Business groups ‘wait and see’ as session enters final phase

When New Hampshire Republicans captured the Legislature in November, many business organizations thought they were in for a legislative bonanza. Not halfway through this Covid-limited session, David Juvet, senior vice president of the Business and Industry Association of New Hampshire, was not exactly taking a victory lap.

“It has its ups and down,” Juvet said, shortly after “crossover” on April 9 — the day all House bills go to the Senate and vice versa. “It is a lot of wait and see.”

Crossover is usually when bills have to pass from one chamber or the other, or die, but in practice, the Senate preserved some major bills by tabling them, perhaps to be resurrected as an amendment to another bill, such as House Bill 2, the so-called trailer bill in the budget.

Some 75 bills have been classified as “miscellaneous” since the House ended its April 9 session without voting on all bills that came out of committee. Most of these bills would have died anyway, a result that many — including many business groups — would cheer, still, “we’re left with this feeling of uncertainty … at least until the Legislature adjourns for good,” said the BIA in its blog. “That’s when these bills will officially become not only merely dead, but most sincerely dead.”

Despite all that, lawmakers from each chamber have passed 250 bills to the other chamber. Some 145 of them may have an impact on the state’s businesses. And for the most part, business groups are optimistic.

“There are aspects of the budget that are terrific, especially when it comes to taxes,” said Bruce Berke, state director of the National Federation of Independent Business in New Hampshire.

“We are pleased about the business tax cuts,” said Juvet. But he added the BIA is “disappointed” that its effort to support Covid-related safe harbor liability limitations went nowhere.

Of course, not all businesses agree on every issue. So rather than paint the session in broad strokes, here is a more nuanced look highlighting the important bills that have made it so far.

Taxes

While nothing is certain until it is signed and sealed by the governor, the House’s $13.6 billion budget proposal cuts the business profits tax rate from 7.7% to 7.6%, and decreases the business enterprise tax rate from 0.6% to 0.55% this year and then 0.5% the next, without the qualifier of revenue increases that a Democratic-controlled Legislature required last year.

That’s the same cut contained in Senate Bill 13, which the Senate passed and tabled. With the state’s finances in surprisingly good shape during the pandemic, it is very likely that business taxes will be lowered if the budget isn’t sidetracked by side issues that conservatives added at the last minute, such as banning the teaching of “divisive concepts,” such as racism and sexism in schools or organizations with state contracts, or curbing the governor’s emergency powers.

Some other business tax changes are contained in the House budget. It allows a credit for overpayments of business taxes up to five times the tax liability during the next five years. It also increases the filing thresholds for BET filing to $250,000 for both gross receipts and the enterprise value. (It is currently $200,000 for the receipts and $100,000 for the enterprise value.) The Senate also has passed Senate Bill 101, which would increase the BPT filing threshold from $50,000 to $75,000.

The House budget does delay, until 2026, the implementation of the single sales factor in the tax apportionment of companies that conduct businesses in multiple states, which is meant to relieve the tax burden of companies based in New Hampshire at the expense of companies based outside the state.

The House budget proposal also would cut the 5% interest and dividends tax by 1% a year, starting in 2023 and eliminating the tax by 2027. A Senate bill only increases the I&D exemptions for the blind and disabled.

Unemployment taxes would remain the same, but there may be some long-term changes. The budget takes away the Department of Employment Security commissioner’s power to add a surcharge if the unemployment trust fund dips below $150 million. But it also raises some of the automatic thresholds to discount it. Those thresholds won’t be reached for at least another five years.

With revenue generally being cut — except an estimated $13 million via historical racing slot machine-type devices at charitable casinos, which is supported by both chambers — the House balances its budget with a 1.4% cut in spending. It cuts aid to municipalities and schools, which critics say could increase property taxes and which New Hampshire businesses generally pay more for than state businesses taxes. But defenders of the cuts note that localities and school districts are getting hundreds of millions of dollars in aid from the federal government.

The House budget also cuts some programs that businesses directly depend on.

While it did restore some funding for the Small Business Development Center, which had been zeroed out in the Governor’s original proposal, the SBDC will still face a cut from $440,000 to $225,000 a year. (On the other hand, it provides $10 million to the victims of the FRM scandal, reimbursing investors in the state’s biggest Ponzi scheme.)

