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Grant Bosse will join WGIR's Charlie Sherman at 7:37am to discuss his exclusive story on the threat of default on the bonds for the Verizon Wireless Arena.

Mayor-elect Gatsas reacts to possible bond default

(MANCHESTER) Mayor-elect Ted Gatsas says Manchester taxpayers and budget writers won't be on the hook if the bonds on the Verizon Wireless Arena default. The current State Senator and Alderman, and incoming Mayor reacted to the Josiah Bartlett Center 's report that changes in the state budget could prevent the Manchester Housing and Redevelopment Authority from making its bond payments in 2010.

In 2000, the city funded construction of the Civic Center, since renamed the Verizon Wireless Arena, through non-recourse bonds funded through the city's share of Meals and Rooms Tax Revenues. This year's budget capped those revenues for two years. Last week, Moody's Investor Services downgraded the bonds to "junk bond" status, and warned of a possible default next year. But Gatsas is confident that any problems with the arena won't spill over into the city budget.

"These bonds don't affect city's bond capacity or bond rating," Gatsas says.

Gatsas opposed the state budget when the Senate approved HB 2 in June. He spoke out at the time against cutting state revenue sharing to balance the $11.5 billion spending plan.

"The downshifting is something I had a concern with, as does every community in the state," Gatsas added. "With the JUA in question, what would be the next position that the state may take?"

The budget anticipates restoring the old revenue sharing formula in 2012, and Gatsas hopes the temporary suspension will go away as the economy recovers.

"Everyone hopes the economy is going to recover by then," Gatsas explained. "I would share the hope that the economy would change."

State Revenue Sharing Decision could Endanger Manchester Arena

The state’s decision to freeze revenue sharing under the Meals and Rooms Tax could endanger the financing for the Verizon Wireless Arena in Manchester. Last week, Moody’s Investors Services downgraded the bonds used to fund the arena, held by the Manchester Housing and Redevelopment Authority, from Baaa3 to Ba2. The lower rating puts the bonds in “non-investment grade” or “junk bond” status, meaning they have only moderate security of future repayment. Manchester Mayor Frank Guinta notified Governor John Lynch of the decision in a letter on Friday.

Read the full story below:
State Revenue Sharing Decision could Endanger Manchester Arena

Mayor Guinta letter to Governor Lynch

Manchester Mayor Frank Guinta's letter to Governor John Lynch concerning the possible default of bonds on the Verizon Wireless Arena.
Guinta Letter 11-06-09

Email from Moody’s Investor Services to William Sanders

Notice from Moody's Investor Services on downgrading the bonds against the Verizon Wireless Arena held by the Manchester Housing and Redevelopment Authority.
Moody's Notice to downgrade bonds on Verizon Wireless Arena

Letter from Robert Beinfield to Walter St. Onge

Manchester Bond Counsel Robert Beinfield's letter outlining the city's concerns with Governor John Lynch's proposal to suspend revenue sharing under the Meals and Rooms Tax.
Beinfield Letter to Walter St. Onge

Many find higher meals tax unappetizing

The Union Leader reports that the increase in the Rooms and Meals Tax is being felt one penny at a time:

For the regulars at Granny Judy's Kitchen, a small diner on Franklin's North Main Street where the dress code includes Carhartts and a hard hat, even a 1 percent hike in the rooms and meals tax has meant cutting back.

Owner Yvon Cloutier said the higher tax, passed last month and put into effect on July 1, has meant some customers are choosing not to order a large orange juice or an extra egg.

In turn, Cloutier, who has a profit margin of about 10 percent, and his servers have seen their take-home earnings drop over the last few weeks.

"The state is beginning to make just as much as me, but I'm the one who is getting up at 4:30 in the morning and out the door by five," Cloutier said. "I'm the one who is putting in the 11-hour days. I'm the cook, I'm the server, I'm the dishwasher, and in five minutes I'm going to be mopping the floor."

