The House, Thursday, February 28, 2019

Rep. Jeanine Notter (R - Hills 21)Thank you, Mister Speaker. Sanctuary policies or laws, ordinances, resolutions, executive actions or any initiatives that prohibit local officials from inquiring, acting on or reporting on individual's immigration status, even when there is reasonable suspicion that an individual is in the country illegally. Why did I sponsor this bill and why am I concerned? The United States of America is the most welcoming nation on the planet with more legal immigrants each year than any other country, but when it comes to illegal aliens, public safety is an issue and I'm not just talking about diseases. By allowing sanctuary cities you are giving human traffickers a safe haven as well as drug dealers and terrorists. The opposition might claim that illegal aliens will not come forward to cooperate with police in the event they have witnessed a crime, but there is zero proof. Police are not inclined to bite the hand that feeds them. When they need information, it is not their policy to first inquire a witness' immigration status. Besides that, there are a number of federal programs that allow state and local police to seek lawful status for illegal aliens who aide in the prosecution of criminals. Even so, most illegal aliens don't suddenly begin trusting American police officers because of sanctuary policies. From the Federation of American Immigration Reform, I learned that antisanctuary measures do not place an unfunded mandate on states and localities. The proposed legislation is not an unfunded mandate because the federal government is not requiring the states and localities to take any specified action that costs them money. Moreover, cooperation with federal immigration officials prevents redundant enforcement actions for a recidivist criminal aliens and prevents wasteful and often dangerous use of taxpayer's resources. In 2017, the estimated costs of illegal immigration nationally totaled $116 billion with $85 billion being absorbed by state and local taxpayers. This estimate includes taxpayer money contributed by unauthorized workers. In Tennessee taxpayers spent $793 million to subsidize illegal immigration. Such costs come in the form of education, healthcare, welfare and law enforcement resources. By comparison, the cost to New Hampshire taxpayers in 2017 was almost $87 million. That number is surely higher now. Did you know that New Hampshire to date has six sanctuary cities? They include Cheshire County, the towns of Deerfield, Dublin, Harrisville, Lyme and the city of Manchester. We cannot sustain this kind of spending. We should be prudent with our constituents' pocketbooks and safety. Vote for the people who trusted you when they voted for you. Vote red on the ITL. Thank you, Mister Speaker.

Speaker ShurtleffThe Chair recognizes the member from. Rep. Long has a question. Do you yield to a question? The member does not yield. The Chair recognizes the member from Salem, Rep. Abbas. You decline? The Chair recognizes the member from Seabrook, Rep. Abramson.

Rep. Max Abramson (R - Rock 40)Thank you, Mister Speaker. Mister Speaker, I rise in opposition to the ITL motion by the committee. It was an 11-9 motion. It was very close and there was a lot of debate, discussion on the matter and what we did at the hearing is pass a very short amendment 19-0 and members are welcome to read that in their House Calendar. It's a one-word change. We all know that Gallup and other organizations do polling of Americans, but Gallup polls internationally and they asked, and they found in their first poll in Latin America that 42 million people in Latin America responded they would move to America if they could, if they were allowed to do it. But, around the world, internationally they found 750 million people, around the world,750 million people would move to another country if they were able. Most in poor, corrupt or rundown, crime ridden countries and of course their number one preferred destination was American. But already schools, hospitals, roads, housing, social services and other services are already overwhelmed. I recently read a report that said as many as 40 hospitals a year are closing down in America due in large part to rising costs but also because of uncompensated care and a disproportionate number we were told were for people who are here illegally, and some were even coming across from Canada and Mexico to take advantage of free American healthcare. We were told that in total that 155 billion a year cost nationally for services and welfare and cash payments for illegal immigrants was about $1,200 per year per household in additional federal, state and local taxes, $1,200 per year per household. Even though immigrants who come here legally are less likely to use welfare benefits and more likely to work, they are more likely to pay more in than they draw out, people that come in illegally, if they remain here for any length of time about 70% eventually end up on welfare or other cash benefits. Police officers under sanctuary cities' policies are prevented from doing their job. They are told that they are not allowed to enforce federal immigration laws. Could you imagine if we tried to do the same thing with federal weapons trafficking, child trafficking, piracy fraud, unemployment fraud or any other issue or federal kidnapping laws? Could you imagine if we took the same example and applied it to federal kidnapping and told police officers that they were not allowed to enforce federal kidnapping laws? It would absolutely be absurd. We would not even consider such a thing. There has been very little news media coverage, but there has been an enormous amount of discussion on social media. When I shared this on social media in my town, I immediately got about 130 different responses and absolutely every single person who answered the question said absolutely no to sanctuary cities. Some people were angry. Some people were surprised. Some people were shocked and those in their towns and cities who found out that their town or city had been converted into a sanctuary city without them being consulted were extremely upset and this is a completely inappropriate policy that we shouldn't allow municipalities to do. The fact is the American people were never consulted on an issue that effects our day to day life, probably more than any other single policy. Instead of straight answers on this, we have been getting placation and obfuscation. We're told at hearing that there were odious and hateful comments made, but there none actually made at the hearing. None of the statements at the hearing did they give us an example to work with. What we are simply trying to do is put a stop to illegal immigration. It's illegal immigration. We are a pro-immigration country. We are unanimous and magnanimous about the need to remain a melting pot and to remain a county that is open, but we need people to come into the country legally, the right way. If we don't have laws that are enforced, we don't have laws at all. Thank you very much.

Speaker ShurtleffWill the member yield to a question? The member does not yield. The Chair recognizes the member from Rochester, Rep. Kittredge to speak against the committee recommendation.

