Thank you, Mr. Speaker.…
Speaker PackardThe Chair recognizes Representative Spahr.
Rep. Terry Spahr (D - Graf 12)Thank you, Mr. Speaker. Does anybody know what we spent last year in this state? Our budget was about $8 billion. 17 years ago, in 2008, our budget was about $5 billion. So we've seen in 17 years basically an increase of about $3 billion in our budget, and mostly that's because of inflation. Salaries go up, healthcare costs, technology, construction, building maintenance, office expenses, they all increase every year, just as we do with our own personal budgets at home. The state covers these costs through collecting, basically a percentage, a percentage of business profits, a percentage of meals and rooms, of car rentals, insurance premiums, real estate transfers, casino gaming, and other sources. By collecting a percentage, the revenue keeps pace with that inflation. The tobacco tax doesn't do this. It is a flat fee per pack of cigarettes, and it doesn't adjust for inflation, and it hasn't since 2008 when our annual budget was $5 billion. Today it's $8 billion. As a result, the state is now losing tens of millions of dollars annually because of this inflation challenge. This bill would simply adjust for inflation and bring it back to the 2008 levels. That's what this bill does. So why is that a good thing? Well, just like the other 90 flat fees that we increased last year to account for inflation and pass them into law, it's the right thing to do to adjust this one as well. Even adjusting for inflation, our state will still be extremely competitive. We're the lowest cost state in the Northeast as far as the cost per pack of cigarettes, and even with this adjustment, we're still extremely lower than all our other states. We're very competitive with this bill. Excuse me. The additional estimated amount is about $40 to $87 million, and right now, our budget is bleeding. This will help staunch that bleeding. Last year, the governor had to basically raid the Rainy Day Fund and deplete it by $67 million. That's not good, and think about this, the additional money collected would also allow lawmakers more flexibility to look at other important taxes to potentially cut. Taxes that are more impactful to New Hampshire, to New Hampshire's growth and its success. Can you guys think of one? Business profits tax. Two of my colleagues, on a different note, two of my colleagues on our committee, one's a Republican, one's a Democrat, they both shared with us last year that they actually quit smoking, said it was the best decision they have ever made in their lives with regard to their health. This fee increase may even entice a few others, New Hampshire residents, to do the same. Not only will their health be better, but they'll actually save a lot more money because the average is $3 a year in cigarettes, and they also spend an average of about $2,000 more in healthcare costs every single year. So it's a win-win for people. And New Hampshire businesses love this bill. Guess why? We lose, the businesses here in this state, lose about a billion and a half dollars a year in lost productivity from workers who are sick and unable to work because of smoking-related causes. A billion and a half dollars. This bill is frankly, in my opinion, a no-brainer. It guarantees our citizens, it guarantees our businesses, and it guarantees our state will be healthier and wealthier. Let's go to New Hampshire.
Speaker PackardChair recognizes Representative Stringham.
