Week Eighteen - May 07, 2010

This electronic publication, known as The Advocate, is brought to you each Friday by your Greater Nashua Chamber of Commerce, in partnership with our friends at Devine Millimet & Branch, and ActiveEdge. Please use this piece to review what has happened in Concord this past week, read about our Chamber's lobbying efforts relating to those activities, and preview what we are doing on behalf of our Chamber members in the coming week.

This Week’s Update

This was a watershed week in Concord, as both the House Finance Committee and the House Ways & Means Committee took their final votes on the various budget-cutting and revenue-raising measures that they have been considering over the last several weeks. These recent efforts are a response to the ever-increasing shortfalls in the state’s budget, thanks to tax revenues that have come in at far lower levels than had been anticipated by the legislature at the end of last session when they and Governor Lynch approved the current budget.

On Thursday, the House Finance Committee, by a slim 1 vote margin, passed an amended version of SB 450 that is now, in effect, the budget bill for 2010.

Here are some of the highlights the Committee included in the final version of the bill that it recommended to the full House:

• An increase in the Insurance Premium tax to 2%. Under the current law, this tax is 1.25% in 2010 and was scheduled to decrease to 1% in 2011.
• An Estate Tax of 8% on estates of over $2 million.
• An increase in the tax on non-cigarette tobacco products, from 48.59% to 65.03% of the wholesale price.
• A tax on electricity generated in this state. The existing tax on the consumption of electricity is repealed.
• Repeal of the LLC tax, so that distributions from LLCs, partnerships and associations are subject to the Interest & Dividends Tax only if they have transferable shares.
• The bill also establishes a commission to study business taxes, including Net Operating Loss (this is a result of the discussions surrounding SB 383, the NOL bill which was proposed by the Chamber). The Commission would be comprised of three Senators, four House members and five public members appointed by the Governor.

This budget bill is also notable for what it does not contain. The Committee did not pass proposals thata were put forward during the process to pass a limited gaming amendment, to decrease the BET filing threshold to $150,000, and to create a Capital Gains tax.

What happens next? The tight vote in Finance gives an indicator of how close this will be on the House floor. Some legislators are predicting that SB 450 will not pass the House. And if SB 450 does pass the House, it is not entirely clear that the Senate will vote to ask for a committee of conference on the bill to sort out the differences between the House and Senate versions of the bill (which would mean that the bill simply dies). And even if it goes to a committee of conference, the bill may not survive.

The background is the gaming issue. Will the Senate agree to the cuts and new revenues adopted by the House in SB 450 (should it be adopted) when the Senate has already made clear its position that gaming is the way to proceed here?

We’ll know the answer in the next couple of weeks. There may not be any gaming provision in SB 450 at the moment, but there is definitely going to be a game of high stakes poker played at the State House before the month is out.

House Ways and Means Committee Significantly Amends SB 497

On Thursday, the Ways & Means Committee in the House recommended a version of SB 497 that significantly altered the Senate version of that bill (which is the measure supported by the Chamber and other business organizations to address the reasonable compensation issue). The version of SB 497 that came out of the House Committee essentially was what that same Committee passed earlier this session in HB 1607, the House version of the fix for the issues of the LLC Tax and Reasonable Compensation. However, this amendment to SB 497 actually takes HB 1607 one step further, and repeals a provision in HB 1607 that gave taxpayers the option to utilize a safe harbor in the current law. Representative Bill Hatch, the sponsor of the amendment, told the Committee that the reason that this provision was taken out was because of “push back” from DRA. We continue to be astounded at the blind faith placed in the Department Of Revenue by a majority of the members in the House Ways & Means Committee.

SB 497 will be voted on by the full House next week

House Narrowly Passes SB 383 Without NOL Provisions

Wednesday to pass a version of SB 383 that was recommended by a majority of the House Ways and Means Committee, and which does not contain the Net Operating Loss threshold increases that had passed the Senate. Representative Frank Sapareto, on behalf of the 5-person minority of the Ways & Means Committee, included the following blurb in the House Calendar, which is worth stating here: “For the past few years, this legislature has increased taxes and fees on our businesses. If there is one ray of hope we can give our employers, it would be the ability to pull themselves up from a recovering economy and recapture taxes on their losses so that they can stay in business. Increasing the number of businesses in New Hampshire is vital to our economy, jobs and the future revenue to New Hampshire.” Representative Sapareto and four of his colleagues on the Ways & Means urged the full House to reinstate the NOL provisions to this bill. His attempt to do so failed by only 7 votes, with 14 Democrats joining the Republicans in supporting his attempt.

We will keep up the fight on this. We think that the Senate will ask for a committee of conference on this bill, and we will keep on trying to have the NOL provision put back into the bill. Given the very narrow margin of the House’s action, we think that there is still some hope that this can be done this legislative session.

We do want to specifically thank Rep. Jane Clemons and Rep. Joel Winters, two of our local Democratic representatives who saw the wisdom of keeping NOL reform in this bill and voted to support us along with all of the Republican legislators in our region.

Acknowledgements

This weekly update is made possible by the generous support of Devine Millimet & Branch, one of the state’s top law firms and our Chamber’s contracted representative in Concord. If your business has a legislative or local issue that needs strategic consulting and attention, they are a valuable resource that can help navigate you through both local and state processes.

This weekly update is designed and maintained by our friends at ActiveEdge, and we thank them for their help in delivering this piece to your inbox every Friday!

If you have questions about this update, or comments to share with us about other issues in Concord, please email Chris Williams at cwilliams@nashuachamber.com. We want to be sure we're representing you to the best of our ability, so do not hesitate to reach out to us!

J. Christopher Williams
President & CEO
Greater Nashua Chamber of Commerce
151 Main St.
Nashua, NH 03060
Phone: 603.881.8333
Fax: 603.881.7323