Rep. Mac Kittredge (R - Straf 12)Thank you, Mister Speaker. This is my first time at the well and I would like to precede my statement by thanking you for your gracious welcome and this House. I have made many friends here and I am tremendously impressed with the amount of elbow grease we butter our good intentions with. Thank you so much. Mister Speaker, I rise in support of HB 232 and to oppose the ITL majority vote of my committee. I will not revisit the foregoing arguments but go instead to the foundational issue. Why are we here? Many would say that it is to make law, and indeed we do, but that is not our purpose. Our purpose is to be the architects of order for New Hampshire and it is a solemn duty. We deliberate in great detail to insure public safety and enhance social harmony in an increasingly complicated world. And as you know, it is a continuing process of refinement. We do not, and must not, make the perfect the enemy of the good. Without order there is no language, communal society, tribe, nation or civilization. No agriculture, science, technology or even the simple ability to work and play together in harmony and reasonable safety. And indeed, our very deliberations as legislators require considerable organization, resources and synergy. In short, we must have order to get things done and not become a Tower of Babel. When we meet, does not our genial speaker begin our session by bringing the House to order? Such actions are so common and pervasive, that the fundamental need for order is often taken for granted, but we must not. And the New Hampshire House is the senior legislative body. These are critical responsibilities that must not be outsourced or neglected. Nor should we allow municipalities to "wing it," acting without our express permission. Whatever their desire for convenience or empathy, lack of coherent order destroys harmony and, all too often, destroys the safety and liberty of our constituents. There is no sanctuary in chaos. The intended effect of HB 232 has much the same purpose as the gavel of our gracious Speaker. It is to call the subordinate governmental authorities to order and direct them not to defeat vital coordination between the agencies of public safety and law enforcement. Whether town, county, state or federal, the blue line must not be denied the authority to posse-up and provide effective and abiding order. And it is our job to facilitate their difficult tasks by passing laws that gives prudent council to well-intended town and city fathers. HB 232 does this, and it is not inexpedient to legislate. Nor is prioritizing our empathy for our own constituents. An overwhelmed immigration system is no gift to those fleeing massive disorder in their home, for it enables the cartels and assorted predators to mingle among, even organize and manage, the caravans rushing our borders. As I stand here, in this Hall of heroes, I am convinced that this bill is essential to protect our role as the architects and guardians of law and order. Therefore, should we not press that red button with such force that our thumbs bleed. Please join me in opposing ITL for HB 232. I've got the band-aids. Thank you, Mister Speaker.

Speaker ShurtleffThe question before the House is the recommendation that the bill is Inexpedient to Legislate. The Chair recognizes the last speaker on this bill, the member from Rockingham, Rep. Maggiore.

Rep. Jim Maggiore (D - Rock 22)Thank you, Mister Speaker. Every speech should start with something that grabs the listener's attention, draws them in, holds their attention and makes them want to listen to the story. The best I can muster for the intro to HB 232 is this is a bad bill. It jeopardizes local law agency control, violates at least 3 constitutional amendments, exposes municipalities to potential costly litigation, as we have already seen in at least two towns in New Hampshire, begets racial profiling and undermines police community relationships. The bill requires local law enforcement agencies to comply with federal detainer requests, federal detainer requests. Detainer requests issued by federal law enforcement agencies are not arrest warrants. Immigration and customs enforcement or ICE detainers are issued by ICE enforcement agents without authorization by a judge. Under federal law, local law enforcement agencies are not required to hold anyone based on a federal detainer request alone. Therefore, local law enforcement would need probably cause to hold a person. A local enforcement agency that holds a person without probably cause would violate that person's 4th amendment rights, which protects against reasonable search and seizure and arbitrary arrest as well as their 14th amendment rights, which grants equal protection under the law. Moreover, HB 232 would put local law enforcement agencies at risk of violating the 10th amendment, which sets the balance of powers between the federal and state governments. The committee heard testimony that law enforcement agencies should enforce the laws no matter who's laws they are. Local police officers are not trained in enforcement of federal laws and are not generally expected to enforce them. If local police are not expected or even permitted to enforce federal law, how can they be expected to enforce federal immigration law? So, stripping local control, potential violations of constitutional rights, whatever upward pressure this might put on local budgets, and the threat of costly litigation should be enough to support the motion of ITL, but I guess I can put this aside for a second and say executive order 2017-09 signed on December 14, 2017. It was signed by Governor Sununu and it established the Governor's Advisory Council on Diversity and Inclusion. A council on which I serve very proudly with several other commissioners, chancellors, representatives of state agencies and associations and citizens. I guess I'm going back to this. The first three tenets of the order reads as follows: New Hampshire derives strength and prosperity from valuing the diversity of its population and its commitments to equal justice for all and when New Hampshire draws on the strength and talents of individuals who reflect its full population, it is better able to understand and meet the needs of its residents and their differences and New Hampshire has an obligation to enforce and safeguard the civil rights of all New Hampshire residents and visitors. So, if HB 232 passes, someone will have to explain to my colleagues on the council that our work is at risk of being undermined by this bill. I guess I'll do that. Someone will have to explain to the Governor that this body put the success of his executive order at risk. Okay, I guess I'll have to do that too. But someone will have to explain to the people of Nashua, Manchester, Laconia, Keene, Claremont and Lancaster where the council has already conducted listening sessions and extended the promise of our Governor to end discrimination, that our work is gravely at risk and in spite of their cries for help. I'm going to leave that job to everyone who voted against the ITL. I ask you to support the ITL. Thank you, Mister Speaker.

Speaker ShurtleffWill the member yield to a question? The member will take no questions. A division vote. The member from Merrimack requests a roll call vote, Rep. Notter. Is that sufficiently seconded? This will be a roll call vote. Members will kindly take their seats. Just a reminder that your buttons are pushed, turn them on. The House will be in order. The question before the House is the recommendation that the bill is Inexpedient to Legislate. The Chair recognizes Rep. Belanger for a parliamentary inquiry.