Rep. Jerry Stringham (D - Graf 3)Thank you very much, Mr. Speaker. As my colleague said, HB 1596 changes the per-pack fee on a package of cigarettes for the first time in 18 years to $2.80 from the current level of $1.78. And he explained why we have to vote on that. While most taxes that we increase auto-adjust because they're percent taxes, so the fee on a hamburger that you bought at the store, the state fee is now higher than it was 18 years ago. But since the fee on cigarettes is per-pack, we have to do the unenviable process of deciding when and how much to raise this tax or change it. So how did we come up with the $2.80 number from $1.78? There's really two things. One is that this is just a COLA-based index increase since the last time it was set at 2008. So it's just an inflation adjuster. Secondly, it was a specific request of the American Heart Association and the American Cancer Society who look at this fee as a very important public health matter. And they say it's better to raise the fee all at once, say a dollar per pack at the time. It has more of a cessation impact, creates a little bit of a shock to the system, than inching it up every once in a while. It's like raising the temperature of the boiling water with a frog in it that we've heard before. So that's how we came up with this $1.02 increase. So the second question is, why now? Well, Maine raised their cigarette tax by $1.50 per pack last year. The new $2.80 Granite State rate will be the lowest in the New England region. In addition to having a lower rate, we still do not pay sales tax. All of the other New England states pay a sales tax on top of the entire purchase price, not just the tax, but the whole thing. So that adds up to a dollar more to the purchase price. So, critics of this bill will tell you we'll lose cross-border sales with this increase. I think those who are stocking up while in the Granite State will continue to do so. They will still save a dollar, perhaps even up to $3 per pack. Just to give you an idea that the rates are $3.08 in Vermont, $3.50 in Maine, $3.51 in Mass, $3.90 in Connecticut, and Rhode Island, $4.50. So saving this dollar to $3 to stock up while visiting the Granite State, and at the same time, while you're here, buying some maple syrup or stocking up on your Live Free or Die bumper stickers is bound to happen. The DOR fiscal note seems to agree, providing about
$80 million in additional revenues. So we can, there's some benefits to it, but why raise it at all? As my friend and colleague often says, we're a state of unlimited wants and limited means. So why raise it? This bill also addresses what some of the uses of this could be, or will be. The bill removes the income-based premium tax for some Medicaid recipients imposed on Granite Staters by our last budget for the first time. Some Medicaid recipients in the Granite State program and the CHIP programs will pay, for the first time, a premium based on about 5% of their income, just to stay in and be eligible for the program. I can see what's going to happen, with my eyes closed, even though it hasn't taken effect yet. Hardworking Granite Staters in need of health insurance just won't have the funds they need. They know they need it, but the up to $270 they have to come up with, they just don't have. What'll happen? They'll lose coverage. They'll still, at times, end up to show up at a hospital or a community health center. The facility's uncompensated care ratio will go up. Some of the facilities of this type of care will have to close, just as the Ammonoosuc Health Clinic in Franconia just did, citing Medicaid cuts as the reason. Access will go down, and then insurer rates for everyone else will go up, impacting businesses and beneficiaries alike. So that's why this bill uses a small portion of the added revenue from the change in the cigarette tax to rid of this income-based tax on Medicaid recipients. Finally, the bill restores a portion of the funding cuts to the university system. While the cuts enacted in the current biennium seem doable, and as one of my colleagues said, a favorite cut, they turned out to be implemented at a rate that is hurting our youth and our businesses because of their size and speed. A factor we may not have appreciated is that over 50% of the university system budget comes from cost-based grants. So if you cut any of those in the cost you save, you also cut the revenue. So a smaller and smaller piece of the university budget, which is already ranked 50th in the nation, has to bear the burden. Maybe they could have cut administrative staff, but our examination says it's already thin. Most colleges have presidents, provosts, and deans, but basically, we don't have deans at our state colleges. The president of Plymouth State is a guy named Jonathan Birx. He's a good president of the 3,182 undergraduates and over 500 graduates. So who's the president of Keene State College with another 2,700? It's a guy named Jonathan Birx, it's the same guy. They're sharing the president of two major universities in the state. It sounds like they're pretty efficient and not top-heavy to me. In response to the budget cuts in the university system, which came fast, they removed 45 teaching positions. They canceled classes and put students at risk for achieving their graduation dates. At least some have left the state for their school to attend out-of-state institutions of learning. A university official told me that even with the cuts, they're still running short. They just can't cut enough teaching positions quick enough to meet the budgetary goals. Local businesses in the North Country and elsewhere are affected. The diner I also often frequent is largely staffed with college students on the weekend. And due to a diminished workforce of students, two weeks ago that diner announced they were closing for the winter and would open in late May, hopefully. There's no part of this bill that doesn't help Granite Staters. I don't take raising any fee lightly. As I'm sure none of you were when we raised the auto registration fee as part of this budget. But applying this COLA to cigarettes allows us to undo some of the most egregious harms in the current budget. I'm sure the second committee will further verify the benefits of reduction income based Medicaid taxes that were instituted and the timing of reductions to the university system or make the bill better. And I do deeply appreciate efforts by some across the aisle on this bill. And I'm hopeful that those ideas will be considered as I know they will in the second House committee. So I ask on behalf of Granite Staters that do not want to face postponement as a penalty for smoking cigarettes. For CHIP and Medicaid patients that are working hard and doing what they can to be part of the New Hampshire experience, and for college students that want to be educated and contribute to the New Hampshire advantage for the rest of their lives. Please support this fiscally responsible bill and vote red on the ITL motion so that an alternative motion can be made. Thank you very much.
