker. Madam Speaker, New Hampshire is at a crossroads. Will we continue to embrace our motto of Live Free or Die and the New Hampshire advantage? Or will we plunge toward the economic abyss that our neighbors to the south and the west in Massachusetts and Vermont seem to be embracing. Our families are hurting, businesses are feeling the pinch and myself, a recent graduate of St. Anselm College, still cannot seem to find a decent job. The economics of Jimmy Carter's 1970's seem to be prevalent at the moment. We cannot continue upon this path of destruction. Economic theorists have pointed this out. The continued taxation that the majority in this House seems to rely on is unsustainable. The law of diminishing return shows whether it is taxes on cigarettes or LLCs, the revenue base will decline. When taxes increase, revenues decrease, period. Our campgrounds will be unfairly assaulted with a new 9% tax on a room. How can the government consider a room to be an outdoor space where the camper, likely an average "Joe," will provide his own meal and shelter? It is absolutely preposterous to change the game midstream. The camping season has already started. This is the exact middle of the night trickery that inflames the voting public and hurts their confidence in our governmental system. We will be hurting our main revenue source in this state with this proposal. Tourists and cross-border shoppers will in turn result in fewer jobs in the state when they are not coming in.

Speaker NorelliWill the member please suspend? It is getting rather noisy in here. Everyone has a right to hear and the member has the right to be heard.

Rep. Timothy Comerford (R - Rock 33)Thank you, Madam Speaker. As I was saying, the loss of tourists and cross-border shoppers as a result of this budget trailer will affect the bottom line of our state's businesses and hurt families who provide jobs with their small businesses. I implore this House. Do not make my generation the next lost generation, the Carteresque inflationary vagabonds of the 70's. Madam Speaker, some members of this body may be content to sit around and fiddle while Rome is burning, but not I. I will be voting against this inflationary, rapacious budget trailer. I implore upon your common sense and upon the commonsense of every member of this body. Cannot we remember simple high school economics? I'm reminded of the old adage, "You reap what you sow." Madam Speaker, I can guarantee you if we pass this dung heap of a budget trailer, the reaper will be paying all of us a visit in 2010. There are two types of representatives here, the ones that stand for their party and the ones who serve the people who elected them. I serve the people. Who do you serve?

Speaker NorelliWill the member yield to a question? The member does not yield. The question before the House is the adoption of the Committee of Conference Report on HB 2. The Chair recognizes the member from Belmont, Rep. Pilliod.

Rep. James Pilliod (R - Belk 5)Thank you, Madam Speaker. Everybody hold up your hand if I can't be heard. I'm speaking into the microphone and loudly. How is that? Is that any better? Thank you. Thank you for raising it. I appreciate it. First page, HB 2, Section one. Notwithstanding - I hate that word. Notwithstanding any other provision of law, the New Hampshire Medical Malpractice Joint Underwriting Association, called JUA, and I will use that from now on, by and through it's board of directors and any person having responsibility and authority for the custody or investment of the assets are hereby authorized and directed to transfer "X" number of dollars, $65 million if you want the numbers, by June 30 of 2009 for July 31st of 2009, transfer, transfer. Where in the law does it say they can do that? In fact, it doesn't. The fourth question that I have here is how can we even accept this bill when it has something that is, in fact, not right? I'm told not to say illegal because an Attorney General that I know of has said it was okay. Does not necessarily, in my opinion, make it legal, but nonetheless, as the JUA is regulated by the New Hampshire Insurance Commissioner, operates in accordance with rules. 1700 number if you want to look it up. According to the rules, if the JUA has a surplus, as proposed in Section 1 of the bill, not only violates New Hampshire law, it violates, if you take the money, Part 1, Article 12 of the New Hampshire Constitution and Part 5, Article 9 of the United States Constitution, which prohibit government from taking property without justification, without just compensation. Now, it has been said that this Joint Underwriting Association has accumulated assets that are way too high. I've been accused of that. I have nothing to do with them, by the way, I'm not insured by them and I don't pay money to them, but I did years ago and in fact the question was did they have too much money. $160 million, is that too much money? I don't know, but let me tell you that as of a little bit ago and not very long two lawsuits were completed in Pennsylvania. In 2000, the Pennsylvania jury awarded $100 million to a plaintiff. I won't go into the reasons for it, let's just say that is what happened. The money went to the plaintiff. There was another $100 million verdict in Pennsylvania in the year 2000 against four doctors and two hospitals. Now, if this JUA that we are talking about, we could just go in and take their money, doesn't have that $200 million or $100 million or even $150,000, whatever, where are they going to get it? Is the state going to give it to them? No. Where are they going to get it? The people who are currently insured will be asked to contribute to a reestablishment of a reserve fund. Is that fair? I happen to be at a Rotary meeting last night, picked up a little card and there are a few rules that you had to go by. One, is it the truth? I've been trying to tell you the truth. Number two, is it fair? I don't think this is fair at all. People took their money, in essence, to build up a reserve fund for the state JUA, Joint Underwriters Association, so they could have the reserves to be able to....The reason there was even a JUA established was because the other insurance companies failed. They failed to collect enough reserve funds to be able to pay some of the awards. That's why there is a JUA now and it was a JUA which was established in cooperation with the state. They never put one penny into it, not one cent. These were all policy holders' money, so there we are. Now, I don't think, I hate to say this because I generally have been in favor of the Governor's budgets and the attempts that we make to try and fund them without adequate income, but nonetheless, I have to say that I am going to be against this bill because I think it's dishonest. I think it is unfair and I must say, think of yourself. You have a savings account, I hope, all of you or most of you, but don't worry, we will just take it whenever we need it because that's stored up money. You have probably stored up too much money, so we will just take it as a state and transfer it to the general fund. Now, that's really all I have to say today. I wanted to keep it brief. I talked to a certain person last night and I was sorry to say that I am going to vote against this and the person looked despondent. I said to myself, I am sorry, I really am sorry. I can't say that I will vote for it. I could have. I took a look at all the different numbers that we have for income. Keep in mind that this transfer, in my opinion, unfairly takes from a fund which is collected to be able to serve the purpose of the people that have a problem. You take that away or even if you use it, if you use it for something good for the State of New Hampshire, that's fine. It's only one time money, you can't do it again. It's not there. I don't like spending money which I cannot continue to spend out in the future. We know that. People have been told, for heaven's sake, don't spend this because if you do, you don't have any left for the next year or the next week or the next month. It is unfair and it is unreal so I will ask you to not kill our effort to try to do this, but do it by defeating this bill and send it back for some more work to try to find money somewhere else where in fact it looks more like an honest to goodness tax or fee or something, but not something that is removing a safety feature, if you will, for a large part of the state. Thank you for your time and I won't take any questions, Madam Speaker. Speaker Norelli: The question before the House is on the adoption of the Committee of Conference Report on HB 2. The Chair recognizes the member from Manchester, Rep. Vaillancourt.