Rep. James Belanger (R - Hills 27)Thank you, Mister Speaker. If I know that in 2016 I was very opposed to HB 1621, which was essentially the same bill as we have before us today because there was the perception that then that sanctuary cities would never happen in New Hampshire and that bill was unnecessary, but now I hear that some municipalities are instructing their police departments to ignore immigration law violators. And, if I know that having law enforcement start ignoring law violators could lead to such ridiculous actions like ignoring speed limits on state highways in one's jurisdiction, which is in direct violation of the oath we took to enforce laws, all laws. And, if I know this bill is not a bill aimed at seeking immigration violators, but one that prohibits ignoring those already charged or convicted offenders of federal laws like kidnapping, tax fraud, drug and weapons trafficking, which equates to law enforcement committing obstruction of justice, would I now press the red button to vote no on this motion so that a sensible motion could be brought forward? Thank you.

Speaker ShurtleffIf you are in favor of the motion of ITL, you'll press the green button. If you are opposed, you'll press the red button. The Chair now recognizes Rep. Mombourquette for a parliamentary inquiry.

Rep. Donna Mombourquette (D - Hills 5)Thank you, Mister Speaker. If I know that current federal law allows for voluntary compliance with immigration detainer requests and that this bill will remove decision making by local law enforcement most knowledgeable of their communities. And, if I know that this bill will promote racial profiling. And, if I know that this bill will deter local law-abiding immigrants from assisting law enforcement in pursuing real crime perpetrators, would I not vote yes to ITL HB 232 and press the green button with such force that our thumbs bleed? Thank you. Speaker Shurtleff: The question before the House is the recommendation that the bill is Inexpedient to Legislate. This is a roll call vote. If you are in favor, you'll press the green button. If you are opposed, you'll press the red button. Voting stations will now be open for 30 seconds. Members should be in their seats. Have all members present had an opportunity to vote? The House will be attentive to the state of the vote. Who has not voted? Rep. Vincent is with us. Have all members now voted who were present? The House will be attentive to the state of the vote. With 211 votes of Yea and 132 votes of Nay, the ITL motion is adopted.

Rep. Susan Almy (D - Graf 13)Thank you, Mister Speaker. On the revenue increases that we saw during the 2016 to 2017 budget are not due to the tax rate cuts placed in that budget over the objections of Governor Hassan unlike what has been mentioned in certain circles. Those rate increases were greatly increased last term. They are not due to the even large ones placed in last terms budget over the objections of the Ways and Means Committee, which felt that we ought to digest the many tax cuts in business that we had already made before we moved forward with further rate cuts. There is a lot about business tax collection which you do not know, and I am about to get a little academic. I'm sorry. I didn't know a lot of this either until recently because the DRA has become much better at analysis.

Speaker ShurtleffThe member will suspend for a moment. Please address to your remarks and not from any sounds you are hearing from the House Members and also to speak to what is before us in this legislation. Please proceed.

Rep. Susan Almy (D - Graf 13)The key point is that varying business tax years interact with our state fiscal years so that in each fiscal year we collect the majority of our taxes on economic activity from the prior fiscal year. Some comes from the year before that and under a quarter comes from the fiscal year that we are living in. The second key point is that we draw our taxes from national and global economic activity. This has been apparent to the Ways and Means Committee for some time, but I think not to the legislature as a whole. Businesses and conglomerates that operate partly inside of our state pay us a percentage of their worldwide activity commeasured it with their presence here. We are not an island. If the economy, which we tax, remains static, the 2016-22 rate cuts would create a loss of 6% of our total general and education trust fund revenues by 2024. This is a major hit for a frugal state government. The loss has been masked so far by extraneous events that provided the current surpluses. By 2024, a recession is almost certain. Moody's now predicts a major slowdown to .5% growth a year on a year from now. When the recession comes we will need what we have lost in order to maintain the basic public services that both our citizens and our businesses rely on. In 2014-15 New Hampshire experienced the normal delayed recovery in business revenues that the Ways and Means tax has seen in all past recessions that we have data for. As a result, we caught up with three years of revenue growth in the other 49 states in a single fiscal year. That was FY16, which by chance was the first year of the first tax cut. 77% of the economic activity that produced FY16 happened in 2014 to 2015, before the law was passed. We should have seen the impact of that cut in the FY17, but in FY17, there was no revenue growth at all. Then, half way through FY18 in December 2017, sorry to get wonky, in December 2017, the Congress gave businesses major tax cuts and they gave them an incentive to prepay their tax bills to states and localities. For the first time ever, a major stimulus was added to a growing economy and the growth surge was, as the President would say, huge. Experts tell us the main effects will dissipate by 2020, but no one can tell us what happens then. No one has ever tried this before. New Hampshire's FY18 benefited from that national growth quickly because of the incentive to fast forward state payments. Business tax revenues in the last half of FY18 surge into FY19. Our FY19-21 will all benefit from this surge because our business taxes rely on the economies of two years prior. But, by 22, that impact will be gone. It's been a long time since the last recession. There is global uncertainty. I understand the talks with North Korea were breaking down again yesterday. The rate cuts will take a large chunk of the total available for the next budget. This budget must pay for the increase services that our businesses and citizens need to survive the recession and prosper after it. That is why we need to stop the bleeding now in our most important state revenue source and I want you to listen well to my colleague from Woodstock when he comes up. Thank you.

Speaker ShurtleffThe Chair recognizes the member from Nottingham, Rep. Bershtein to speak against the committee recommendation.

