Smokers will soon shell out 28 cents more for a pack of cigarettes, if a compromise two-year spending plan is passed by the Legislature next week. The increase will bring the per-pack cigarette tax to $1.08, still below the cost in other New England states.

House and Senate lawmakers agreed on the cigarette tax increase yesterday, at the end of five days of budget negotiations. Whether the smokers would face a heftier tax was never in question. But the size of the increase - the House backed a 45-cent per-pack raise, while the Senate pushed for Gov. John Lynch's proposal of a 28-cent raise - proved a point of contention.

Yesterday afternoon, House negotiators agreed to the Senate position, albeit with reservations. "I'm very disappointed about the cigarette tax, and actually primarily because of public health issues," said House Finance Committee Chairwoman Marjorie Smith, who cited research showing the link between higher cigarette costs and a decline in teenage smoking.

"We tried very hard to get the Senate to come into the middle between 28 (cents) and 45, and to no avail. The Senate was just not interested in doing that," said Smith, a Durham Democrat.

With the cost of health benefits and fuel surging, lawmakers looked to several tax increases and surcharges to balance the roughly $10.3 billion two-year spending plan.

In February, Lynch proposed increasing the per-pack cigarette tax by 28 cents, and most members of the Democratic majority embraced the plan.

But when the House voted to raise the per-pack tax by 45 cents, to $1.25 a pack, senators balked.

The increase will be the second in the past two years. In 2005, New Hampshire raised its per-pack tax from 52 cents to 80 cents. Although senators were eager to curtail teenage smoking, "you also have to balance that with the impact on people who do smoke," said Sen. Maggie Hassan, an Exeter Democrat and member of the Senate Finance Committee. Many smokers are working class, she added. "The tax does hit them hard, and cigarette smoking is addictive."

Senators also worried that if New Hampshire's cigarette tax neared the level of taxes in neighboring states, out-of-staters wouldn't bother making the trip to stock up on cigarettes. New Hampshire "has a lot of border retailers, and they've started to see a decrease in their sales," Hassan said. While the drop might not be linked to the tax, "I think we want to be cautious," she said. "We don't want to unnecessarily raise it beyond where we need to go."

The full House and Senate are expected to approve the compromise budget next week, and the new proposal would take effect July 1. But even with the cigarette tax increase, New Hampshire will lag behind the per-pack tax in neighboring states, including Massachusetts ($1.51), Maine ($2) and Vermont ($1.79).

The Senate predicted that with the 28-cent increase, the state would generate roughly $45 million more in tobacco taxes next year. With the House-backed 45-cent increase, the state would have raised about $75 million more in tobacco taxes next year, according to House revenue projections.

Lawmakers also agreed on higher vehicle registration fees yesterday, with fees for cars and small trucks set to rise $6. The registration fee for trucks weighing more than 8,001 pounds will go up 12 cents per hundred pounds of vehicle weight, half of the increase originally proposed by House lawmakers.

The House proposal would have raised an additional $3 million over the next two years, money lawmakers could have directed to the highway fund, Smith said. "We would have been able to put significantly less of a strain on the highway fund," she said, which goes toward shoring up the state's highways. Lawmakers last increased the registration fee for large trucks more than two decades ago.

But senators clung to their proposal. "We heard from an awful lot of truckers, many of whom are small business people, many of whom are on the border and could switch their registrations to Maine or Vermont," Hassan said. "These folks are small business people who have also been hit incredibly hard by the increase in gas prices."

House negotiators also conceded another controversial fee increase to the Senate: a 7 percent telecommunications tax on the first $12 of residential phone bills, a move senators say will increase revenue by $5 million annually. Lawmakers have shied away from similar fees in the past, arguing that it harms those least able to pay. In an attempt to temper the new fee, negotiators decided that when an individual applied for welfare assistance or food stamps, they would receive information about programs that help low-income residents pay for telephone service.

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