Rep. Steve Vaillancourt (R - Hills 15)Thank you, Madam Speaker. I rise in support of HB 2. A month ago, two months ago, I could not envision ever saying those words. Because when this spending plan left the House, I could never have supported a capital gains tax. I could never have supported estate taxes. When things were floated, such as taxing your refinancing, I could not have supported that. There are many, many things I could not have supported. They're all gone. They are not in here. Although, I would certainly, as one of the most conservative people when it comes to spending, would have liked to have seen much less spending. I realize we're in a position of compromise. Somebody who is counting votes came up to me this morning and said, "We no longer need you to vote for HB 1 and HB 2. We have the votes without your vote. We have that much of a margin," to which I said, "Thank you, but I don't operate that way. I think its good enough, probably the best we can get so I am going to vote for it." I stand by that. This is the best we can get. In 1800, Presidents didn't deliver their inaugural addresses to Congress orally, they wrote them. So, if I were to say that after a very lengthy debate, Thomas Jefferson spoke at his inaugural address, I would be wrong, but he did in fact, write in his inaugural address, "We are all Democrats. We are all Federalists." That was a plea during a time of national crisis after a disputed election when parties were beginning to be formed and there were tremendous differences between those parties. That was a plea by Thomas Jefferson to say, set your individual differences behind and do what is in the general interest good for society. I think all things being considered, this packet of spending increases and tax and fee increases is in the best interest of society. How can I say otherwise? Three of these ideas are things I have posited for a long time. I believe it was my first session, which would have been 1998, that I thought, you know, if I win a $1 million on a gambling effort, I should pay a tax on gambling winnings. It's taken twelve years, but it's here and I think that is a good thing because I don't want an income tax, I don't want a sales tax and I don't want a broad base tax. I realize that the only way we're going to avoid those broad base taxes, is in the Republican tradition of nickel-anddiming us to death and the best way to nickel and dime us to death is making taxes equal and if you can afford to pay 8%, now 9%, for a room at an expensive hotel or in a flea bag hotel, then you can afford to pay 9% at a campground. It is not a question of even raising money for me with this tax. It's a question of fairness, a question of making everybody pay the same thing. I know the campers are going to be mad at me, but my reaction when I saw this was, you mean we are not already taxing campground operators? And, then when I heard them say, "Oh, but it's a rooms and meals tax, and it's not a room." Well, the rooms and meals tax, if you didn't know, just doesn't tax rooms and meals. I believe it was the Republican Party, my party, which extended the rooms and meals tax to include rental cars a few terms back. So, let's not pretend we are holier than thou. Let's forget that we are all Democrats or all Federalists and let's try to do what's in the general good when we do tax policy and I certainly think it's in the general good that we tax campgrounds if we're taxing other forms like that. You may recall, Madam Speaker, that the very last item we did in HB 2, when it passed a month or so ago, was an attempt to raise the rooms and meals tax, not to 8 �%, but to 9% and you may recall that the Ways and Means Chairman said, "Oh no, Representative Vaillancourt, we can't do that because this is a regressive tax and we dare not pass regressive taxes." I did not believe then and I do not believe now that the rooms and meals tax is a regressive tax. If I leave here today and go have my 99 cent whopper junior, I am going to pay 8 cents. Next month I'll pay 9 cents. If I go and have a $10 meal, which I assume most of us will, I'll pay 80 cents, 90 cents after the tax. If I am a relatively wealthy person and go have a $100 meal, I'd pay $8, instead I'll pay $9. Oh, that will ruin the New Hampshire advantage. I think not. Vermont is 9%, Maine has just gone up to 8 �% and Maine has added that dreaded entertainment tax. Quebec is 14% and we all know what they charge in Massachusetts, if not for this tax. For me, the rooms and meals tax is the least objectionable tax we have. Nobody is going to stop going out to eat or going out to that hotel because this goes from 8 � to 9%. Nobody is going to even think of it and that's the Republican way. That's the way we avoid an income tax. That's the way we avoid a sales tax and dare I say, that's the way we avoid gambling. Many of you who've been here a long time know that I believe people have a right to waste their money any way they see fit, but I do not believe that its in the constitutional interest or in the best interest of this state to give 3 or 4 or 5 businesses entr�e to have a monopoly over gambling so I could never have supported HB 2 had it included the D'Allesandro gambling plan at five institutions or the Sgambati gambling plan which lowered it to just one institution, even worse as far as I'm concerned, even more of a monopoly. And, I could never have supported that last minute plan which would have allowed certain tracks to have what they call historic race machines, where you, in the form of a slot machine, are betting on previous races. I thought to myself, oh that's interesting, I go and watch a two minute race and bet on the result. No, the two minute race goes by in five seconds, just like a normal slot machine with the bells and whistles and it's just another form of gambling which I would not have supported. We have done, I don't want to take credit, you have done, Madam Chair, you have done, people on the Conference Committee, the virtual impossible. You have crafted a tax and spending plan here, a tax plan that is the least harmful. Republicans, like my good friend, said we shouldn't be taxing during a time of crisis. He's right. We shouldn't be adding a capital gains tax, we shouldn't be adding the death taxes and we shouldn't be adding an income tax or a sales tax. We're not doing any of that, we're taxing around the fringes. So, my friends, we're all Democrats, we're all Federalists. We should all be supporting this. Just to get back quickly to the gambling tax on gambling winnings. You've had a lot of emails, I'm sure, from people that say they wager out of state at various tracks. I got one today that a man claims that he will now lose $200,000 a year because he is betting on Belmont races. To that I say, what more proof do you need that these racetracks are not in fact racetracks where people go to watch dogs and horses, they are not even racetracks where people go to off track betting. They are OTB parlors for out of state people who phone in their bets. We don't need that in New Hampshire. A 10% tax on gambling winnings is innocuous. An increase in the rooms and meals tax is innocuous. I'm somewhat ashamed to say that I would prefer a gasoline tax to the increase in the registration fee, but in all honesty, I voted against the gasoline tax increase earlier, so who am I now to say I dare stand up and oppose this alternative method. Finally, the cigarette tax increase. I was shopping at my favorite store on Storrs Street the other day, it's always a sociological experience. The woman ahead of me had an order for $90 and she saw that I only had a can of tomatoes so she was sad that she was going to have to make me wait longer while she got a carton of cigarettes. I felt a little amused so I said, "Those are going to kill you, you know." She looked down and she said, "I'll outlive you." I said, "How many do you smoke?" She said, "Two packs a day." This gets back to the issue of fairness. This gets back to the third tax I tried to have done when I was in the Ways and Means Committee. If we are going to tax that poor little old woman on her cigarettes, we ought to be taxing the cigar smokers as well so I'm not against this being extended to cigars. This is all about fairness. This is all about doing the least possible to maximize our results. Therefore, Madam Speaker, I can say what I never dreamed I'd be able to say three or four weeks ago, I will vote "Yes" for HB 2 even though you won't need my vote. Thank you.