Rep. Alan Bershtein (R - Rock 2)Thank you, Mister Speaker. I rise before this wonderful body in opposition to HB 623, a bill which increases the current rate of business taxes and repeals scheduled reductions that are to come at the end of next year. There are many reasons to ITL this bill. It imposes a retroactive tax increase. It breaches a promise made by this very chamber. It inhibits job creation. It inhibits investment. It's seems arbitrary, evidenced by the very fact that the amendment passed just moments ago, increases the business enterprise tax 35% from the bill as originally submitted. 35%. But instead of getting into the weeds, let's focus on a different aspect of this bill. First, some context. Most members of the Ways and Means Committee, including our esteemed Chair, the sponsor of this bill, believe our economy is going into recession. In committee, we actually went around the room and just about everyone gave their prediction as to when the recession would happen. Also, recently the federal reserve had some sobering words about a pending economic slowdown. So, let's go with the premise of our Chair that we are headed into recession. By definition a recession is negative economic growth for two or more consecutive quarters. Businesses at that point in time will be reeling and they are going to be facing tough decisions about layoffs, furloughs, plant closures. All very painful things especially for workers. Raising taxes during a recession is kicking them when they are down, and it takes a bad situation and makes it that much worse. This isn't just my opinion for there is no school of economic thought, whether it is Keynesianism or Austrian Economics, whether it's Monetarism or Mercantilism, none of these schools of economic thought advocate for a tax increase during a recession. As a matter of fact, each of these schools of thought advocate for exactly the opposite. During a recession, you lower taxes. That's exactly the opposite of what this bill is proposing. This bill gets rid of a scheduled reduction in business taxes at exactly the same time when the bill's own sponsor predicts we go into recession. As the kids would say, SMH. I'm certainly not bewitched, but I am bothered and bewildered. If you take one thing away from my speech today, it's that it is bad policy to raise taxes during a recession. The good news is in the event of a downturn we already have a safety net. This body in its wisdom has created a rainy-day fund which is ever increasing and at this moment in time the rainy-day fund is at record highs and it looks like it will go even higher. A rainy-day fund exists to make up for revenue shortfalls during a downturn because everyone say it with me, it's bad policy to raise taxes during a recession. In summary, HB 623 is bad policy because it raises taxes during a recession. Let's not self-inflict pain by passing retroactive tax increases and for goodness sakes, let's not plan to raise taxes during a recession. This one is an easy call, ITL. Thank you very much.

Speaker ShurtleffThe House will be in order. The Chair recognizes the last speaker on this bill, the member from Lincoln, Rep. Stringham.

Rep. Jerry Stringham (D - Graf 5)Thank you, Mister Speaker. According to the Council of State Taxation, in their most recent report, New Hampshire businesses pay $3.1 billion in state taxes annually. The tax burden includes property taxes, utility, insurance excise taxes, unemployment taxes, gas taxes and yes, some corporate income taxes. $700 million or less than 25% is for corporate taxes. We have the business profit tax or BPT in New Hampshire and the business enterprise tax, the BET. As I said, these two combine to less than 25%. BPT is paid upon company profits and BET is paid on wages. These taxes are largely paid by a small percentage of businesses that are large or highly profitable. For example, 537 businesses paid more than 75% of the BPT, each paying more than $100, 000 per year. 77% of New Hampshire businesses don't pay either of these taxes. So, let's talk about HB 623. What 623 does is maintain the BPT and BET tax cuts implemented over the past two years and leaves tax rates at the December 2018 level. This is not a tax increase over the December 2018 levels. This bill repeals roughly $84 million in anticipated further business cuts over the upcoming budget cycle. Because business income taxes go to the general and education trust fund, passage of this bill and maintaining current tax rates as of December, will inevitably lead to greater support to cities and towns and diminish the reliance on property taxes to meet education and community needs. These taxes businesses pay just as well as citizens. Well how much do businesses pay in property taxes? $1.7 billion. That's over 2 � times more than they pay on the BET and the BPT combined. It's 52% of their tax burden and these property taxes, which have been rising dramatically over the past decade, continue. Partly, this is because our citizens at the town level recognize the needs that the state has left unfilled and are trying to compensate. That's why that percentage keeps going up for businesses. Partly it's because not having enough revenues, we here in Concord have ended the state's routine contributions to local retirements, revenue sharing, water projects, county eldercare and some level of baseline education. So, my good colleague talked about don't cut taxes or don't increase taxes during a recession. Well, we've been in the opposite of a recession and we did the opposite, we cut taxes. So, it's seems like if you are going to use the argument for one, you use it for the other. We are not yet in a recession. We are not even talking about further increasing taxes right now, just leaving it at the end of 2018. Rather than reducing a business tax that mostly benefits less than 1% of the business in the state, let's start to do what the Governor's economic development office said we need to do, to promote growth, which is implement policies that retain and attract young adults, particularly those aged 25-35. Businesses are not going to be able meet their growth potential without them. I'm a business owner. I'm sure that a lot of you are too. Our housing market is struggling to house enough workers to make business succeed and business growth possible. Can our businesses prosper without the lower- and middle-income citizens who will raise and train our new generations and without the amenities and services that attract and retain the highest talent? I don't think so. Please pass this bill.

Speaker ShurtleffWill the member yield to a question? The member does not yield. The question before the House is the recommendation of Ought to Pass as Amended. Are you ready for the question? A roll call has been requested. Is that sufficiently seconded? It is sufficiently seconded. Members will kindly take their seats. The House will be in order. The question before the House is the recommendation that the bill Ought to Pass with Amendment. The Chair recognizes Rep. Abrami for a parliamentary inquiry.

