Business groups keep a wary eye on 2004 Legislature
It’s a non-budget year, and the state Legislature hopes to adjourn in May. There’s a presidential primary and war going on. So why should businesses pay attention to what is going on in the State House?
It turns out no matter what year it is, no matter how many rules are devised to discourage more legislation, no matter how conservative the ideology, lawmakers can’t help themselves. They are sent to Concord to make laws, and, apparently, make laws they must.
Even in this off year, lawmakers have so far proposed nearly 500 bills, ranging from an increase in the minimum wage to a proposed cut in business taxes. And that doesn’t count the 150 bills or so left over from last session, some of which legislators had planned to deal with when they met on Jan. 7, though many will go to interim study and may resurface later.
Of those 500 new bills, about 200 would or could affect businesses, maybe your business, so you might as well make it your business to find out what the heck is going on in Concord.
The good news is that, for the third year in a row, it looks likely that the state won’t increase any major business taxes. Oh, there is an income tax bill filed, but it has as much of a chance of passing, let alone getting past Gov. Craig Benson, as a New Hampshire winter without any snow. A hike in the cigarette tax also expected to fail Jan. 7, since Benson has threatened to veto such an increase in the past over the recommendation of his own former health and human services commissioner.
Some bills represent an attempt to extend the current mood against taxes into perpetuity. There is a proposed constitutional amendment prohibiting an income tax and another constitutional amendment, Benson’s taxpayers’ bill of rights, that would require a two-thirds vote to pass any tax increase. While neither has a good chance of passage, they give an indication that increased taxes are not a likely outcome of the 2004 legislative session.
Indeed, having gone so long without a tax increase, some are pushing for a decrease.
House Bill 1387, sponsored by Rep. Mark Brady, R-Jefferson, would reduce the business enterprise tax — now at 0.75 percent down to 0.25 percent by 2008 — the level at which it originally stood when the law first was enacted in the mid-1990s. Brady also wants to cut the business profits tax from its current 8.5 percent rate to 4 percent over the next five years.
Fat chance, most business advocates agree. Those taxes were imposed to balance the budget in light of the education-funding mandate. And despite yet another attempt at a constitutional amendment for the state to cast off that mandate, it doesn’t appear to be going away anytime soon.
Even with the recent measures to slow down state spending on education, the state is still struggling with a sluggish economy and is having a tough time meeting its bills, as evidenced by Benson going to Washington to beg for funds that he counted on the last budget.
“Anything can upset this house of cards that was the last budget,” said David Juvet, vice president at the Business & Industry Association of New Hampshire. “There is no wiggle room.”
Still, the BIA supports the tax reduction bills “because it’s a good forum. It begins the discussion,” said Juvet.
Similarly, the BIA backs a bill to study the effect of the state’s business tax structure on the economy.
There are a number of targeted tax breaks that do have a better shot, including credits for research and development and employer-paid health insurance. But don’t count on them gaining approval either. And there are attempts to reduce specialty taxes, including the insurance premium tax.
Finally, there will be an attempt to roll back another sneaky way the state found to get revenue out of business. Last year, the state stopped a 2 cents per tax dollar rebate to tobacco wholesalers they had received for stamping cigarette cartons with the state’s tax stamp. It was one of the things that was thrown in at the last minute during the massive budget compromise that emerged some three months after the session was supposed to end.
So Rep. Kenneth Weyler, R-Kingston, wants to give them a penny. It’s not just the money, it’s “the denial of process. There was no public hearing. Let the wholesalers make an appearance at least.”
Weyler notes those who collect rooms and meals get 3 cents on the dollars they collect, and “it is far less labor. How could you give them 3 cents and us nothing?”
But those in the restaurant business fear that they are next, and that this will be another way that the state could find to raise money in a pinch, without actually raising taxes.
“We’ll be keeping an eye on that,” said Henry Veilleux, a lobbyist for the New Hampshire Lodging and Restaurant Association.
The NHLRA will be keeping an even closer eye on a new attempt to increase the minimum wage, a perennial bill that Veilleux jokingly labeled an “old friend.”
This time the bill, introduced by Sandra Keans, R-Rochester, would increase the minimum wage from $5.15 to $6.65 by July 2006. Supporters have long complained that workers can’t afford to live on the current minimum. According to Veilleux, restaurant workers get more than the minimum thanks to tips, especially because the average restaurant tab has gone up.
Look for business to fight against other reforms pushed by labor. One bill would allow laid-off part-time workers to continue to collect unemployment benefits.
Rep. Frank Bishop, R-Raymond, who introduced the bill, says the economy has changed from the 1930s. A quarter of the work force is part time, some 168,000 workers, and those employees are taxed to pay for the unemployment trust fund, so they should benefit from it.
But the economic slowdown has sapped the unemployment fund, driving up the employer’s contribution, and business groups are going to oppose anything that will shrink it further.
Sen. Bob Odell, R-Lempster, is tackling another tricky question of unemployment insurance — the independent contractor. Currently, it is unclear who should be put on the payroll and who shouldn’t. Odell’s bill would make it certain that a person who goes to the trouble of forming a separate corporation or an LLC would be automatically classified as an independent contractor.
“Having to take out taxes for these people is a terrible discouragement for business,” Odell said. “We need more flexibility in the marketplace. If someone has taken steps to declare themselves, they are independent.”
Sole proprietorships would still be handled on a case-by-case basis.