Speaker NorelliThe question before the House is the adoption of the Committee of Conference Report on HB 2. The Chair recognizes the member from Keene, Rep. Kris Roberts.

Rep. Kris Roberts (D - Ches 16)Thank you, Madam Speaker. Fairness, what is fairness? Not equality. What is fairness? Everyone here has a totally different idea what fairness is. Fairness doesn't mean that we get it done now and go home and say it's fair. Fair is making sure that we do the right thing. One of the major reasons why I'm voting against this HB 2 is because two years ago, I told a number of my fellow members here that the numbers were off by $125 to $200 million. When the revenue projections were increased to balance the budget, I was told, "Just trust me." If someone has to tell you, trust me, then that should be a warning. When it came time to vote, I stood here and said nothing. I voted "Yes." I was wrong then and I was still wrong and I won't be wrong today. I knew better. My advanced education and training was in fiscal management, budgeting and long range planning. The Boston Herald stated that the New Hampshire housing market had the greatest risk of a major downturn in the New England region. It was correct. Many other indicators were heading south. I know that the economy two years from now will not be close to the economy of two years ago. Last week it was reported that based on forecasts of improving economy, revenue projections were again raised this time about $75 million in order to balance the budget. Yes, housing starts were up 17%, but that 17% is based on 500,000 units, not the peak of 2.2 million units. I would rather have housing down 50% off the peak because that means housing would be up 100%. The National Association of Realtors stated yesterday that the median house which was worth $180,000 in December 2008 will be worth $152,000 in December 2009 and would be worth $179,000 in December 2012. If the positive looking National Association of Realtors is correct, sometime in 2013, not 2009, 2010 or 2011, my house will be equal to what it was in 2008. Yes, the number of people in unemployment is down, but once you take a part time job, you run out of unemployment, when you count the high school and college graduates who can't get a job or you have just given up, you don't count anymore. In May of this year, the underemployment rate, not the unemployment rate, the underemployment rate was 16.4%. 16.4% of all Americans did not have a job, were working part time or had multiple jobs just trying to make it through. In February of this year, over 3.8 million people over the age of 45 were unemployed. These people were living off their 401-ks, their IRAs and their children's college funds. Let's be honest, how many of these people over the age of 45 will ever get a job that paid them what they used to do and covered their benefits? These people will spend the rest of their working lives living in fear of losing their jobs again. They won't be buying new cars, eating out, camping or going on vacations. They will have a negative effect on HB 2's revenue projections. The New Hampshire Public Policy report dated December 8 stated that housing prices will bottom out in the 3rd quarter of this year. Jobless rates will peak in the 1st quarter of 2010 and substantial growth starts in the 1st quarter of 2010 with housing prices starting to rise in the 4th quarter of 2010, while at the same time projecting a $300 to $500 million shortfall. What happens to HB 2's revenue projections if the New Hampshire Public Policy report is off by twelve to eighteen months? Or, we don't have the 4% growth that the President is counting on? What happens if we only get 1% to 2% growth? What happens if today is the new reality? What happens if they are correct and there will be a 3% drop in worldwide GDP? I won't support a budget built on hope. This is our responsibility to have a budget built on reality, not on hope. I would not bet my life on the numbers in HB 2, yet we are asking the men, women and children of New Hampshire to trust us with their future, their hopes and their dreams. This, on revenue numbers that have been repeatedly wrong. This, based on stimulus money and other one-time funding. $750 million seems like a lot of money, it is a lot of money, but that is less than $350 a year for every man, woman and child in New Hampshire. How many times, as leaders, can we tell people that we were unexpectedly wrong before they lose complete confidence in our ability to make the hard and sometimes painful correct decisions? When a railroad engineer plans a train load, he bases his calculations on the capability and capacity of the engines. He understands that to do otherwise creates inefficiencies. The citizens of New Hampshire are the engines that must drive this train, not the people with the loudest voices or the most orange badges in here. I've heard over and over again that we must do this, we've worked hard, and we've been digging hard in here. Well, I was once told I dug and dug and dug until I realized when I looked up I was digging my own grave. Speaker Norelli: Will the member yield to a question? The member yields, Rep. DiPentima you may inquire.

Rep. Rich DiPentima (D - Rock 16)Thank you, Madam Speaker. Thank you, Representative for taking my question. They say the third time is a charm so I finally get my question in, from a Democrat anyway. In this budget I have heard two comments previously about the fairness of this bill. Fairness seems to be a word that we use quite often. Can you tell me or show me in HB 2 one source of revenue that inordinately impacts the wealthy in our state versus the poor and middle class?

Rep. Kris Roberts (D - Ches 16)I think it goes much deeper than fairness because what it does is, I do not feel that the revenue projections in HB 2 are correct. If they are wrong and we have to come back and do exactly what we did the past year, there will be no fairness because we will leave it up to the Commissioners to decide who's going to suffer the worst. The people with orange badges are here, the hard working people from New Hampshire are working every day. They will not have a voice in developing that fairness.

Speaker NorelliWill the member yield to a follow up? The member yields.

Rep. Rich DiPentima (D - Rock 16)Thank you, Madam Speaker. Thank you, again, Representative. Again, just quickly, I am conflicted with this HB 2, very conflicted. Can you, for my sake, point out one item of revenue in this budget that is not a regressive tax or fee on the poor and middle class of this state and is more of a burden on the wealthy in our state? Can you point one of those sources of revenue out to me?

Rep. Kris Roberts (D - Ches 16)If you want to keep it real simple, I would just go to the camping portion of it. I don't see very many people with a $150,000 to $250,000 mobile home going to camping areas. A lot of times it's mom and pop that can't afford to go to Disneyland or Disneyworld. They go to the local camping area in a stay-vacation. They're going to get hurt the worst. That 9% on a limited income is a heck of a lot more because they are going to lose more of their disposable income than people with more income.

Speaker NorelliWill the member yield to another question? The member yields, Rep. Boyce you may inquire.

Rep. Laurie Boyce (R - Belk 5)Thank you, Madam Speaker. Thank you, Representative, for taking my question. Talking about camping, don't you think that the campers in New Hampshire could go to the other New England states that don't charge for camping so our camping revenue would not be there?

Rep. Kris Roberts (D - Ches 16)Well, I would think what would happen is, yes they could go, but if they can't afford the 9%, chances are they'll just stay home. The campsite will lose income, the local McDonalds and all those other ones would lose income. It would have a multiple ripple effect going down there, if a person stays home and eats peanut butter and jelly instead of having a big meal at McDonalds.

Speaker NorelliThe question before the House is the adoption of the Committee of Conference Report on HB 2. We are down to the final two speakers. The Chair recognizes the member from Weare, Rep.............Will the member yield to a question? The member yields. Rep. Baldasaro you may inquire.