Rep. Patrick Abrami (R - Rock 12)Thank you, Mister Speaker. Mister Speaker, if I know that the New Hampshire business tax reductions have had a significant stimulative impact on business growth resulting in one of the lowest unemployment rates in the country. And, if I know revenue for the first eight months of this year are $134.5 million above plan with a good percentage due to these tax cuts. And, if I also know that the additional cuts that are scheduled will add to the business growth and continued growth in business tax revenues. And, Mister Speaker, if I know that the reversal of the future business tax cuts, cuts that companies across New Hampshire, small and large, have based their business plans upon is a betrayal to our business community by this legislature. Would I then press the red button to vote down the pending motion, so another motion can be made? Thank you, Mister Speaker.

Speaker ShurtleffThe Chair recognizes Rep. Ley for a parliamentary inquiry.

Rep. Douglas Ley (D - Ches 9)Thank you, Mister Speaker. Mister Speaker, if I know I heard a great deal of concern about rising property taxes while on the campaign trail this past Autumn. And, if I understand correlation and know that continuing to reduce the business taxes will only result in skyrocketing property taxes for our constituents. And, if I know that unpredictable property tax increases cause undue stress for New Hampshire families and undermine their ability to plan for the future. And, finally, if I know this bill does not increase business taxes, but simply freezes tax cuts that are primarily benefiting our large out of state corporations, would I now press the green button to pass this bill and stop funding government on the backs of those who can least afford it? Thank you.

Speaker ShurtleffThe question before the House is that the bill Ought to Pass as Amended. If you are in favor of that, you'll press the greed button. If you are opposed, you'll press the red button. Voting stations will be open for 30 seconds. Have all members present had an opportunity to vote? The House will be attentive to the state of the vote. With 200 members having voted Yea and 141 voting Nay, the recommendation is adopted. This bill will be sent to the Finance Committee as a second committee. Representative Avellani declared a conflict of interest and did not participate in this vote.

Rep. Steven Smith (R - Sull 11)Thank you, Mister Speaker. I am a little confused about a process and I was hoping you can straighten me out. We have passed, I believe, two bills currently related to the formula for funding an adequate education and stabilization grants and those bills, one of those repeals grants and the other extends them. So, they conflict and now we have a third bill about the funding formula. Can you tell me how all of that gets resolved because they can't all pass, can they?

Speaker ShurtleffI will not comment on whether they pass or not. They will be going to second committees and this one will also. If it should pass, it will be going to the Finance Committee and I have great faith in our Finance Committee. I'm sure your questions will be answered at that body. Further question? I see the pause.

Rep. Steven Smith (R - Sull 11)Yes, thank you, Mister Speaker. I apologize for not characterizing my question properly. It wasn't whether or not you thought they were going to be popular and make it on a vote, but procedurally can the language in all of those bills all become law simultaneously? Do you know the answer?

Speaker ShurtleffThat I cannot give you an honest answer. Let me refer it to the clerk. This is how good my memory is. I just talked to the clerk and I thank him for his advice, as always. As the clerk has just mentioned, the last bill passed will be the one that will be effective by law, however, we see a lot of bills that have different aspects to them. When they go to another committee, a lot of times those bills can be merged into one bill to resolve the issues that you have pointed out to the House. I thank the member for his question.

Rep. Steven Smith (R - Sull 11)I would like to table HB 686. Thank you, Mister Speaker.

Speaker ShurtleffThat motion would be in order. The motion just made was to table HB 686. That motion is in order. Are you ready for the question? A roll call has been requested. Is that sufficiently seconded? It is sufficiently seconded. This will be a roll call vote. Members will kindly take their seats. The question before the House is the motion to table HB 686. The Chair recognizes Rep. Steven Smith for a parliamentary inquiry.

Rep. Steven Smith (R - Sull 11)Thank you, Mister Speaker. I've been here awhile, and it still seems unusual to me that we are barraging Finance with a bunch of conflicting bills and if I know that they can take any of the language of a bill that's not ITL'd and put it into their final product, then would I vote to table the bill to avoid them having one more thing to deal with?

Speaker ShurtleffThe Chair recognizes Rep. Ley for a parliamentary inquiry.

Rep. Douglas Ley (D - Ches 9)Thank you, Mister Speaker. Mister Speaker, if I know that this bill has garnered a great deal of attention from all sides. And, if I know that it is time for this bill to be heard. And, if I know that in response to a prior query, the last bill to go entirely through the process of legislation is the bill that stands, if there is conflict, would I now vote against tabling by pressing the red button? Thank you.

Speaker ShurtleffThe question before the House is the motion to table HB 686. If you are in favor of that motion, you'll press the green button. If you are opposed to tabling, you'll press the red button. Voting stations will now be open for 30 seconds. Have all members present had an opportunity to vote? The House will be attentive to the state of the vote. With 139 members voting Yea and 203 members voting Nay, the motion to table is defeated. The Chair recognizes the member from Jaffrey, Rep. Ames to speak in support of the recommendation.