Business groups also are opposed to any attempt to set up a trust fund for paid family leave.
“It’s the employers who are going to have to end up paying for it,” said Joan LaPlante, lobbyist for the New Hampshire Federation of Independent Businesses.
Restaurant owners also are going to be focusing on several regulations that could affect their industry. Among them is a bill that would require fast-food restaurants to post nutritional information on the menu.
The bill, sponsored by Rep. Jan Langley, R-Rye, is designed to help fight the growing problem of obesity, but the bill would only be aimed at the state’s larger chains (10 or more restaurants).
“It does not apply to the Galley Hatch or the small mom-and-pop store,” Langley said.
Langley is singling out the chains because, she said, most post this information on the Web already and people give more thought when going to a stand-alone restaurant than when they go “to get the quickest thing and then go. We want you to know what you are buying.”
This might be a good idea, said Veilleux, but the industry is already discussing this at the national level with the Food and Drug Administration.
“We are trying to develop a consistent nationwide standard, rather than be a patchwork of different laws in different states,” he said.
On the other side of the obesity issue, the NHLRA will be supporting legislation that would prevent customers from suing restaurants for allegedly causing people to become fat.
“How people eat is a personal responsibility,” said Odell, the prime sponsor of the bill in the Senate.
Similarly, it shouldn’t be the restaurant’s responsibility to protect children from secondhand smoke, said Veilleux, who will be opposing a bill that would prevent children from sitting in the smoking section.
“Adults can make their own choices,” said prime sponsor Rep. John R. Cloutier, D-Claremont, who said he opposed creating non-smoking sections in the first place. “But kids are a different matter. We need to protect them. We don’t let them drink until they are 21. Why not this?”
However, restaurant owners don’t want to be the ones telling parents they can’t light up in front of their family.
“Here’s another situation where the restaurant is being the cop and breaking the bad news to the family that you can’t all sit there,” said Veilleux.
Real estate and construction
Despite the economy, there has been no lack of demand for housing, but there has been a lack of land, mainly due to zoning restrictions. This has pushed up the cost of housing beyond the reach of the average worker. This has led to an unusual coalition of builders, employers and advocates of the poor to push for so-called “workforce housing.”
Part of this debate was expected to come to a head on Jan. 7, when the House was to vote on an amended version of Senate Bill 95, which would have clearly defined what constitutes affordable housing — which towns must now include in their zoning — and set up a processes for developers to challenge towns which exclude such housing.
The House version took the teeth out of the bill, said Kathy Corey-Fox, a Salem Realtor who chairs the public policy committee of the New Hampshire Association of Realtors.
“It’s clearly night and day, black and white,” Corey-Fox said. If the House version passed, Corey-Fox predicted that the whole thing will go to a conference committee.
Even if that matter is resolved on Jan. 7, there are other bills that deal with the issue of local zoning and planning restrictions.
Perhaps the most interesting are a group of bills sponsored by freshman Rep. Packy Campbell, R-Farmington, that would set statewide limits on wetlands. Such setbacks have been left up to the towns, but municipalities were using wetlands as an excuse to stop development, Campbell said.
“We need to standardize this,” he said. “There is no reason for a 100-foot setback. The science isn’t there.”
His plan would benefit builders and developers by providing clear standards as well as protect wetlands in many towns that have no setback requirements at all.
Rep. Harriet Cady, R-Chester, would put time limits on towns’ pre-application process. This preliminary process was supposed to give developers and homeowners an idea of how their project will fare. Instead, some communities have used it as a stalling tactic, she said.
“They [developers] couldn’t get them [planning boards] to turn them down so they could go to the zoning board of appeals,” Cady said.
Realtors will be watching two other bills closely. First there is the continuing debate over how the state would reimburse businesses whose property is taken through eminent domain, mainly to make way for new highways. Legislators instituted a number of reforms last session, including increasing tenfold the maximum reimbursement amount. But Realtors still want to keep alive the idea of reimbursing businesses for replacement, and not just relocation, costs. The House was expected to send that bill to interim study on Jan. 7.
Finally there is concern over a bill that would forbid the sale or rental to a sex offender of housing within 2,000 feet of a school. While it’s a nice idea, real estate brokers shouldn’t be legally responsible, said Corey-Fox.
“We are going to start having to keep lists and keep it updated and if there is a mistake… We don’t want to go there,” she said.
Faxes and spam
Finally, there are those annoying solicitation bills that interest everyone except for those businesses doing the marketing. Last year the target was telemarketers. But the national Do Not Call list has taken the edge off of that complaint. This year it is e-mail spam and commercial faxes.
Sen. Burt Cohen, D-New Castle, is sponsoring a bill that would require commercial e-mail to be labeled as an advertisement. But this isn’t just a truth in advertising bill. It would enable anti-spam software to more easily delete it.
“We’re trying to can spam,” Cohen said. “The goal is to stop it.”
A bill sponsored by Representative Cady would make the distribution of obscene e-mail a felony. It’s not just a moral issue, said Cady. It’s an economic one.
“How much time do businesses take deleting that stuff from their computers?” she asked.
At least you can delete spam. You have to pay for receiving commercial faxes. An earlier bill failed because it attached heavy fines, so HB 1145 is relatively toothless. Still, said Rep. J. Edward Kerns, R-Bedford, it is important to begin to take a stand.
“This is bigger companies interfering with small-business growth,” Kerns said. “We pay for it and they reap all the benefits.”