Rep. Al Baldasaro (R - Rock 5)Thank you, Madam Speaker. Thank you, Representative, for taking my question. There is a big thick book that is sitting in my little cubby hole out there and of course, I, like Congress, did not get a chance to read the budget. But, there are some issues that I keep hearing about on the $30 DMV fee that affects every person. Is that true? Is it just $30 more or is it, in this budget, is this tax more? This fee I should say.

Rep. Kris Roberts (D - Ches 16)What I read from it, it went from $30 to $75 based on the weight of the vehicle in there. But, the thing is, the part that I'm talking about here, in the budget in here is the projections. If the projections are wrong, it doesn't matter how accurate everything in the budget is. If you only have $10 and you have $15 of budget stuff, everything is wrong.

Speaker NorelliWill the member yield to a follow up? The member yields. Rep. Baldasaro: What I am trying to find out, that $30 or more, I have a pickup truck, � ton, does that hit low income?

Rep. Kris Roberts (D - Ches 16)That hits everybody. Again, you have to go, let's not talk about income, let's talk about disposable income. As I said before, in 2005, 43,000 families in New Hampshire didn't even make enough money to pay their day to day bills so this is going to be taking money out of them.

Speaker NorelliThe question before the House is the adoption of the Committee of Conference Report on HB 2. I misspoke, somebody else thought that they were already signed up. The Chair recognizes the member from Plaistow, Rep. Major.

Rep. Norman Major (R - Rock 14)Thank you, Madam Speaker. I appear before you opposed to HB 2. I want to say that I was honored to be able to work with some very distinguished colleagues as an alternate to the Committee of Conference on HB 2. We worked very hard and very long. I really feel bad about having to stand here, but let me share with you some of the reasons, some of the reasons why I oppose HB 2. Well, we worked hard on revenues, both the Senate members and the House members and on June 17th, which is on a Tuesday, the House conferees got together with the Senate conferees and we agreed on revenues. The following night at 10:00 in the evening, the DRA comes in with a series of changes to revenues. These revenues added about $70 million to the base revenues. The base revenues are those that you use to project on. The bulk of that increase was due to the cigarette tax. There is some justification for that because the cigarette tax increase was rising. It was rising for a couple of reasons. One of the reasons is Massachusetts raised their cigarette tax by more than a $1.00 and it really is more than that because they have a state sales tax on that. The projection of the DRA in increasing the base and extending it out when you apply the 45 cent increase, that probably would have worked, but our federal government has just passed a bill which now says that cigarette manufacturers are going to be regulated because of nicotine. What is that going to do to cigarette sales? The biggest part, close to 60% of that increase that night was due to cigarettes. I project that we're not going to see that 60% increase in cigarettes now because the federal government has passed this regulation. Another reason...........

Speaker NorelliWill the member please suspend? The Representative is not having any problem with his microphone anymore, but there is noise in here and so some members are having a problem hearing. I would ask you please to keep your conversations quiet or take them into the anteroom. You may proceed.

Rep. Norman Major (R - Rock 14)There is another thing that kind of disturbs me is, that same night, 10:00, the last night of the Committee of Conference when we met. The DRA comes in with the LLC part of this bill of taxing. This LLC tax which supposedly raises another $30 million will essentially hurt the small businesses. The corporations, it doesn't affect them. It affects the small businesses. We have about 45,000 of these small businesses in New Hampshire that didn't expect this. I called the DRA today and asked them to explain to me or give me some examples of how this works because we've never seen the details of this. We can't understand that. When the Chairman of our Committee was asked questions a little while ago, she doesn't know the details either because we don't know how this is going to work. So, we passed a tax on our small businesses who are trying to survive in this economy and with this tax how many more of these small businesses are we going to drive out of business? That's another reason. Another, the same time, 10:00, the last evening of the Committee of Conference, they came in with this trailer tax or taxing campgrounds. I never saw that. Members of the Ways and Means Committee have never seen that, it's never been vetted. The way we are supposed to work, if we are going to institute a new tax, what we do is we file a bill. The public is aware, then all the people that are affected either positive or negative have a chance at a public hearing and then the legislators can take that into consideration and then it comes before the whole House. This process has been completely bypassed. The bill that we passed this morning or this afternoon, HB 1, has $203 million in new revenues. Those new revenues, part of them are based upon the tobacco tax, so that has been put at risk because of federal regulation. Who here believes that the economy is going to grow 5% or 10% over the next couple of years? It isn't going to happen. It takes a while for the economy to bottom out and then come back out. Two years ago, I was here at the well and I told you what I had learned about where the economy was going and what the economists were saying. We were at peak at that point in time and we were projecting revenues way up. What I don't want to see happen now is, where the economy has been dropping, it still has a ways to go and we don't know how long its going to take for it to come out and to project revenues that won't be there. In order to balance the budget we need over $600 million worth of revenues above our baseline revenues. That is revenues that we now get from normal taxes and normal fees. How we balance this budget is using $203 million of new taxes and fees and there is over $400 million in one-time money. That one-time money is over $300 million, of that, is the stimulus we know isn't going to be here. In this biennium, on this budget, $45 million of that is the JUA money or the malpractice insurance money. Another $30 million of that is the sale of the liquor warehouse and leasing the land around the welcome centers. There is another $20 million or so that is taken, that's all that's left that we can take out of the rainy day fund. The rainy day fund will be left with just $20 million. So, what I am asking you to do is to vote this down so we can work together to come up with something that is predictable and that can happen.