Rep. Dick Ames (D - Ches 9)I stand here to ask you to support HB 686, as modified by the committee amendment (0404h). HB 686 extends to capital gains. Our existing 5% investment earning tax that currently applies only to interest and dividends. HB 686 also raises personal exemptions, more than doubling the individual exemption and bringing the exemption for a married couple over the age of 65 up from $7,200 to $25,000. The expected result will be substantial new revenues in spite of the fact that our 5% flat rate on capital gains will be lower than the comparable rates of taxation on capital gains of every other Northeastern state. A department of revenue administration static analysis using 2015 to 2016 data, estimated a net of about $95 million in new revenue per year after accounting for the loss of revenue due to the higher exemptions. Other estimates using current data and current economic conditions put the likely net new revenues at about $150 million annually. Of course, changing economic conditions will inevitably affect the actual amount of revenues collected in future years. There is no persuasive evidence, however, that the presence of a tax on capital gains in our neighboring Northeastern states has affected or will affect economic activity to the good or to the bad, nor will it have such an affect in New Hampshire. More than 80% of the new revenue likely will come from taxpayers with incomes above $200,000. Taxpayers in the bottom two income quintiles will typically experience no tax increase. An estimated 4,600 taxpayers will actually pay lower taxes because of the higher personal exemptions. The bill uses the federal definition of capital gains. This means that gains from typical primary residents, sales and gains realized within pension plans will not be taxes. Current year losses will be netted out against current year gains. The new revenue produced by the bill will enable sorely needed public education funding and property tax relief. This is accomplished in the bill, in the second part of the bill, by fully reversing all stabilization grant cuts by reducing the statewide education property tax rate by 25%, by increasing per pupil education adequacy grants, and by recommending a study commission to develop a longterm resolution to ongoing public education funding issues. HB 686 responds to fundamental taxation and education funding inequities. Currently, the burden placed by New Hampshire taxation, state and local, on those with very low incomes as a portion of their income is about 4 times greater than the tax burden borne by those with very high income. Currently, those in the middle of the income spectrum, bear a tax burden that is about twice the burden borne by the most affluent taxpayers. Currently, business property owners pay business profits tax on capital gain realized when business assets are sold, but wealthy investors in the stock market pay no gain when they realize capital gain on their holdings. Currently, educational and tax burden disparities between communities reflecting wide swings by zip code, in income and wealth, dramatically worsen this picture of inequity. The capital gains component of this bill joined with its public-school funding, property tax relief component will move us in the direction of fairness. From my position on the House Ways and Means Committee, I watched closely the ebb and flow produced by the state's existing revenue sources. Those revenues are fully committed to the needs of existing state programs and we all know of needs that are not being met. Relief at the margins may be possible, but I do not believe that meaningful, sustainable relief from the property tax and educational inequities that I have referred to is possible without the new revenue that would be equitably generated by this bill. As one example, HB 709 approved by this body yesterday, is a bill that will provide significant education and property tax relief, but it will die in Finance - that is my prediction - if a new revenue source is not identified to pay for its $100 million plus price tag. I ask that you join me in voting OTP, Ought to Pass, on HB 686, as amended by (0404h) so that it can proceed to the Finance Committee for an in-depth examination in conjunction with the other education funding bills that have been passed by this body for that in-depth examination of the property tax relief and the education funding part of the bill. Thank you.

Speaker ShurtleffWill the member yield to a question. The member does not yield. The Chair recognizes the member from Stratham, Rep. Abrami.

Rep. Patrick Abrami (R - Rock 12)Thank you, Mister Speaker. Mister Speaker, I rise in opposition to HB 686. We just had a long discussion about the fact that this is a 2-committee bill and it is a 2-committee bill, but Ways and Means is charged with really just looking at the revenue part of this bill, which is the imposition of a capital gains tax. This will be going to Finance where they will figure out how to spend that money, if this bill is passed. This state since its founding has never had a capital gains tax. Mister Speaker, for the record, a capital gain is a profit realized on the sale of a non-inventory asset that was purchased at a cost amount that was lower than the amount realized on the sale of that asset. That is the textbook definition of what a capital gain is. This bill calls for taxing such a gain at 5%, as we heard a rate similar to the interest and dividend tax, which is already on the books. Yes, this bill does call for some increases on exemptions, on all three types of taxes combined, but the minority of Ways and Means argues that this action is not enough to impact the negative effects of this new tax. Mister Speaker, the minority feels this is an attack on business creation and a tax on risk taking. I will repeat, a tax on business creation and a tax on risk taking. Those who invest in business can win big and they can lose big. There are no guarantees. I will repeat, there are no guarantees. When you start a business, buy a stock, buy a building, whatever it may be, there is no guarantee that the value of those assets will go up. According to the Small Business Administration, 20.1% of businesses fail after the first year. 49% of the businesses fail in five years. 67% fail in ten years. The point is investors and risk takers lose money many times because there are no guarantees. Today in New Hampshire, we as a state, we do not lose or benefit from individuals willing to take a risk. We don't. If they want to take the risk, great. If they lose, it's their problem. If they win, great. This dynamic will change if this bill passes. New Hampshire will not share in losses by a failed business but will take 5% of the gain when the value of the business is successful and goes up. In my estimation, this is not fair at all. Mister Speaker let me give you two examples. Mister Speaker, years ago you could have bought McDonald's, 50% interest in McDonald's for $25,000, but guess what? At that time, no one was going to take that risk. No one because they thought their $25,000 was going to go down a rat hole. But, if you had taken that risk, you would be a billionaire now. Example closer to me personally is my brother. He was building a business from scratch in the 80's and things were going along just fine until the recession. What happened was he lost his business, he lost his house he used to collateralize his business. Now, the government, that would be New York State, didn't come to his rescue and say we will help pay for your house that you lost because you risked everything on a business, but New York State would surely, if that business succeeded, would have been glad to take the tax from him for his success, the capital gain. There are nine states, including New Hampshire, without a capital gains taxes and eight others who have capital gains taxes with rates lower than what is being proposed in this bill. Being one of these nine states, there is a reason for our economic success. Mister Speaker, the minority feels in a time of strong economic growth and revenues some $128.8 million above planned for the first seven months of the year and as you heard in my PA, I've adjusted that because at lunch I checked and in February we gained another $5.7 million above plan and things are still rolling along pretty well. We've heard a lot of doom and gloom with some from the other side about this, but things are moving along just well so we are up $134.5 million right now on plan with another four months to go. The last comment is that the job of the New Hampshire Department of Business and Economic Affairs to attract entrepreneurs to New Hampshire will be made harder. Mister Speaker, they will now have to explain this 5% tax on risk taking and success, risk taking and success to potential businesses that want to move to New Hampshire. Please vote no on the pending OTP motion so another motion can be brought forth. Thank you.

