Sen. Jeanne Shaheen is sponsoring a bipartisan bill to restore tax-exempt status to water infrastructure projects, citing unexpected tax hikes in southern New Hampshire and across the country after the Republican-backed Tax Cuts and Jobs Act of 2017.
The TCJA undid a little-known exemption on Contributions In Aid of Construction (CIAC). This exemption had allowed water and wastewater utilities to avoid income taxes on government and private aid received to improve infrastructure.
Without the exemption, the Hampstead Area Water Company (HAWC) reports facing a $1.5 million tax bill on an infrastructure projectaimed at providing more customers access to clean drinking water. Some warn that the tax increase will be passed on to utility customers, increasing their water bills.
"I think anytime you pass a tax bill without any public hearings, there are unintended consequences, and that's what we're seeing," Shaheen said at a roundtable in Atkinson on Friday with staff from HAWC and the Department of Environmental Services.
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Shaheen said she had been working on the issue since the spring, when constitutents from Atkinson contacted her office. Staff at DES warned that without a legislative remedy to correct the tax code, the new tax would hamper efforts to improve water systems in New Hampshire, including in areas with high levels of PFAS and other contaminants.