Speaker NorelliThe question before the House is the adoption of the Committee of Conference Report on HB 2. We are now down to the last two speakers. The Chair recognizes the member from Weare, Rep. Kurk.

Rep. Neal Kurk (R - Hills 2)Thank you, Madam Speaker. I rise in opposition to HB 2 and for those of you who may think since we passed HB 1 we have to pass HB 2 because that's where all the revenue is and if we don't pass HB 2, HB 1 will in effect fail, let me suggest to you something that has been done in the past and can be done now. If we were to defeat HB 2 and send it back to another Committee of Conference, that Committee of Conference can make whatever changes it wants and to the extent that those changes would affect HB 1, they can, through HB 2, amend HB 1 because this would be the last piece of legislation to pass. So, if you find HB 2 objectionable as I do, but you're concerned that you have to vote for it in order to support financially HB 1, please be advised that you can vote against this bill and we can produce a balanced budget because you can amend HB 1 through HB 2. Now, as you know, this is the bill that contains all the revenues. We had a six page list from LBA of all of the revenue increases in this bill from the fees to the taxes to all of the other changes that increased revenue. Part of the problem that I and others have with HB 2 is not just the total volume of tax increases. We raise $185 million of new taxes. We raise $12 million of new fees, both for the general fund. That's 3.7% of all general fund expenditures in the next biennium are covered by new taxes and new fees. That's just general fund. For other funds, $22 million for the highway fund, $86 million. Let's talk about some of these taxes like a new tax on gambling at 10%. We had a gambling tax in the House version of the budget, but there was a change at the last minute that was not vetted through the normal process and has some unintended consequences. Now, some people may think that these unintended consequences are good. Some may think they're not good. But, they are unintended and we are not fully aware of all of the others. I refer in the tax on gambling to the fact that anytime you gamble now and you have a particular winning, let's say $600 or $1200, it triggers a reporting requirement under federal tax law that you fill out or that you get a W2-G, G for gambling. In New Hampshire now, that applies to anybody who bets and if you're betting on simulcast and you're from out of state placing a telephone bet at Belmont or one of the other tracks and you win more than, I think it's $600 but it may be $1100, you're going to have the state tax withheld from your winnings and that W2-G filed with the feds. Our state will learn how much money you have won and apply the tax to that. If you're from out of state and you can call a 1-800 number in New Hampshire and pay an extra 10% of your winnings to the state or you could call a 1-800 number in Delaware and not pay that 10%, where do you think you'd make your 1-800 number call to? Now, we didn't understand that at the time this passed because it zipped through, there was no vetting. None of the transparency that some of us have come to value so highly, none of the process that some of us like to follow and we don't understand the other consequences either. This budget does not include a reduction in revenue from the racetrack taxes that we currently have that will result from the fact that a lot of our out of state betters will no longer be betting simulcast in New Hampshire. The rooms and meals tax. Okay, when it came out of the House it was an increase to 8 �%, 2 �%. The Committee of Conference raised it to 9%. Probably we could figure out that there weren't going to be too many more significant consequences. But, at the very last minute and I didn't know about this and I don't think many of the other conferees did, DRA came out with a suggestion of getting another $8 million, $4 million each year, if we extended the tax to campgrounds. Seemed like an easy thing to say yes to, but we didn't understand what the consequences were. I think, if like me, you received all of their emails, you understand that there are a lot of people who are very concerned that they have already paid their campground fees for the whole year. Will that be subject to tax even though they've previously paid it? There are many questions, not only about the administration of the bill, but also some of the other consequences to tourism of raising the tax on this particular group of people. How much money will not be spent in New Hampshire because some out-of-staters or some New Hampshire people will choose not to go camping with all of the other rooms and meals negative consequences from that decision? That's not reflected in our revenues. The Limited Liability Corporation issue, where in the interest of fairness, the idea is to treat Limited Liability Corporations and their payouts to their owners as if, in effect, for most cases they were dividends, which, if this were a regular corporation, would be taxed to the shareholders under the interest and dividends tax. But because most of these owners are also employees, not all of them but many of them, they have avoided that tax. Now, we