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

Rep. James Spillane (R - Rock 2)Thank you, Mister Speaker. Thank you to the member for taking my question. I first had this question come up while the prior member was speaking. The prior member mentioned that we had a, we were experiencing decreasing revenues due to higher exemptions. Isn't that just another way of saying we are letting people keep more of the money they have earned?

Rep. Patrick Abrami (R - Rock 12)Yes, but here's what is going on in Ways and Means. Here is what is going on with our state revenues. We also had the federal tax cuts and we know with the federal tax cuts there are some anomalies. What I think the other side was trying to say is that all of this increased revenue that we are seeing is due to the federal tax cuts and not the state tax cuts. I argue the other way. I think it has something to do with both and I wouldn't discount the fact that these business tax cuts have helped us all. Thank you.

Speaker ShurtleffWill the member yield to another question? The member yields. Rep. Lekas you are recognized to ask your question.

Rep. Tony Lekas (R - Hills 38)Thank you, Mister Speaker. Thank you for taking my question. I'd like to know if I am correct in my understanding that capital gains can be a very volatile source of income. If the economy is doing well we might get a lot of money from it and come to depend on that money and set up spending depending on it, but if the economy goes down, that's likely to drop rapidly and it's a very spiky form of income and it could get us in a lot of trouble if we came to depend on that. Is that correct?

Rep. Patrick Abrami (R - Rock 12)Yes, in a good economy, assets usually grow in value so yes. If you decide to sell your business or your stock or your building or whatever it might be, you will probably have a gain on that. In a time of recession, that's not the case. Your value may go down so when you go to sell your business, you may sell it at a loss and therefore there will be no gain. Thank you.

Speaker ShurtleffWill the member yield to another question? Rep. Flanagan, you are recognized.

Rep. Jack Flanagan (R - Hills 26)Thank you, Mister Speaker. Thank you, to the Representative, for taking my question. Yesterday we talked about income taxes, especially with family medical leave insurance. If I traded stock and made a capital gain or if I had a corporation that I deferred all of my income until the end of the year, which was then considered a capital gain and took that as my salary, are we creating another income tax?

Rep. Patrick Abrami (R - Rock 12)I don't know if I would call it an income tax. If you own stocks, you can get two ways you find out that you have to pay tax. If the company makes a profit, you'll get a dividend and that dividend is taxable, but in their bookkeeping if they declare a capital gain because the company could sell off an asset or whatever during the year, there is a capital gain so that is also taxable as a capital gain. Thank you.

Speaker ShurtleffWill the member yield to another question? The member does not yield. The Chair recognizes the member from Milford, Rep. Martin. This will be our last speaker.

Rep. Joelle Martin (D - Hills 23)Thank you, Mister Speaker. Good afternoon House colleagues. HB 686 presents us with an opportunity to address our constituents' biggest concerns, property tax relief and public-school funding. Every one of us has heard from our constituents about these two critical issues. Not one constituent has talked to me about businesses or taxes. In Milford, property tax rates have gone up over 50% in just 10 years. How many of our incomes have gone up 50% over that time? I continue to hear from seniors and hardworking families worried that escalating property taxes will force them out of their homes. Over the last two days we have heard a lot about the upward pressure forced on local property taxes due to down- shifted state costs including inadequate state funding of our public schools. All of these state costs, all of these state cuts to public education have added up and downshifted a huge cost burden to our local property taxpayers. HB 686 will not only boost state education adequacy funding and strengthen our public schools for all of New Hampshire's children, it will also cut, yes, I said cut, the statewide education property tax for every New Hampshire citizen. This bill will also provide additional tax cuts, especially beneficial for our most vulnerable seniors. Seniors in my community who looked at a $25,000 exemption and said oh my gosh I will never reach that, this is a great bill. This is a tax cut bill. HB 686 accomplishes all it sets out to without robbing another funding source as well, without depriving another critical need for our New Hampshire citizens. This bill responsibly funds these solutions outlined. It simply extends the existing interest and dividends tax to include all investment income at the same low rate. I'll repeat what my colleague from Jaffrey mentioned. Our tax rate is the lowest of all New England states. As State Representatives, we were elected to represent our constituents' best interests. HB 686 is our opportunity to address two of their biggest concerns, public education funding and property tax relief. So, let's put our legislative priorities in line with the people's priorities. The pro-property tax, anti-public education legislative priorities of recent years in this chamber can end today. Let's build a New Hampshire that works for everyone and pass this tax cut bill. Please vote Ought to Pass on HB 686. Thank you.

Speaker ShurtleffWill the member yield to a question? The member does not yield. Rep. Harrington has a question for a member of the committee. Does any member of the committee wish to answer it? Rep. Ames is recognized as the Vice Chair of the committee to respond to Rep. Harrington's question. Rep. Harrington, you may inquire.

Rep. Michael Harrington (R - Straf 3)Thank you, Mister Speaker. Thank you, Representative. There has been a lot of discussion on property tax relief and I have looked through this, I see there is going to be a 25% reduction in the state education property tax which is not a real large portion of people's property tax bill and then we are going to increase the public education adequacy grants, but there is nothing in this that prevents a school from simply getting more money from the state and just spending it and not reducing property taxes at all, does it? Is there something in the bill that makes them use it to cut taxes? Can they spend it any way they want to?

