Covid and the budget are on the front burner for 2021

Less is more.

That was the recommendation, and prediction, made by Senate Majority Jeb Bradley for the upcoming legislative session.

“This year we are not going to do everything we do in a typical session, so we have to work on the biggest things — protecting public health and trying to make sure we do everything we can to get people back to work. Those have to be the priority,” said the Wolfeboro Republican.

He added a few others priorities: keeping taxes down, broadband expansion, addressing affordable housing and, perhaps, energy.

Last year, lawmakers from both sides had moved forward on hundreds of bills only to see them hastily consolidated into a handful of omnibus bills as the pandemic forced lawmakers to limit meetings. One bill, House Bill 1234, contained 40 separate pieces of legislation and was so unwieldy that Governor Sununu vetoed it primarily for that reason.

This year, however, it could be even worse. The bills that last year were crammed into the omnibus bills, as well as others that didn’t even make it that far, can now be dusted off and resubmitted. But those bills were moved forward by a Legislature controlled by Democrats. This time around it will be Republicans making most of the decisions.

That does not mean nothing will happen. Indeed, since the entire process will be dominated by one party — albeit with slim majorities — some bills might have a better chance, not only of passage but also of being signed into law by the governor, who vetoed a record-setting number of pieces of legislation when Democrats controlled the Legislature.

The federal stimulus package is another wild card. Last year, Sununu had more money at his disposal than the lawmakers. The legislative power of the purse diminished, particularly in a non-budget year. This year, there is another such package — smaller than last year but perhaps larger after Democrats take control in Washington. How much money comes down the pike, and what strings are attached, could again alter dynamics.

That’s the unknown. Here are some of the major pieces of legislation that have so far emerged as the new session begins.

Taxes and the budget

The state’s budget picture doesn’t look as bleak as it did last summer. Indeed, revenues not only stopped their descent but climbed by the fall, so the daunting deficit, once in the hundreds of millions, is now estimated to be under $100 million.

There is even more cause for optimism, since under Democratic control in Washington, there might be direct aid going to the state and municipalities. And with Republicans in control in Concord, that might mean tax cuts.

Both the House speaker and the Senate president are sponsoring measures to cut business taxes. House Bill 10 would decrease the rate of the business profits tax from the current 7.7% to 7.6% this year and 7.5% in 2022. It would also decrease the business enterprise tax from 0.6% to 0.55% this year and then 0.5% the next.

“Our goal is to lower taxes so we can attract more businesses into New Hampshire,” said Speaker Sherman Packard, R-Londonderry.

The bill would also eliminate language that would have allowed tax decreases to go forward only if revenues increased by more than 6%, and would require taxes to go up if revenue falls by the same amount. Neither happened, so the tax rate remained unchanged.

The Department of Revenue Administration estimates that the proposed tax cut would result in a $138 million decrease in revenue over the next four fiscal years, based on an analysis using revenues from the 2020 fiscal year.

According to the analysis, just shy of $6 million of that total would be felt this budget year, which ends June 30. There would be a $78.5 million hit to the 2020-21 biannual budget and a $53.7 million drop in revenue for 2023.

Such revenue estimates give even the other sponsors of the bill pause.

“The thing that we have to consider is that if the economy doesn’t change, and especially if it gets worse, then we are in deep trouble,” said Rep. Norm Major, R-Plaistow, chair of the House Ways and Means Committee. “I would like to make it happen, but I will make my final determination after we have a public hearing.”

Major’s predecessor, Rep. Susan Almy, D-Lebanon, said that it would be a mistake to pass a bill without any triggers. “I think this bill is incredibly risky,” she said. “This is the largest tax aside from the property tax.”

But business groups are concerned about parts of the budget that affect their members.

The Associated General Contractors of NH, for instance, is concerned about whether there will be money for school construction, which was halted for nearly a decade, first by a state aid moratorium and then slowed by Covid.

It also wants to make sure the Highway Fund, which has suffered from lower gas tax revenues thanks to lighter traffic during the pandemic, is adequately funded. While recently passed federal funding might fill that hole, it’s not clear whether that will be entirely spent on road construction.

“It’s how that money gets spent,” said AGC Executive Director Gary Abbott.

Another possible tax cut would come in the rate of the rooms and meals tax. No legislation has emerged yet, but most people expect Sununu — who first proposed it to help the ailing hospitality industry — will include it in his budget package. It is expected to garner support among Republicans.

“It would be good,” said Bradley. A tax cut wouldn’t affect whether people go out to eat, but “it might make a difference on big things like weddings and convention centers.”

The reduction would slightly cut into the commission restaurants and hotels get for collecting it, but it also enables them to raise prices without customers noticing it and “that far outweighs the little bit of commission to collect it,” said Henry Veilleux, who lobbies for the NH Lodging and Restaurant Association. Even better, he said, is a bill that would increase that commission, though the size and the duration of the increase has yet to be disclosed.

Finally, there is an effort to reduce the interest and dividends tax.

Rep. Norman Silber, R-Gilford, is proposing to eliminate it altogether. Another bill — HB 210, proposed by Rep. Timothy Lang, R-Sanbornton — would increase the exemption on the I&D tax from $2,400 to $3,500, and decrease the total amount of research and development credits to be used against business taxes from $7 million to $2 million. That bill is strongly opposed by the BIA.