make them pay that tax as if part, not their salary portion, but part of the money they get is considered a dividend payout. You can argue that that's fair, but there are consequences to that. How many jobs will not be created in New Hampshire because the money to do so has been taken from the owners of the business and given to the state? There is a price to fairness. Someone mentioned before that in President Eisenhower's administration the top tax rate was 92%. He was a Republican. It got cut down to the present 30's level in a series of administrations, both Democrat and Republican, because we understand that if you want to create jobs, you have to have employers. If you take the money away from the people who are employers and they tend to be wealthier, then the jobs aren't there. If you want fairness, there is going to be a higher unemployment rate. If you don't believe me, look at Europe. Their unemployment rates, by and large, are much higher than ours over time. Their economic growth is slower than ours because they have a "fairer" tax with higher marginal rates at the upper end. There is a price to be paid. We don't understand because this was not vetted, it was a surprise, not quite at the eleventh hour, but a surprise to the conferees and certainly to me. I don't believe this was vetted by our Ways and Means Committee or the Senate Ways and Means Committee. The tobacco tax increase. We've always hit tobacco like we're hitting gambling. After all, it's evil, it's a sin and its bad for you and we know best. There's something else that we've done here that's rather interesting and I am especially - I just got the signal from the guy who buys his cigarettes from Florida to avoid the New Hampshire tax - sorry. What did we do? This was done by the Democrats, the Democrats who are supposed to care for the working man. We've extended this tax and what are we covering? Cheap cigars. The cigars that "Joe six pack" buys. The cigars that the business tycoon buys, you know those $5 and $10 cigars, we're not taxing those. I love it. Total tax increases are $185 million. It's not a good idea in a recession. I've said it before and I'll say it again, there's another way to do it. We can amend this bill. We can go back into HB 1. Make the cuts we need to reduce this spending and reduce these taxes. Let's talk about fees. Boat registration fees are doubled depending on length. I know boats are used by rich guys. What's the problem with hitting a bass fisherman by doubling his tax? How about the automobile registration fees? The Governor refused to allow us to do what the House wanted to do, a gasoline tax increase. The fallback position is an increase in your registration fees. So, Granny, who drives 1,000 miles a year to church and the store, pays the same $30 on her Prius that the salesman who drives 100,000 miles pays. I understand this was a compromise. This is not what the House wanted but this is not a good way to raise revenue. I think I'm quoting somebody, it's unfair. Four year pistol permits for out of state folks who want to come in here and carry a concealed weapon went from $20 to $100. Admittedly, it's for four years. Not a huge increase but we know where that is going. It will start soon to be applied to New Hampshire residents who want to carry a concealed weapon. In effect, another version of gun control. Septic system permit fees are doubled. That's really going to help new construction, isn't it? Vanity plates increased by $15 from $25 to $40. Now, here's an area, if you have to raise revenue that we could do better. A Democratic, I think it was a Democratic Minority Leader a few years back, suggested that we auction off the low digit number plates. You know, the ones that you're supposed to be able to get by speaking to the Department of Safety? No longer. Well, why not auction those off? Why only charge an extra $15? I mean if people are vain in this state, let's see how vain they are? Let's auction those plates off also. We've raised too much by fees. We're raising too much by taxes. We did it at the last minute and we didn't do it in a considered manner. We really don't know some of the consequences. Let's talk about downshifting. Remember, we have in the budget in HB 2 the fact that the state is going to pay less to the municipalities and the school districts for the cost of retirement contributions, by those entities, to the retirement system on behalf of their employees. If you vote this down, we can go into the budget, we can go into HB 2 and instead of downshifting the $11 million that this budget does to the cities and towns, we can save them that money, not downshift it to them, put it to the schools, which are getting a huge amount of money and make it fairer, the balance between the hit to the schools, not the hit, the benefit to the schools and the hard hit to the municipalities. Let's do something for local property taxpayers. We can do it if you vote this down and we set up another Committee of Conference. If you want to make this a better budget, vote this down and let's correct some of the problems in this and be able to hold our heads up a little bit higher. What we have now is not the best we can do, but we can make it better. Please vote "No" on HB 2.