Rep. Dick Ames (D - Ches 9)That's a good question. The bill and the amendment which is where the statewide education property tax feature come up, provides directly for a cut in the statewide education property tax and it is a 25% cut which translates to .51 cents per 1,000 across the state. So that will happen if this bill goes forward as written. There will be a property tax for everyone. On top of that, so the cost of that might be $80 or $90 million, I don't remember the exact number, but that's a cost and it goes directly to property tax relief on top of that with the expectation that there would be additional revenues beyond that. The additional money would go for education funding by an increase in the adequacy formula. I think the base rate goes up in my bill, in 686, to $4,000 from the, I don't know, $3,750 or so it's at now. That money is steered through the adequacy formula to the school districts and you are quite right, the local decision making at that point will determine whether that money translates into more spending or a return to the municipalities that are part of that school district or to that city in the form of a lower local school tax rate. It's a local decision-making process. The school district might propose a higher level of spending in which case all the money would be used up that way if they got through the local approval process. If it didn't, it goes back the other way.

Speaker ShurtleffWill the member from Jaffrey yield to another question. Rep. McGuire, you may inquire.

Rep. Carol McGuire (R - Merr 29)Thank you, Mister Speaker. Thank you for taking my question. I wonder if the Ways and Means Committee is familiar with the experience in Connecticut when they created an income tax to lower their property taxes?

Rep. Dick Ames (D - Ches 9)I believe the Ways and Means Committee was fully aware of the experience not only in Connecticut, but in many other states. Thank you.

Speaker ShurtleffWill you yield to another question? Rep. Abrami, you may inquire.

Rep. Dick Ames (D - Ches 9)I have a question to the Chair. Can a committee member ask a committee member a question? Is that in order?

Speaker ShurtleffTo ask the majority because it is about the majority's proposal is in order, but whether to answer that question lies with the member from the committee.

Rep. Patrick Abrami (R - Rock 12)So, members of my caucus are confused about how we can call this bill a tax cut bill when it is going to raise $80 to $120 million. We are very confused about that. It's a new tax. Let's be sure about that and do you disagree with that?

Rep. Dick Ames (D - Ches 9)I'll try to respond. I have not called this a tax cut bill, just to be clear. However, this bill will, like all things in the world, matters are complicated, and this is a complicated bill. This bill will result in a tax cut for people at the lower end of the income spectrum among those who are currently paying interest and dividends tax and who do not experience, do not realize in the world they live in, capital gains. They will receive a reduction. They will pay less interest in dividends tax. That is tax cut number one. Tax cut number two, if 686 goes through as amended is the SWEPT cut, the property tax cut. That's a 25% cut in the rate so that will be experienced by all taxpayers who pay property tax. Then there will be a tax increase and that's the tax on people who have capital gains and who's personal exemptions are used up before you get to the capital gains or halfway through the capital gains.

Speaker ShurtleffWill the member yield to another question. The member yields, you may inquire.

Rep. Patrick Abrami (R - Rock 12)Thank you, Mister Speaker. Thank you to my friend again. So, aren't we taxing the wealth creators? Aren't we taxing, won't we be taxing those risk takers that are willing to take the risk to create business, to create jobs, that are going to create even more revenue by this bill? That's why I have a problem with it sounds like a redistribution of wealth bill to me. I think we are poking at the wrong place here in terms of taking a risk with those who would be the most productive in our society.

Speaker ShurtleffWill the member suspend? Was that the end of the question?

Rep. Patrick Abrami (R - Rock 12)Aren't we going after the wrong group of people to put a new tax in place on?

Rep. Dick Ames (D - Ches 9)I think this is a fair tax that is being proposed. It will be borne by people at the higher end of the income spectrum and that's the way our tax system should operate. Thank you.

Speaker ShurtleffI want to thank the member from Jaffrey, the Vice Chair of Ways and Means, for his indulgence in answering the questions. Thank you. This will be a division vote. A roll call has been requested and sufficiently seconded. This will be a roll call vote. Members will kindly take their seats. The question before the House is the recommendation that the bill Ought to Pass as Amended. The Chair recognizes the member from Londonderry, Rep. Packard for a parliamentary inquiry.

Rep. Sherman Packard (R - Rock 5)Thank you, Mister Speaker. If I know that if this bill passes, for the first time since its founding, New Hampshire would require a 5% tax, new tax, on capital gains. If I also know that this is an attack on business creation and there is no guarantee of success when someone invests in a business as I have done twice. I have been successful, but I know many who haven't. And, if I know that our very robust economy would be negatively impacted by the imposition of a capital gains tax. And, Mister Speaker, if I know that if this bill passes that the New Hampshire Department of Business and Economic Affairs' job of attracting new businesses and risk takers to our state will be made much harder. And, if I know that this bill is a new tax, would I now press the red button and stop taking more money out of one pocket and putting less in the other? Thank you, Mister Speaker.

Speaker ShurtleffThe question before the House is the recommendation that the bill Ought to Pass as Amended. The Chair recognizes the member from Jaffrey, Rep. Ley, for a parliamentary inquiry.

Rep. Douglas Ley (D - Ches 9)Thank you, Mister Speaker. Mister Speaker, if I know that this bill addresses property tax relief and public-school funding, the top concerns of our constituents. And, if I know that inadequate education funding has already led to escalating property taxes that our constituents cannot afford and that continued increases will be devastating to many, many more of our constituents. And, finally, if I know this bill increases investment in public education, reduces the interest and dividend taxes for more than 4,500 Granite Staters and takes meaningful steps to provide property tax relief for virtually all Granite State citizens, would I now press the green button to support the committee report? Thank you.

Speaker ShurtleffThis is a roll call vote. The question before the House is the recommendation that the bill Ought to Pass as Amended. If you are in favor, you'll press the green button. If you are opposed, you'll press the red button. Voting stations will be open for 30 seconds. Have all members present had an opportunity to vote? The House will be attentive to the state of the vote. With 199 voting Yea and 143 voting Nay, the motion of Ought to Pass as Amended passes.