Covid and health

There are at least 30 bills directly dealing with Covid-19, addressing everything from vaccinations to nursing home regulations, as well as bills restricting the state of emergency and increasing legislative control over federal Covid funds. But the biggest priority for business organizations is a bill being developed by Sen. Bob Giuda, R-Warren, and supported by some 35 business groups, that would back Covid-related liability.

The bill would provide a safe harbor, meaning that a business couldn’t be sued as long as it is following guidelines, he said, although “bad actors” would not be protected.

“But the last thing businesses need now is a frivolous lawsuit that will cost someone $40,000 or $50,000 just to defend against it,” Giuda said.

Businesses locally and nationally have long been pushing for liability protection against lawsuits. Giuda said he knew of no such suits in New Hampshire, but he added, “it only takes one. Someone is going to sue.”

Sununu has said he supports liability protections but would prefer it at a national level. Business lobbyists in Washington pushed for such protections in the stimulus bill, but Democrats, who will soon have power in Washington, successfully blocked it.

So the BIA delivered a letter to Governor Sununu and the leaders of both parties in the Senate and House urging them to follow in the footsteps of 16 other states that have adopted similar legislation.

The legislation is among the BIA’s top priorities, said David Greer, vice president of policy, who emphasized that such a measure wouldn’t just protect businesses but also hospitals, municipalities, and public and private schools.

There are bills that would allow emergency procedures put into place during the pandemic to become law. One, backed by New Hampshire Lodging and Restaurant Association, would continue allowing beer and wine deliveries.

Another bill, strongly backed by the NH Grocers Association, would expand keno — now restricted to restaurants — to convenience stores. It would be good for the stores, since keno operators are paid an 8% commission, compared to the lottery tickets’ 5%.

“If they can’t get it in a bar, this would be a convenient alternative,” said John Dumais, who heads the grocers’ trade group.

Real estate and construction

Affordable housing was one of the few policy initiatives mentioned in Sununu’s inaugural address, and both parties say they want to do something about the state’s affordable housing shortage.

One bill, sponsored by Rep. Joe Alexander, R-Goffstown, with some Democratic support, would offer incentives to developers that build workforce housing and help clear municipal barriers that thwart its development.

For Alexander, 26, housing is both a business and a generational issue.

“There are businesses in the state that need to attract young talent. This is the age spectrum where we need housing to be more affordable, so we can increase the supply and make the state more marketable to us.”

The new bill would allow Tax Increment Financing (TIF) districts to be used for nonprofit workforce housing development, allowing developers to avoid paying property taxes due to improvements on the property.

It would also allow for doubling the duration of the tax breaks in Community Revitalization Districts — usually reserved for downtown commercial development — if, for instance, a developer adds affordable housing on the second floor of a building. And it would allow a municipality to define how large a downtown is to be part of that TIF.

Under the bill, municipalities that adopt this and other workforce housing-friendly policies could qualify for “housing champion certification,” which would give them access to various state resources, including discretionary state infrastructure funds as well as free training.

The bill also would strengthen the existing workforce housing law. For instance, if a municipality allows increased density or reduces lot size for construction of elderly housing, it must do so for workforce housing too. It would require that planning and zoning boards provide specific written reasons when rejecting workforce housing.

Another bill, HB 154, sponsored by Rep. Casey Conley, D-Dover, would empower municipalities to expand redevelopment tax breaks, now used to encourage downtown development in order to create jobs, to the town outskirts to encourage affordable housing as well.

Conley also has proposed a trio of bills aimed at helping tenants. One would postpone evictions an extra month (should the federal moratorium on evictions lapse) for those demonstrating that they are seeking housing assistance.

The other would require landlords to provide a 60-day notice for rent increases that exceed 5% and a 90-day notice for rent hikes over 8%.

His final bill would remove any municipal requirement for an inspection if tenants are applying for emergency housing assistance, “since a lot of landlords would balk at that,” Conley said.

Other revised bills aimed at supporting tenants include one by Sen. Rebecca Perkins Kwoka, D-Portsmouth, that would require a 30-day notice (as opposed to seven-day under current law) to evict for nonpayment of rent if tenants have experienced Covid-related job loss. Another would allow localities to distribute housing aid without requiring an eviction notice.

Energy

Numerous energy bills are on the horizon this session but few have bipartisan support.

One, HB 106, would increase fivefold the maximum size of a renewable net metering project — not for businesses, just for municipalities.

The bill, sponsored by Lang, has the support of Bradley and other Republican senators, and the hope is to bring it to Sununu, who has vetoed such bills in the past.

Speaking of renewables, there is an attempt to renew several bills that didn’t make it through last year.

Sen. David Watters, D-Dover, is proposing a bill that would require the state to procure renewable energy, similar to laws in other New England states like Massachusetts and Connecticut. This would commit the state to buy 800 megawatts, if economically feasible, with 600 megawatts for offshore wind. While the law permits the energy purchased come from other states, indeed even in conjunction with other states, the hope is some might be right off the Seacoast, perhaps even developing a local industry in building and installing the wind farms.

“This industry has incredibly high-paying jobs,” Watters said.

Bob Sanders can be reached at bsanders@nhbr.com.