The Senate appears to anticipate federal money in a different way. SB 132, an omnibus Covid bill, establishes a microenterprise relief fund and a Save Our Granite Stages fund, with no state money but the ability to accept federal funds.

The Senate also passed its own form of tax relief: SB 2 would exempt forgivable PPP loans from state taxes retroactive to 2020, which Juvet called “a big deal” because some 25,000 businesses received assistance last year, though it could mean a budget hit of $80 million to $130 million.

Labor

All eyes are on SB 61, a so-called right-towork bill that bans contracts that require all members of a bargaining unit to pay union fees. More than half the states in the country have such a law, but New Hampshire would be the first in New England to have one.

Historically, right-to-work passes the Senate and dies in the House, even when the latter has been dominated by Republicans, but its members this session are much more conservative.

SB 61 passed the Senate with one Republican defection, 13-11, and passed the House Labor Committee, 11-9, but even supporters are pessimistic that it will make it through the full House.

“It has been difficult to get the Republican Party behind it in the past,” said Berke.

Only 11% of workers in New Hampshire belong to unions, and about half are in public employee unions. Still, Juvet said, most employers don’t want to “deal with an extra layer of bureaucracy” and that a lot of companies “won’t come to or expand in New Hampshire without the right to work.”

As for another perennial issue, the minimum wage, as expected legislation that would have increased didn’t make it to the House floor (in that “miscellaneous” limbo), along with bills for mandatory paid sick leave and paying workers for their unused vacation time.

Two other workplace bills have survived so far. SB 68 would require employers to provide reasonable accommodations for pregnant employees, and SB 69 would require employers to provide access to sufficient space for nursing mothers and reasonable break time.

Hospitality

It is no surprise that lawmakers passed many bills to help the hard-hit hospitality industry. The House budget cuts a half percent off the 9% rooms and meals tax. This might not mean a lot to a couple dining out, but it could help venues competing for weddings or large business functions.

“What it really does is send a message that our state is open for business,” said Mike Somers, president of the New Hampshire Lodging and Restaurant Association.

On the other hand, the House budget contains a cut of $350,000 in the Division of Travel and Tourism Development’s biennial budget compared to the governor’s budget, and by $1.2 million over what was budgeted last year. That still leaves more than $4.5 million, but it is a “counternarrative” when it comes to attracting tourists, Somers said.

The Senate also passed and then tabled SB 128, which would increase an establishment’s fee for collecting the tax from 3% to 5% for a year.

“Operators love that idea,” said Somers.

“It is a way to help them come back after the pandemic.”

SB 99, another bill that was passed and tabled, requires that 40% of the proceeds from the rooms and meals tax go to the cities and towns. The association favors the measure since it would forestall efforts to allow towns to collect their own tax, Somers said.

The Senate passed a bill that would freeze the tipped wage — currently $3.27 an hour — if Congress votes to increase the federal minimum wage, which is what New Hampshire uses.

Finally, the Senate passed SB 66, allowing licensees to deliver 192 ounces of beer or 1.5 liters of wine with a takeout meal, putting into law what Sununu ordered during the emergency.

On the House side, HB 593 would require third-party food delivery services like Door-Dash to have an agreement with a restaurant it is getting an order from.

The House also passed HB 15, requiring third-party short-term rentals for both homes and cars collect the state rooms and meals tax, rather than having homeowners or car owners be responsible. Airbnb already does this, but this would put other services on a level playing field with it and with more traditional hotels and other lodging facilities.

Real estate and construction

A surge of demand partially driven by outof-state buyers has intensified the state’s housing shortage, increasing the focus on affordable housing. “Overall, the issue was clearly front and center this year,” said Elissa Margolin, director of Housing Action NH.

This year, HB 586, the most comprehensive bill addressing affordable housing, was supported by the governor and many Republican and Democratic leaders, but it was narrowly tabled by the House’s conservative rank and file.

The House did pass a provision in HB 154 that would allow municipalities to expand community revitalization tax incentives — normally reserved for downtowns — to outlying areas to increase “Housing Opportunity Zones.” Another piece of that bill — calling for more training for local officials on how to plan for more affordable housing — is included in a Senate omnibus bill on zoning.

