ATKINSON — U.S. Sen. Jeanne Shaheen, D-NH, is introducing a bill to overturn a tax on water utility companies that her office calls an “unfair measure” in the Tax Cuts and Jobs Act of 2017, which resulted in a surprise $1.15 million tax bill for one New Hampshire company.
Shaheen is teaming up with Republican Sen. Lisa Murkowski of Alaska as co-sponsor, and New Hampshire Sen. Maggie Hassan is a co-sponsor as well.
“Water infrastructure is vital to economic development and fundamental to delivering clean drinking water. Communities across New Hampshire have been planning projects for years that are now threatened by this new tax,” Shaheen said in a press release. “Congress should be encouraging infrastructure development which is why we need to fix this tax bill that was rushed through Congress.”
She said the current tax structure will create a “strong disincentive” for future water infrastructure development.
At issue is an adjustment to the Contribution in Aid of Construction (CIAC) tax, which since 1996 provided an exemption for water and wastewater utilities. The 2017 tax law did quietly did away with that exemption.
Now, water companies in New Hampshire are being billed by the federal government for major pipeline projects that expands public access to clean water, including remediation efforts related to groundwater contamination.
Hampstead Area Water Company (HAWC) is facing $1.15 million in taxes for their involvement in a major extension of drinking water infrastructure from Manchester through several southern New Hampshire communities.
The additional tax burden will either have to be covered by state and local governments or passed on to ratepayers and property taxpayers.
According to Shaheen’s office, the bill would simply restore the tax provisions levied against utility contributions from their taxable income, governmental entities and civic groups to the pre-2017 language, making those contributions exempt from taxes.
Shaheen said it was a “common-sense” effort with bipartisan support, and thanked Sen. Murkowski for her support.
Murkowski said in a statement that she’s pleased to join Shaheen in introducing this bill.
“Many water and sewer utilities in Alaska rely on contributions of homebuilders and others interested in expansion of service to offset the cost of service build-out. In the absence of this, the cost gets passed on to customers in the form of higher bills,” Murkowski said.
Republican leaders in New Hampshire have championed this cause for months.
State Senate Minority Leader Chuck Morse worked closely with the state Department of Environmental Services, water utilities and local communities to piece together the Southern New Hampshire Regional Water Project, which is currently in the early construction phase.
When he learned about the issue, Morse notified Gov. Chris Sununu and DES Commissioner Robert Scott told the Union Leader this past summer that he has been in communication with New Hampshire’s congressional delegation about figuring out a long-term fix.
Shaheen staff say they first became aware of the issue during a meeting in Atkinson earlier this year.
On May 14, Sununu sent a letter to U.S. Senate Majority Leader Mitch McConnell and Finance Committee Chairman Chuck Grassley, saying he believed the change in the tax code was an “unintended consequence” of the 2017 tax law, and asked them to restore the CIAC tax exemptions on water and wastewater utilities.
In the letter, Sununu said New Hampshire is particularly affected by this tax in two ways: when a party responsible for groundwater contamination pays for new water connections as part of a settlement or administrative order, and when grants are awarded from the New Hampshire Drinking Water Groundwater Trust Fund and the New Hampshire MtBE Remediation Settlement Fund for the construction of a large-scale regional drinking water project.