A new State House reality

Business groups see a changed political landscape

Once upon a time, so-called right-to-work legislation was only a pipe dream on the Business and Industry Association of New Hampshire’s agenda. This year, it is one of its top priorities. What changed? Something called an election.

“We supported it in the past,” said David Juvet, senior vice president at the BIA. “But we had to be politically realistic. You could only fall on your sword so many times.”

But for the new legislative session — which begins with Republican majorities in both the House and Senate as well as a Republican governor in the corner office for the first time in a dozen years — one right-to-work bill has 17 sponsors. It is legislation that would increase the minimum wage bill that is now considered polit​ically unrealistic.

The legislative issues are largely the same as in prior years, but the political landscape has changed. What was once a dream for some is now within reach. What once was secure for others is now in danger.

The biggest revisit will be Medicaid expansion, but that is another story for a later time, because whatever the state does when it comes to health care depends on what happens at the federal level.

But there are other major issues are emerging, roughly outlined in the legislative service requests that are filed at the State House. At the time of this writing, roughly 800 LSRs have been filed, with about 300 relating to business. And many of them relate to the major costs of doing business — labor, energy and taxes.

Labor

The BIA’s interest in right-to-work legislation — which essentially allows workers to stay out of a union voted in by the majority — is curious, considering that less than four percent of the state’s private workforce are union members. 

It isn’t the substance, but the message, said Juvet. “Some manufactures won’t locate in states without a right to work. If we have it, we would at least be at the table,” He said.

But NH AFL-CIO President Glenn Brackett thinks it’s sending the wrong message: as the only Northeast right-to-work state, New Hampshire will become a haven for a low-wage workforce, as more qualified workers flee the state, “because they can’t find jobs with competitive wages.”

Likewise, the National Federation of Independent Business has long supported right-to-work nationally, but it isn’t even on the radar screen of some other business organizations.

The NH Retail Association, whose members have little experience with unions, never weighed in and isn’t planning to this year either, said Curtis Barry. 

Which brings us to the minimum wage, which also affects a small part of the population, but could push up wages throughout the lower end of the wage scale.

Currently, the state has no state minimum, so it defaults to the federal $7.25 an hour. But with Maine recently voting to increase its minimum to $12 by 2020, and with Vermont’s reaching $10.50 in 2018 and Massachusetts’ rising to $11 an hour this year, New Hampshire’s minimum wage workers could eventually be earning 60 to 70 percent less than their counterparts.

The issue is so important to the minority party in the State House that it was first LSR to be listed. House Bill 115, sponsored by Rep. Douglass Ley, D-Jaffrey, would increase the state’s minimum to $9.50 an hour in 2018, and eventually to $12 by 2020, adjusting for inflation after that. The percentage paid to tipped workers would increase from 45 to 60 percent.

The bill allows for a three-month “training wage” of $8.50 for those under 18, but a more modest bill failed to pass last year when a Democrat was governor.

Paid family leave might have a better chance. It has the support of 80 percent in a recent poll conducted by the Carsey School of Public Policy at the University of New Hampshire. The concept also was “absolutely” endorsed by the new governor Chris Sununu, during the campaign.

Rep. Mary Stuart Giles, D-Concord, has been pushing for paid leave ever since she was first elected 16 years ago, and this year is no different. 

Under the bill, a trust fund would be set up similar to the unemployment security fund, but only employees will be required to pay into it though a payroll tax (though business could chip in). Like unemployment insurance, they would be paid through the fund when they need to take a leave to care for a child or disabled family member.

Only employers that already have to grant unpaid leave under federal law — those with more than 50 full-time equivalents — would pay employees a percentage of a salary 12 weeks while they cared for child or disabled family member, though a smaller business could voluntarily participate in that as well.

“We have aligned all the operational elements with existing law,” Giles said. Paid leave is not only important to families, she said, but businesses too, because it would attract and retain “young people, who are leaving New Hampshire” for other states offering better family benefits.

But retailers would strongly oppose a bill that affects smaller businesses, which often can’t leave a position open for such a period, Barry said. 

While retailers wouldn’t support a bill aimed just at larger employers, they could be mollified, as they could be with the “ban the box” bill.

The bill would require employers to remove from their hiring applications the check box that asks if applicants have a criminal record. Several business lobbyists said they might acquiesce to such a law, but only if the bill’s language meets their expectations.

In addition, there are a number of bills related to employment discrimination, including one covering genetic information and another regarding credit history. The latter, sponsored by Rep. Renny Cushing, D-Hampton, would allow the use of taking credit history into account, only if it is required by law or for a “bona fide purpose”.

On the other end of the spectrum, Sen. Jeb Bradley, R-Wolfeboro, is sponsoring a bill that would give employers immunity about information shared about an employee’s performance on the job.

“That would hopefully help them give an honest interpretation for that employee,” Bradley said. 

Also expect a revisit of the biweekly pay bill. Current law requires that employers get a waiver to pay employees every other week, a practice so widespread that many employers end up breaking the law without even knowing it. A bill to allow the practice, unless there were some payroll issues, passed the House but failed in a conference committee last year.

Energy

Energy costs have gone down in New Hampshire, but they are still higher than most of the nation. For years, the corner office have been working to reduce demand, but now all three branches of government agree the main thing is to increase supply.

