Distant Dome is co-published by InDepthNH.org and Manchester Ink Link

By GARRY RAYNO, Distant Dome

New Hampshire does not like change – from a US Supreme Court ruling saying state businesses have to collect sales taxes for other states to abandoning the death penalty.

The state – and more specifically its lawmakers – approach change in an incremental way. Try a minuscule change for a year and then see if a tiny bit more is acceptable.

There are exceptions.

Garry Rayno

It took some time for New Hampshire lawmakers to approve same sex unions, but after they did, it took little time to adopt same-sex marriages. New Hampshire was the first state to make the change legislatively rather than through the courts.

But same-sex marriage is the exception to standard operating procedure in the Granite State.

Many years ago, the Fish and Game Department was one of the more robust state agencies for revenue. The sale of fishing and hunting licenses funded the department, exempting it from the careful scrutiny lawmakers exercised over most sections of the state’s two-year budget.

Fish hatcheries supplied a steady stream of trout to feed the self-proclaimed prowess of weekend anglers who would go home with their legal limit eliciting faint praise from spouses who had to clean the fish.

Fifty years ago, every field with a view was not crammed with houses, the woods went on forever and the shorelines of remote mountain lakes were empty, not lined with camps and now large houses as they are today.

In those days deer were plentiful as were game birds in a more natural habitat. Picture windows with children playing inside were not at risk of being hit by a stray bullet.

Much has changed since that time. Today, license sales do not cover the cost of running the department which along with game management has to rescue lost or hurt hikers and police operators of off-road vehicles. Registration fees provide little money in return for the costs of the overseeing their operations.

Less Money

A department with diminishing revenues with growing responsibilities is a recipe for disaster and that is what the Fish and Game Department has been facing for a number of years because lawmakers have been reluctant to spend general fund dollars to help the department maintain the workforce needed to meet its mission.

Over the years, lawmakers allowed the department to charge hikers when they have to be rescued due to their own negligence. 

However collecting the money for the rescue efforts often costing well into the thousands of dollars, is not easy if the person lives out-of-state or is poor.

Lawmakers more recently made another attempt to help defray the cost of rescues.

After several years of failure, a “hike-free” card was approved. Hikers may purchase the card and will not be charged for rescue efforts on their behalf.

However none of these efforts have closed the revenue gap sufficiently to provide the department with the needed staffing and robust game management programs.

The revenue stream is also not enough for the department to support a significant capital building or rehabilitation project and many of the agency’s facilities have deteriorated. Several sessions ago, lawmakers did provide the general fund money to rehabilitate some facilities through the state’s capital budget.

Lawmakers established several study committees with various recommendations such as the “boat tax” that caused an uproar but major changes in the agency’s revenue stream have not materialized.

The Fish and Game Department is not alone.

Keno

While New Hampshire was the first state with a “legal” sweepstakes, other states jumped ahead with on-line gaming and more importantly Keno.

Neighboring Massachusetts bathed in the monetary benefits of the fast-paced game played mostly in bars for many years before New Hampshire finally decided to allow the game after years of failure. Keno passed the House several times but the casino gambling advocates in the Senate worked to kill it.

Keno passed last year, sold as the funding source to expand state aid for kindergarten to full-day instead of half-day support.

State officials expect Keno to produce about $9 million a year to fund full-day kindergarten.

But the state’s tax system is perhaps where change is the slowest, often taking lawsuits to transform the system.

In the past three decades, only two major revisions have occurred: the business enterprise tax and the changes spurred by the Claremont education lawsuit.

In the early 1990s, the state’s largest employer — Cabletron Systems — sued the state over its business profits tax which hit manufacturers like the Rochester-based company but not professional organizations such as law firms, medical practices, architects, or large non-profits like hospitals and educational institutions, which still are not subject to businesses taxes.

former Gov. Steve Merrill

Then Gov. Steve Merrill worked with an advisory group to establish the business enterprise tax which taxes a business’s total compensation, interest paid or earned, and dividends.

A kind of back-door value added tax, the levy worked as intended bringing in all the professional organizations and slowing the peaks and valleys of business profits tax revenues.

Some complain the BET taxes businesses whether they profitable or not, but other businesses have found ways to significantly reduce their tax liabilities.

The two business taxes account for more than 25 percent of all state general and education fund revenues.

Although the business enterprise tax is a relatively new tax in the overall picture, it does not capture much of the revenue generated in the gig economy where everyone is his or her own limited liability company or contractor.

Claremont Ruling

Lawmakers reacted to the Supreme Court’s Claremont II decision by establishing a statewide property tax, utility education property tax and upping the rates of existing taxes.

The Claremont funding decision said the current system of widely varying property tax rates used to fund public education was unconstitutional. Yet lawmakers created a new system that was even more dependent on property taxes, except now they some would be collected as a state tax.

The state utility tax also significantly reduced property tax revenue for communities hosting large utility facilities such as Seabrook, Portsmouth, Newington and Bow.

Some changes have been made in the education funding system all putting more emphasis on local property taxes and now the disparity between rich and poor communities that the court noted in its decision, is as great or greater than it was when the decision was released in the 1990s.

The Pledge

And there is the infamous pledge against broad-based taxes that has stymied any discussion of a general sales or income tax that could have significantly changed the system to make state revenues more responsive to the economy but probably not so much these days.

It is likely to take another lawsuit to transform the state’s tax system if it is to be more responsive to the current economic environment, but none appear to be on the horizon.

Changing New Hampshire state government is like turning the Titanic, it takes a long time to make adjustments and icebergs are waiting.

Garry Rayno may be reached at garry.rayno@yahoo.com.

Distant Dome by veteran journalist Garry Rayno explores a broader perspective on the State House and state happenings. Over his three-decade career, Rayno covered the NH State House for the New Hampshire Union Leader and Foster’s Daily Democrat. During his career, his coverage spanned the news spectrum, from local planning, school and select boards, to national issues such as electric industry deregulation and Presidential primaries. Rayno lives with his wife Carolyn in New London.