I often buy coffee at White Mountain Coffee down the alley from our office. Last month, a large coffee cost $2.00. Now it costs $2.02. I will try to temper my personal annoyance at the Rooms and Meals Tax hike as we continue to report on its effects.

"Tent Tax" a tough sell, collectors complain

The Union Leader's Paula Tracy reports on opposition to the state's new tax on camping from the folks from have to collect the tax from their customers.

Campground owners gathered yesterday at Patrick's Pub to pepper a state official about a new tax they said they have yet to figure out.

"Everyone here could be doing a hundred other things at their campgrounds right now," said John Osuchowski, who operates Twin Tamarak Family Camping and Resort on Route 104 in New Hampton. "This is the busiest time of their year. Why couldn't they do this in January?"

He said that would allow time to change accounting structures to accommodate the newly enacted law. (more)

Tax changes catch some businesses off guard

Nashua Telegraph reporter Maryalice Gill notes that local businesses were not notified that they were expected to collect higher taxes on behalf of the state, starting yesterday:

The start of a new fiscal year, July 1, triggered the implementation of the new tax, giving many local business owners just one night to adjust.

Owner Korapin Sueksagan only knew about the increase because her friend in the restaurant industry called her Tuesday night and asked if she was ready for the tax.

"I said 'no way,'" Sueksagan said. "The tax passed yesterday and it's effective today. It's something that I never knew was possible."

The House and Senate passed the final budget last Thursday, but didn't get the document to Governor John Lynch for his signature until June 30th. Since the state can't notify businesses of changes in the law until the law is changed, that gave them less than 12 hours to let hotels, restaurants, and stores that they had to collect 9% on rooms and meals, and an additional $.45 on cigarettes.

I noticed yesterday that the coffee shop didn't charge me 9% on my morning brew. I figured they just hadn't updated their cash registers. I should have asked if they knew they were supposed to be collecting the higher rate.

Campground owners protest new tax

Dan Touhy reports that extending the Rooms and Meals Tax to campgrounds is meeting opposition at the State House:

The state budget leaves few happy campers.

The $11.6 billion plan, which the Legislature may finalize Wednesday, imposes the meals and rooms tax on campsites for the first time. It also increases the tax rate from 8 percent to 9 percent.

Campers and campground owners rallied today at the State House against the tax, which was quietly added to the budget last week.

"Nobody comes and makes our bed. We make our own," said Emily Laplante, a retiree from Jacob Brook Campground in Orford. "Nobody cooks our meals."

Using Rooms and Meals for Building Aid

In the Nashua Telegraph, Kevin Landrigan reports on a plan by Nashua Rep. David Campbell to set aside a portion of the Rooms and Meal Tax to pay for the state's Building Aid Program:

Democratic state Rep. David Campbell said the plan would be a way to keep the state's promise for building aid while allowing for enough state-backed debt to finance its own public work projects.

"This is a way to get us through the next biennium," Campbell said Thursday after he and Rep. Candace Bouchard, D-Concord, chairwoman of the House Public Works and Highways Committee, offered the proposal to the Senate Capital Budget Committee.

"This allows the discussion to take place in the state Senate, where it belongs," Campbell said.

As proposed, it would dedicate one-half of 1 percent from the room and meals tax to pay for bonds covering the state's share of school construction projects.

"It would be up to the Senate to decide if it should raise the tax or use one-half of 1 percent of the existing tax," Campbell said.

First of all, the state already dedicates a portion of the Rooms and Meals Tax to revenue sharing. Gov. Lynch's budget proposed ending it, but the House budget restored it.

Secondly, Rooms and Meals revenue are already being spent. Dedicating them to a specific program does nothing to actually solve the problem. It just takes money from other spending.

Finally, if the Building Aid Program is such a high priority for Campbell and the Public Works Committee, they could have included more than $0 for it in the budget. They decide to punt, and let the State Senate figure out how to pay for a program that will almost certainly be added back into the House budget.