So look for more statewide support for projects like Northern Pass and a natural gas pipeline and less support for renewable energy and energy-efficiency programs.

“Businesses are fed up about electric rates and want to do something about it,” said Rep. Michael Harrington, R-Strafford, a freshman lawmaker who was twice a member of the Public Utilities Commission.

One of the energy-efficiency programs is New Hampshire’s membership in the Regional Greenhouse Gas Initiative. Sununu campaigned against it, and Harrington has a bill to repeal it.

“It’s frustrating to have this debate over RGGI again,” said Kate Epsen, executive director of the NH Sustainable Energy Association. “Every time we make it clear — there is no economic benefit to pulling out.”

That’s because the program requires power producers to pay to emit gases that cause climate change. Most of those producers are out of state, so ratepayers will pay a small RGGI surcharge whether New Hampshire participates or not. But the Granite State would leave RGGI money on the table if it withdraws.

Currently, almost all of the money received through RGGI is used to lower electric bills, with the rest going to energy-efficiency programs.

Even Harrington admits that his LSR is more of a placeholder. Instead, he said, the bill might morph into one that would rebate all of the money to ratepayers. Last session, a compromise bill failed that would have done that for business customers, while sending all the residential RGGI funds to help low-income ratepayers and municipalities to conserve. While there might be an attempt to revive it, this might not be the year for compromises.

Most of the state’s energy-efficiency funding comes from the systems benefits charge (SBC) portion of a ratepayer’s bill. That charge is due to go up thanks to a recent PUC decision to set an energy-efficiency standard, a specific goal to cut the state’s usage by a certain percentage.

The PUC claims that this will not just reduce electric bills for those who conserve, but that all will eventually benefit by cutting peak demand. Currently, the law doesn’t require the PUC to obtain legislative approval for the SBC hike, but Rep. Michael Vose, R-Epping, is sponsoring a bill that would require lawmakers to weigh in on any increase. 

In addition, several bills would tinker with the renewal portfolio standard, which requires that utilities increasingly add more renewables in the mix. A bill sponsored by Senator Bradley would increase the amount going to biomass and solar energy projects. The former, he said, would preserve jobs, particularly in the North Country, and the latter would help rooftop solar continue to expand. 

“The industry is going gangbusters, and this would insure that the industry will continue to do well,” he said.

There are several bills related to net metering, which requires that utilities reimburse homeowners and businesses that generate more electricity than they use through solar or other renewable energy generators. Last session, lawmakers doubled the cap, which had limited the amount that could be reimbursed, while charging the PUC to come up with a fair reimbursement rate. The current one is too generous, according to the utilities, or too stingy, charge renewable advocates. 

Protecting and expanding biomass requirements has been important to the NH Timberland Owners Association. The closing of several Maine paper mills left many loggers and sawmill operators with few places to sell low-grade wood.

“They are teetering on the edge,” said Jasen Stock, the association’s executive director, and if they weren’t “buffered by the biomass requirements, it would be “devastating to the industry.”

But Harrington is backing a bill that would repeal the standards. “The only special interest is the ratepayer. It can’t be wood; it can’t be solar.” 

He is also introducing a bill that would prohibit Eversource from passing on the costs of decade-old expensive contracts with wood plants, when the company sells off its generating asset to all ratepayers.

“These wood plants are old clunkers,” Harrington said. “Why should everyone pay a tax for burning old wood? They create jobs? Let’s all pay a tax to bring back horse and buggies then.”

All this makes it difficult for the renewables industry to grow, said Epsen, but grow it will, because the cost of renewables keeps on going down. “There is exciting momentum. The question is whether New Hampshire is a leader in this field, or whether we lag behind other states,” she said.

One other bill sponsored by Harrington deals with the Site Evaluation Committee, which approves energy projects. The measure would prohibit the SEC from applying “pages and pages” of tough regulations that lawmakers meant for windmills to other projects, such as gas pipelines, he said.

Taxes 

Business taxes have gone down, and there appears to be a commitment to continue to cut them. The question is, how quickly and by how much?

Bradley, who says further cuts in the business profits tax rate are “just something we need to do to be competitive” wants to cut the BPT rate to 7.5 percent by 2021.

Such a bill would be supported by the BIA, said Juvet.

“Business taxes have come in beyond expectations, and we are still on the high end of the spectrum,” Juvet said.

Sen. Andrew Sanborn, R-Bedford, chair of the Senate Ways and Means Committee, said he would like to cut the BPT and business enterprise tax sooner than Bradley.

“We are in a friendly competition to see how fast and how deep to make tax cuts, while not being detrimental to the state budget,” Sanborn said.

Sanborn also is looking forward to making changes in the interest and dividends tax, the Section 179 expense deduction, the loss carryforward deduction and the rooms and meals tax as part of a “global tax policy.”

Juvet would like to finally remove the “artificial cap” on the research and development tax credit, which last session was increased from $2 million to $7 million. The cap not only limits the amount that a business can declare, since it is prorated depending on how many businesses file for it, but it also means that businesses would get the credit right away, “rather than waiting for the DRA to divvy it up.”

Bradley is also sponsoring a bill backed by the NH Department of Resources and Economic Development to increase the tax credit for companies creating jobs in Economic Revitalization Zones. 

Business bills to watch in 2017