The Senate also includes an extra $10 million for the state’s Affordable Housing Fund in SB 127, another omnibus bill passed and tabled. The House budget gives some money to the fund as a share of the real estate transfer tax.

Margolin also noted the defeat of yet another attempt to repeal the newly created Housing Appeals Board. The House Judiciary Committee recommended its demise 15-6, but the House never got a chance to kill it.

“It’s just another of the bills in limbo,” said Ari Pollack, a lobbyist for the New Hampshire Home Builders Association. “We don’t think it will pass, but we don’t know where it will resurface.”

The association also backed SB 129, a bill about endangered species that helps speed up the process for alteration-of-terrain permits, a big deal for homebuilders.

The problem, said Pollack, is that the Department of Environmental Services, which grants those permits, has to run them by Fish and Wildlife, which often doesn’t act on them for a long time.

“If you can’t get a permit out of DES because wildlife is going sideways, it prevents builders from building,” said Pollack.

Environment and energy

The BIA was not too happy about some other environmental legislation that passed, said David Creer, its director of public policy.

It opposed HB 135, which would require businesses that contaminate wells with pollutants like perfluoroalkyl to pay the water bills of affected residents for two years, arguing that there was not a process in place for businesses to defend themselves. The House also passed HB 236, which would increase the statute of limitations to sue over such pollution.

Finally, there was HB 177, which would prohibit siting a landfill near a state park.

That bill had strong support in the towns near a 180-acre landfill proposed by Casella Waste Systems near the Lake State Park in Dalton.

“If we are restricting landfill capacity when the demand is going up, then the cost is going up for businesses to dispose of their waste,” Creer said.

The House killed many bills promoting renewable energy or energy efficiency either directly or by not voting on them, which the BIA opposed, arguing that they would drive up electric rates. Clean Energy NH let a lot of them go, focusing more on those with a shot at passage.

The Senate passed and tabled one such bill, SB 109, which would increase maximum net metering capacity but only for governmental subdivisions, not businesses. Gov. Chris Sununu, who vetoed previous efforts to expand net metering, said he would support this concept, but even so, “it is still hard to get all of our ducks in a row,” even within the same party, said Madeleine Mineau, Clean Energy NH’s executive director.

SB 78 is another of her group’s priorities.

It allows money from the Renewable Energy Fund — which utilities that don’t meet the state’s renewable energy goals have to pay into — to pay for multiyear projects. Without that, the funds can’t be spent, even though they are there.

There are still two major battles. HB 309 would make it hard for communities to aggregate renewable projects. Clean Energy NH worked hard to get a bill passed that would regulate them better but still make the projects possible, and that was the version that passed with BIA support. Now there is an effort to amend it to bring back the language that the organization objected to.

And last, but certainly not least, is a war over who has the power to raise the system benefits charge on your electric bill to fund the Energy Efficiency Resource Standard. The Public Utilities Commission is on the verge of doing so. Previous legislation would have required legislative approval the next time, but HB 351, which passed the House, would require it this time.

Not only did the bill pass, the language was included in the House budget proposal, tucked into the new section creating a new Department of Energy.

While some clean energy activists oppose this department because it infringes on the independent power of the PUC, Mineau said she thought it might be a good idea to separate out the PUC’s regulatory functions from the executive function of implementing energy programs. She pointed out how long it has taken the PUC to spend money set aside from the Volkswagen settlement to build electric charging stations.

“It would really be good to get stuff done,” she said.

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

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‘There are aspects of the budget that are terrific, especially when it comes to taxes.’

— Bruce Berke, state director, NFIB

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‘We are pleased about the business tax cuts,’ but ‘disappointed’ that Covid-related safe harbor liability limitations went nowhere.

— David Juvet, senior vice president, NH BIA

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‘Overall the issue (affordable housing) was clearly front and center,’ says Elissa Margolin of Housing Action NH. But the most comprehensive bill was narrowly tabled by conservatives in the House.

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Clean Energy NH supports language in the House proposed budget to separate the PUC’s regulatory functions from implementing energy programs, says Executive Director Madeleine Mineau.