Week Nineteen - May 14, 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

Senate Goes “All In” On Budget

Remember last week when we compared the State budget battle to a game of high-stakes poker? Well, that characterization is coming true. Wednesday and Thursday of this week proved to be two watershed days for the legislature.

On Wednesday, the House passed SB 450, a budget stabilization measure, which contained a series of budget cuts, a repeal of the LLC tax, and a number of new taxes and fee increases (including an ill-advised reversal on a decision two years ago to lower the Insurance Premium Tax and reinstatement of an Estate Tax). Even with some aggressive lobbying by the leadership of the House, and an hours-long debate on the floor of the House, the bill only passed by 9 votes. The assumption was that the Senate would ask for a committee of conference on SB 450, and that there would in fact be a conference committee to work out the differences between the House and the Senate versions.

But on Thursday, the Senate made it all irrelevant. On Thursday afternoon, the Senate notified the House that the Senate was going to simply “non-concur” in the SB 450 amendments. That action means that there will be no Committee Of Conference, and that SB 450 is now dead. This interesting parliamentary maneuver by the Senate caused much traffic between the Senate floor and the Governor’s office down the hall. It also set the stage for the Senate to stick an amendment onto HB 1128 (a bill intended to allow an increase in Rooms & Meals tax distributions to cities and towns), which contained the Senate’s budget proposal and includes repeal of the LLC tax, as well as a revised form of the gaming bill which was passed by the Senate and rejected by the House last month.

This revision to the gaming proposal scales down the number of slot machines to 10,000, and no longer creates designated locations for the machines. Instead, the Lottery Commission would approve four locations in the state based upon a competitive bidding process.

What Happens Next?

Since the only budget stabilization measures are found in the Senate amendment, the House realistically has only one alternative, and that is to agree to a committee of conference on HB 1128. If the House were to simply “non-concur” on the HB 1128 amendment and let that bill die, then the LLC tax would not be repealed and there would be no budget stabilization measures in place to address a budget shortfall that is now predicted to be almost $300 million (far in excess of the $220 million number that was considered by some to be an extravagant prediction just a few weeks ago). House members seem to be assuming that if all the budget bills go down to defeat, the solution would be a series of sweeping cuts made by the Governor through executive orders. But since the Governor’s constitutional authority to make budget cuts by executive order is already the subject of at least one lawsuit pending in the superior court (and since any budget cuts done by executive order obviously might become the subject of further litigation), there are a lot of uncertainties out there.

Although the Senate does not hold all the cards, it would appear that the Senate’s maneuvers on Thursday have given them something of an edge in the budget battles that are coming down to the wire. We’ll know on Wednesday what the House is going to do, and then the committees of conference will be meeting in the ensuing days.

In Other News...

The House passed an amended version of SB 497, which removed the Senate’s language concerning reasonable compensation and the Interest & Dividends tax, and inserted the House’s own language (which they had passed earlier under HB 1607). The Senate parried and returned the thrust by amending HB 1607 to reflect what the Senate had originally included in SB 497.
We’ve been saying all session that, while both SB 497 and HB 1607 seek to resolve the LLC Tax issue and reform Reasonable Compensation, SB 497 did a far better job of it. Now, our support will quickly shift to HB 1607, since that bill now contains the Senate’s intentions as opposed to SB 497, which no longer does what we believe is needed. Confused, yet?

The Chamber’s hands are still working on SB 383, which is our effort through Senator Lasky to increase the Net Operating Loss threshold from $1M to $10M. You may recall from prior updates that the House (how interesting that the House this session is where all the trouble is happening) stripped the bill so that NOL reform was no longer included. We are working through the Senate to take this bill to a Committee Of Conference, where we hope a compromise on the NOL threshold can be reached. We are optimistic this can happen, given the fact that the House’s removal of the NOL reform only passed by a slim 7 votes – this signifies a lot of support in the House for our attempt to reform Net Operating Loss. Stay tuned for another update on this, next Friday.

A good result was reached quietly on Thursday as the Senate left HB 1543 on the table. This was a bill (opposed by the Chamber) to increase the amount of interest on judgments in lawsuits to 6%. By laying the bill on the table, the Senate essentially is killing the bill because the bill will not be enacted.

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