ARMI tax break proposal examined by New Hampshire House panel
Tax credit, loan forgiveness bill greeted by wary lawmakers
A bill granting tax credits and loan forgiveness to those involved in the budding Advanced Regenerative Manufacturing Institute project might have a tough time winning passage, if Wednesday’s hearing before the NH House Ways and Means Committee is any indication.
Senate Bill 564 would exempt businesses involved in the regenerative manufacturing industry from state business taxes for a decade as well as spend $5 million to help students who work in the industry in New Hampshire repay their student loans.
The bill, which has the support of Gov. Chris Sununu and much of the business community, sailed thought the Senate. So did two other bills – one giving a real estate transfer tax break to first-time homebuyers and another for businesses that contribute to “recovery-friendly workplace” programs. But the very same Ways and Means panel overwhelmingly recommended sending both of those measures to study.
The ARMI bill seemed to face less hostile fire during its public hearing. Some members even said they were excited about locating a hub of businesses dedicated to engineering tissue growth at the Manchester Millyard.
“This is huge,” said the committee’s vice chairman, Rep. Patrick Abrami, R-Stratham, in introducing the bill. “This is one of the biggest things that could happen to the state.”
Others agreed with prime sponsor Sen. Jeb Bradley, R-Wolfeboro, that the establishment of ARMI presents “a once-in-a-lifetime opportunity to create a new industry in its infant stages that is ripe for commercialization. The question isn’t if or when, but where it happens.”
He said there would be no tax revenue loss because “these industries currently don’t exist, so there is very little risk here.”
But Rep. Susan Almy, D-Lebanon, noted that both Stryker Biotech, a Portsmouth firm that moved from Lebanon, and the company that moved into the old building – Novo Nordisk – engage in regenerative manufacturing as defined by the bill.
That might be true, responded Maureen Toohey, who works with entrepreneur Dean Kamen, the inventor and entrepreneur who initiated ARMI. But the tax breaks would only go to companies that devote 75 percent of their efforts to such endeavors, and both companies are far too large for that to be possible.
She said most of the firms that have expressed an interest in applying by May 1 for some of the initial $80 million U.S. Defense Department funding awarded to ARMI have been small startups or companies with fewer than 100 employees. Those companies don’t necessarily have to come to New Hampshire, she added, and without a tax break they probably won’t.
What if large existing companies just form an LLC subsidiary to take advantage of the tax break?
Then that would be a “new subsidiary that would not have any profits,” answered Toohey. “So that definitely meets the requirement that no revenue would be lost.”
Other committee members noted that the definition also includes “performing any activity necessary to bring a product created through regenerative manufacturing to market” and “providing education/workforce development services and other professional services in support of any activity listed” could encompass all sorts of companies.
Rep. Bill Ohm, R-Nashua, suggested that the state, since it has some “skin in the game,” should get a piece of the action if a company was “wildly successful” and went public.
Toohey said such a stipulation might sour companies on the credit incentive, noting that other states competing for this industry are already offering “a lot more skin than New Hampshire.”
Other committee members chafed at the requirement that a company had to be a member of ARMI to get the tax break.
“Suppose a business wants to go its own way outside the orbit of ARMI,” said Richard Ames, D-Jaffrey. “Why not?”
Anybody could join ARMI for as little as $5,000 and could pay with an in-kind contribution, Toohey said, but the requirement is a “useful screen” to see if a company is credible.
Several members had questions about the student loan forgiveness appropriation: Could it be used to pay for the expenses of students in New Hampshire? How can you insure a dedicated fund wouldn’t be raided? Is $5 million enough money?
The fund could be used to reduce loan interest, delay payment or partially forgive the loans, said Bradley. The bill charges the Business Finance Authority to come up with a plan that would require that any approach have to be approved by lawmakers.
As for the amount, “it should be sufficient,” said Bradley. “What if we asked for $50 million for loans? Do you think it would pass?”
Whatever action lawmakers take, both Bradley and Toohey emphasized that it should be done this session, not handled by a study committee.
“It needs to be this year,” Toohey said. “Next year will be too late.”