Rep. Neal Kurk (R - Hills 2)There are some people to whom I cannot say, "No."

Speaker NorelliI kind of figured. The member yields, Rep. Scamman you may inquire.

Rep. W. Douglas Scamman (R - Rock 13)Madam Speaker, Representative Kurk, thank you for taking my question. You spoke about the gambling tax and as I understand the gambling tax, at the federal level you subtract out your losses and you pay only on the difference. My understanding of the New Hampshire tax, if you win $400,000 at Belmont, you can't subtract out the $340 or $350 or whatever you bet, therefore, that winner is going to be paying 10% of $400 million as a tax on top of the Massachusetts income tax they are earning. Can you tell me if that is true? Can you tell me if Belmont can continue operating, in your opinion, without all of these Massachusetts people not calling in to the track?

Rep. Neal Kurk (R - Hills 2)Ten percent of $400 million is $40 million. That almost gives us enough money to restore the revenue sharing that we cut. The answer to your.........$400,000, well, at one point you said $400 million. The answer to your question is that you are correct. This is a tax on winnings only. Under federal law you can deduct your loses which is one of the reasons when you go to a racetrack you see so few betting slips on the ground. The reason is, of course, is that everybody has a winning, starts picking up all the losers betting slips so he or she has evidence to give to the feds of all of the losses he incurred to offset his winnings. However, that would not work under the New Hampshire tax. This is a tax on winnings only. There is no loss deductible and this is the problem that I alluded to before. Belmont racetrack, which has a lot of out of state folks betting there, is very likely to suffer so significantly that it has to close its doors because some of the big betters are out-of-staters and they will not pay a 10% tax on their winnings. Speaker Norelli: Will the member yield to another question? The member yields, Rep. Hikel you may inquire.

