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Why they voted: New Hampshire House members explain decision to gut sales tax bill

  • Members of the New Hampshire House vote on a range of bills sent by the Senate in the final weeks of the legislative session, May 10, 2018. Ethan DeWitt / Monitor file

  • State Sen. Dan Feltes, D-Concord, speaks at a special Senate session convened Wednesday, July 25, 2018, to pass legislation in response to a Supreme Court decision on internet sales taxes. The bill passed the Senate unanimously, but it ultimately failed after it was gutted in the House and the new version was rejected by the Senate. Ethan DeWitt / Monitor file

Monitor staff
Published: 7/25/2018 6:17:42 PM

Hardly anyone had spoken on the floor before the House hurtled toward a vote. By a narrow margin Wednesday, representatives voted to gut a bill intended to push back on a U.S. Supreme Court decision on internet sales taxes, rebuking Gov. Chris Sununu and the Senate, which had approved the original bill 24-0.

The move to strip the bill down to a mere study commission came unexpectedly, prompting the Senate to angrily reject the remnants and kill the bill altogether.

But as representatives poured out of the State House and back to their summer break, unified answers were hard to find. The battle lines were not clear; members of both sides of the political spectrum voted to pare back the original legislation, cobbled together by the governor’s office and a bipartisan commission last week.

Here were some of the common concerns:

That the bill was unconstitutional

Under the proposed bill, titled SSSB 1, New Hampshire would impose a series of requirements for those out-of-state jurisdictions to meet if they wanted to request sales tax revenue from New Hampshire businesses. The idea was to deter frivolous claims, create a way to monitor and potentially challenge requests, and force foreign jurisdictions to cover the administrative costs of complying with the sales taxes.

But in leading the charge against the bill on the House floor, members of the influential conservative House Freedom Caucus said that imposing those new rules was in clear violation of Article 1, Section 10, of the U.S. Constitution – the interstate commerce clause. That provision prevents states from meddling in interstate trade matters without the consent of Congress.

For that reason alone, Rep. Dan Itse, R-Fremont, argued on the floor, the Legislature should pull back and study its options more closely.

“SSSB1, as introduced, built the ladder to broach the walls of protections that our State and Federal Constitution provide,” Itse said in a statement after the vote.

That the bill was rushed

For many, the process was just too quick. First unveiled by the governor’s office on Thursday, July 12, the bill endured three work sessions by the task force last week, from June 17-19, some lasting more than five hours. Defenders of the bill said it had more scrutiny and staff involvement than most pieces of legislation get during the normal session. But ahead of the vote, Rep. Leonard Turcotte, a Freedom Caucus member, said the result had not been well-presented to the rank and file.

“Legislators and the public still don’t fully know what is in this bill and how it would work,” he said in a statement Tuesday. “We are being told to ‘pass the bill to find out what’s in it.’ ”

House Democratic Leader Steve Shurtleff, D-Penacook, a member of the task force, said that while he had supported the group’s bill, he, too, felt that it could have benefited from more time. During deliberations last week, Shurtleff had asked for a delay in voting, preferring instead for the commission to prepare suggestions in time for “veto day,” when the Legislature reconvenes in September.

“I think people felt the governor really rushed it,” he said. “He jumped out in front on this issue.”

Rep. Mary Jane Wallner, D-Concord, agreed the study commission was the best option.

“I think it leaves us just exactly where we should be,” she said shortly after the vote. “There’s going to be a group of people looking at how this affects the state. And that’s where we should have been to begin with.”

That was before the Senate killed the final piece.

That the bill would have made New Hampshire a target for litigation

On top of Constitutional questions, many House lawmakers voiced more a practical concern: The bill would invite jurisdictions to sue New Hampshire into compliance. In the wake of the Supreme Court decision, South Dakota v. Wayfair, released last month, none of the five other states without sales taxes have attempted the kind of bold legislative response that New Hampshire has. By sticking its neck out, many argued, the attorney general would make New Hampshire the default battleground for all litigation.

“I think it would have ended up in federal court over possibly New Hampshire violating the commerce clause,” Shurtleff said. Now, he said, the state is “back to square one.”

And that, critics of the bill said, means that the litigation sure to follow the Supreme Court’s ruling might be spread among all the businesses now subjected to potential interstate sales taxes – not just New Hampshire’s.

“I worry that if one small state does this, and all of the big taxing states get together and sue us, they’re going to have much more resources,” said Patricia Lovejoy, D-Stratham. “Our small businesses are in no different positions in a small business in northern New York or in Idaho, or whatever.”

Regardless, as the dust settled, members on the task force that hammered out the bill rejected the concerns. Rep. Barbara Griffin, R-Goffstown, a House speaker candidate and task force member, called the outcome a missed opportunity.

“I think the vote was unfortunate because it leaves our businesses hanging until June 1, with no direction as to response,” she said, referring to the likely end of the legislative session in 2019.

Rep. Neal Kurk, R-Weare, agreed.

“We need to take action now,” he said. “A study committee is inadequate.”

And Majority Leader Dick Hinch rejected the idea that the process was too fast. The bill was never meant to be the end-all fix, he argued.

“I think that task force acted in a fashion where we understood the charge and we wanted to work toward building a foundation for a bill that took the uncertainty away from businesses at this time,” he said. He noted that the commisision had been added to the original bill “knowing that the work was not done” with this month’s bill alone.

Then came partisan frustrations.

“The Democrats really let us down on this,” Hinch said, pointing to 85 out of 139 Democrats who had voted in favor of the amendment.

The state Democratic party, meanwhile, directed blame to Sununu, accusing him of “ineffective leadership” in wrangling the vote.

But to the lawmakers who voted to strip down the bill, few saw any kind of partisan animus. To many, the bill was simply bad policy.

“I voted pretty ‘no’ across the board – it was just a wasted day,” said Rep. Dan Eaton, D-Stoddard. “It was going to be a wasted day regardless.”

He continued: “It was raw politics, pure politics, feel-good stuff, to accomplish nothing.”

In the end, that sentiment, more than any other, may have carried the day.

(Ethan DeWitt can be reached at edewitt@cmonitor.com, or on Twitter at @edewittNH.)

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