The Golden Eggs

Remember Aesop's fable about the goose that laid the golden eggs?  The greedy owners killed the goose because they wanted all the gold that must have been inside.  But it was just an ordinary goose.  Then they had nothing.

I had an example of that last week in committee hearings.

One of our jobs in Ways and Means is to determine a realistic revenue projection for the two fiscal years beginning July 1, 2011.  So for the past week we heard testimony from all the agencies that contribute revenue to NH, and looked at their 10 year history.  Thursday we heard from the Lottery Commission, which has contributed over $260M in revenue in past years, but is down to under $240M this year.

One disturbing comment from the Commission was the "very unhappy players" who have just cashed out a jackpot at the lottery offices.  In the past, they would walk away with all smiles.  Now, in addition to Federal withholding (which everyone expects), an additional 10% is taken out by the State of NH on the new "Gamblings Winning" tax.  This 10% never comes back.  Unlike the Federal tax, it is not offsettable by gambling losses, and applies to everyone.  That includes NH residents who hit a jackpot in Connecticut, and Massachusetts residents who bought a NH lottery ticket over the border.  These winners felt like losers.

So now we hear stories of how border towns have had their lottery sales dry up, not to mention the associated sales of gas and convenience store items, and perhaps a short trip as a tourist into our fine state.  A tax that was supposed to raise an additional $4M has actually lost $2M.  And that's just on the lottery side.

Scratch tickets are the most popular lottery item, about 69% of the sales over the last 10 years.  NH has a decent payout on scratch tickets, ranging from 60% on the dollar tickets up to 74% on higher denominations.  Nice golden eggs for everyone.  But two years ago the Legislature imposed this new 10% tax, which is killing the goose.  Those irresponsible legislators were mostly voted out office, but their legacy remains.

My fellow members on Ways and Means were disappointed to hear all this, and one of our members has sponsored House Bill 157 to kill this tax effective July 1, 2011.  The bill has been assigned to our committee, and a public hearing will take place.

It can't happen too soon.