Speaker PackardThe Chair, recognize Representative Cole.
Rep. Brian Cole (R - Hills 26)Thank you, Mr. Speaker. HB 1596, an act relative to the collection of certain healthcare programs funding for the University of New Hampshire and raising the tobacco tax. First, let's address the heart of the bill. A massive increase to the tobacco tax from $1.78 to $2.80 per pack. 57% tax increase. It's projected to generate $84 million in new revenue by singling out smokers. New Hampshire's low tobacco tax has long been a competitive advantage, particularly for our border communities. Our tax rate is nearly half of that of Massachusetts. This draws cross-border shoppers and supports local retailers, convenience stores, and creates jobs. A sharp increase like this will shrink in-state sales and undermine the very revenue that the bill promises to produce, threatening both our low tax identity and the economic vitality of granite-staters who rely on that price differential. The bill also carves out a permanent $18 million a year appropriation for the University of New Hampshire system. Only a small percentage of the university system budget comes from state funds and is continuing to operate effectively without additional state support. Most concerning, however, is how this bill pays for this new spending. By repealing premiums for the Grant Advantage Medicare Expansion Program and the Children's Health Insurance Program, these premiums were deliberately designed to promote shared responsibility, control costs, and reduce pressure on the general fund. Eliminating them shifts the burden entirely onto taxpayers. By combining these two elements, this bill increases state expenditures by up to $34 million and new general fund costs starting next year. New Hampshire is already generous in its healthcare support. There are no free rides, state employees pay premiums for their coverage, and participants in these programs should as well to maintain fairness and fiscal discipline. HB 1596 raises taxes significantly, creates new permanent spending, relies on uncertain and potential declining revenue, and dismantles proven mechanisms for cost sharing. It places long-term pressure on an already strained budget and chips away at what makes New Hampshire attractive, low taxes and fiscal restraint. I urge the body to press green button and support the ITL motion, and Mr. Speaker, I call for roll call.
Speaker PackardRepresentative Cole has asked for roll call. Is that sufficiently seconded? It is sufficiently seconded. This will be a roll call vote. Members, take your seats. The motion before us, the majority committee report of Inexpedient to Legislate on House Bill 1596. This is a roll call vote. The Chair recognizes Representative Spahr for a parliamentary inquiry.
Rep. Terry Spahr (D - Graf 12)Thank you, Mr. Speaker. If I know that this bill will make our residents, our businesses, and our great state so much stronger, then I would push the red button?
Speaker PackardChair recognizes Representative Janigian for a parliamentary inquiry.
Rep. John Janigian (R - Rock 25)Thank you, Mr. Speaker. Mr. Speaker, if I know that the funding source of this bill is a huge dollar, over a dollar tax on a pack of cigarettes, and if I know that our low tobacco tax compared to surrounding states is what creates a lot of cross-border traffic from places as far away as Rhode Island and beyond, and finally, if I know that a large increase in this tax would substantially slow those cross-border sales, then would I now press the green button and support the majority of the committee and the ITL motion?
Speaker PackardThe motion before us is the majority committee report of Inexpedient to Legislate in House Bill 1596. This is a roll call vote. If you're in favor, you'll press the green button. If you're opposed, you'll press the red button. Voting stations are open for 30 seconds. Have all members present had an opportunity to vote? The House will attend to the state of the vote; 200 voting Yay, 157 voting Nay, the committee report is adopted.