Rep. John Hikel (R - Hills 6)Thank you, Madam Speaker. Thank you, Representative Kurk. I'm listening to this all day here and I'm hearing things like cigarette tax, cheap cigar tax, registration increases, campground tax, LLC tax and the misnomer that we small business owners happen to be loaded which certainly is a fallacy in many cases, the gambling tax. This sounds like they were trying to raise revenue and help the people but we're trying to raise revenue from the people that we're trying to help, by the people that are going to be spending the most of their money on these gambling taxes, these sin taxes, these saltwater fishing licensing increases. It sounds like the tax is actually going to be paid by the people that they are saying they're trying to help the most. Is that correct?

Rep. Neal Kurk (R - Hills 2)With the exception perhaps of the cigarette tax, that is not correct. The kinds of people we are trying to help in the budget are people who are truly needy, people who are unlikely to pay any of these taxes. Yes, I suppose some of the people might gamble a little bit and therefore be subject to this tax if they are lucky enough to win. Some of the people who are smoking perhaps are really people in need and on Medicaid or on welfare. But, by and large, these taxes do not fall on the bulk of the populations that we are trying to help.

Speaker NorelliWill the member yield to another question? The member yields, Rep. Packard you may inquire.

Rep. Sherman Packard (R - Rock 3)Thank you, Madam Speaker. Representative, can you tell me, when you were deliberating the tax increases and the fee increases, if any account was taken that many large corporations, mainly car rental companies that will be paying these taxes when they register new vehicles, those taxes will be doubled? Will they be taking these rentals out of state and registering them in another state, thereby losing tens of thousands of dollars to our local municipalities where they register them?

Rep. Neal Kurk (R - Hills 2)I'm not certain but I think that's very likely. The problem is that I should be able to answer that question and each of you should know the answer to that question, but because of the way the various taxes were placed in the budget and the changes at the last hour, we didn't do our homework. We really don't know. The one thing that I can tell you, Representative Packard and every member of this House with surety is that whenever you increase taxes you change behavior. If we're good at it, we figure out what the change in behavior is likely to be in advance and plan for it. If we're not good at what we do and we are not when it comes to the taxes and changes in HB 2, then we suffer the consequences and you mentioned one of them.

Speaker NorelliWill the member yield to another question? The member yields, Rep. Vaillancourt you may inquire.

Rep. Steve Vaillancourt (R - Hills 15)Thank you, Madam Speaker. I just want to be sure. Did I hear you say that people are committing fraud against the federal government by picking up these gambling loss receipts that are not theirs and that the New Hampshire way would not allow them to commit this fraud?

Rep. Neal Kurk (R - Hills 2)You are correct. You heard me say the people are committing fraud. The New Hampshire way avoids the need to commit fraud, that much is true, but the New Hampshire way of taxing winnings only will have very negative consequences to employment if the Belmont track closes and to revenue if it closes and we lose that revenue or we lose similar simulcast revenue from the other tracks. We don't know exactly what will happen because we haven't done our homework on these bills.

Speaker NorelliThe question before the House is on the adoption of the Committee of Conference Report on HB 2. The Chair recognizes the final speaker, the member from Durham, Rep. Marjorie Smith.

Rep. Marjorie Smith (D - Straf 7)Madam Speaker, one day in a fictional legislature, certainly not the New Hampshire House of Representatives, someone who had days earlier spoken publicly that the revenue estimates in this budget were solid was exposed to something in the air in this fictional legislature and talked about how suddenly the revenue estimates weren't solid. One day in this fictional legislature someone said we are only going to end up with $20 million in the revenue stabilization fund - that would be what we think of as the rainy day fund. That would also be the rainy day fund that had in it $17.3 million on the day that the control of the legislature changed three years ago and in that period of time those people who were in the majority brought that balance up so that when the rainy day came we could in fact use that money and still end up with $20 million. In that fictional legislature someone who had voted against the gas tax said the gas tax is the answer. In that fictional legislature someone who was involved day after day after day in making decisions that were not necessarily in the best interest of people who were completely dependent upon the state for their help suddenly was concerned about those people who were dependent upon the state for their help. I am glad that some of those changes in the fictional legislature recognize that we ought to be doing the best that we could with the hand that we were dealt. I'm also glad that those things happened in a fictional legislature because those of us sitting here today know what the real world is and we know that we have to make a series of difficult choices. We made them in HB 1 and we will make them in HB 2. Not because we think that there will be violins, not because we think there won't be any reactions to what we did, but because using the resources of state agencies who came right up there to help, using the resources of every member of the Finance Committee and the Ways and Means Committee, people for whom I have the utmost admiration, came to where we are today. Some of us think it's a game and it's amusing and some of us like the conflict. I was told today that the reason I don't like the conflict is gender based, that men think this is a game. I don't think that's so. I think the men and the women in this body know that it is not a game and that we have to do what adults do in difficult times: make hard choices, try to guarantee that the people who have no other place to go get support from the state and understand that some of the rest of us are going to have to just wait until the day comes that we live in a perfect world. Thank you very much.

Speaker NorelliThe question before the House. The House will be in order. The question before the House is on the adoption of the Committee of Conference Report on HB 2. Rep. Eaton has requested a roll call. Is that sufficiently seconded? It is sufficiently seconded. This will be a roll call vote. Will members please take their seats?