Business groups left smiling after legislative session

After little new legislation, and some failed major bills, the assessment: no harm, no foul

The biggest thing that happened last legislative session, as far as business is concerned? Almost nothing. And that – for many business organizations – is just fine.

“This was a pretty good session for business,” said David Juvet, senior vice president of the Business and Industry Association of New Hampshire. “Everybody was holding their breath hoping nothing bad would happen. And nothing did.”

No casino gambling. No Medicaid expansion. No minimum wage increase. No gas or beer tax hike, no soft drink tax. No increased business taxes and no messing with business tax breaks. No major budget cuts to hospitals, the university or tourism.

“There were even a few positive, proactive things,” Juvet added.

Here the top four:

 • A major rewrite of the state’s Business Corporations Act (Senate Bill 41). It was the first revision of the law in 20 years, enabling electronic filing, remote shareholder meetings and generally making it easier for out-of-state corporations to domicile here. “This law changes everything,” said Juvet. “We will be as up to date as any state in the country, and it will be useful for that small family-held corporation that we seek to encourage.”

 • Enactment of the Auto Dealers Bill of Rights (SB 126). Dealers didn’t like manufacturers forcing them to invest thousands to upgrade their showrooms every five years or so (at the risk of losing the franchise if the upgrades weren’t made) because, as Peter McNamara, president of the New Hampshire Automobile Dealers Association, said, “Buildings don’t sell cars.” Other states have passed similar laws, but only in New Hampshire are auto manufacturers limited to requiring those upgrades once every 15 years. The bill has some other unique features, including giving dealers access to market share and performance reports.

 • An increase in the reasonable compensation safe haven from $50,000 to $75,000 for sole proprietors (House Bill 598). This is the amount that sole proprietors can pay themselves so that the money will count as wages, taxed under the state business enterprise tax (0.75 percent) as opposed to profits, taxed under the state business profits tax, at 8.5 percent, without triggering an audit. HB598 increased the safe haven from $50,000 to $75,000. “It was off the radar screen, but it was really helpful,” said Bob Nash, of the New Hampshire Association of Insurance Agents. “We think it should be $100,000, but it was a step in the right direction.”

 • Expansion of the research and development tax credit. SB 1 – whose number represents the priority that supporters, including Gov. Maggie Hassan, gave the bill – would double from $1 million to $2 million aggregate cap on the credit and make the new cap permanent. The bill passed both chambers the previous session, only to be sacrificed after it was attached to a non-germane bill about abortion. SB 1 would not change the $50,000 per-business credit cap that is currently allowed against either the BPT or BET, but it would effectively double the number of businesses receiving the tax break.

Other measures passed in the last legislative session: a new program that would allow some people collecting unemployment benefits to start a business, as opposed to looking for work (SB 143); a renewable energy bill that increases alternative compliance payments for those burning wood chips, so utilities will be more likely to buy those chips from Granite State producers (SB 148); a bill allowing restaurants to sell alcohol until 2 a.m. if authorized by local ordinance (HB 575); SB 124 and HB 416 both streamline various environmental permitting processes; and HB 513 enacts changes in the Shoreline Protection Act that is aimed at dissuading municipalities from adding their own ordinances, resulting in a patchwork quilt of regulation.

No ‘tip tax’

But the bigger story is the major legislation that failed.

A bill allowing a casino didn’t happen. Chalk one up for the New Hampshire Lodging and Restaurant Association, which came out against the measure this year, along with a host of other organizations, as well as the $80 million-a-year charitable gaming industry.

Expansion of Medicaid – pushed by the governor and the House — has been put off until at least October, pending the results of a study commission. The delay occurred much to the disappointment of the health care industry, including the New Hampshire Hospital Association, but the New Hampshire Independent Insurance Agents don’t mind the wait. Ditto when it comes to the watered-down version of any state partnership with the federal exchange.

As for the state budget, hospitals didn’t get cut as much as they feared, and now will play ball with the state on the Medicaid managed-care system whose future was touch-and-go until the hospitals agreed to take part. The university system did all right, resulting in a big sigh of relief by the high-tech industry. And the tourism budget even got a raise. It will again receive 3.15 percent of rooms and meal tax revenue — estimated to be $7.2 million in 2014, or a $400,000 increase.

Three tax breaks passed last session were about to be thrown off the fiscal cliff by the House, but the Senate rode to the rescue and put them safely back onto the budget.

Two had to do with the net operating loss carryforward deduction, doubling the number of years (from five to 10) it can be taken and raising the amount that can be carried forward from $1 million to $10 million. The third was the recent increase in the reporting thresholds on the BET — from $75,000 to $100,000 for a business enterprise, or $100,000 to $200,000 of gross sales.

A last-minute hospitality industry amendment to the budget’s trailer bill halted what it saw as the state Department of Revenue Administration’s end-run to gain revenue via a “tip tax,” or an effort to include tips received by employees in calculating the BET.

The DRA said the law justified counting tips because they are reported on an employee’s W-2 form, but the NHLRA argued that because businesses aren’t allow to touch tips, they therefore couldn’t be counted as wages. Lawmakers agreed and knocked the DRA efforts out of bounds.

“We are very happy,” said NHLRA president Mike Somers. “We thought that was great. It put us exactly where we wanted to be, because it really changed nothing.”

The 12 cent-a-gallon gas tax hike, approved the by House, was a non-starter in the Senate. The money was destined to help shore up the state’s sagging highway fund.

“We do need good roads,” said John Dumais, president of the New Hampshire Grocers Association. But more important are those people driving across the border on any roads to fill up their trunks with tax-free merchandise. Even a small rise in the gas tax “is going to be a restraint on those sales,” he said.

However, if the gas tax failure means that the widening of Interstate 93 won’t reach Manchester, “then I put that in the disappointment column. It kicks that can down the road,” said Will Stewart, a lobbyist for the Greater Manchester Chamber of Commerce.

Stewart was pleased, however, that the state is going ahead with a rail study and is studying an infrastructure bank that might enable the state to finance highway construction in the future.

‘Remarkably civil’

The state did raise the cigarette tax a dime, but that wasn’t exactly a big change, since it lowered it a dime the last session, with the hope that increased border sales would offset the loss of revenue. That didn’t happen, but the Dumais was glad that grocers didn’t have to pay the “floor tax” — a tax on unsold tobacco inventory, which results in a storeowner having to take “thousands of dollars from his operating cash and give it to the state.”

And then there was – in what has become a routine practice – the looting of dedicated funds.

In this case, it was a $17.35 million raid on the Renewable Energy Fund, money that utilities pay for not meeting increasingly stringent renewable energy standards. (There was a $16.1 million outright raid on the REF to bolster the budget as well a $1.25 million “loan” to help bail out Tri-County Community Action Program, based in Berlin.) The fund is designed to help homes and businesses switch to renewable energy, which would have helped that industry.

However the major accomplishment when it came to the budget was that, I the end, it was passed without rancor and endorsed by both sides.

“It was remarkably civil,” said Juvet. “When was the last time you saw Democrats and Republicans both voting for the budget?”

With Democrats taking over the House and keeping the corner office, there were high hopes among labor unions, but the word that AFL-CIO president Mark McKenzie used to describe the last legislative session was “disappointing,” and he wasn’t even talking about the failure to raise the minimum wage, but to two bills passed by both legislative bodies, but killed in conference committee. One would have prohibited businesses from demanding a worker’s social media passwords, and the other would stopped firms from using credit checks when hiring.

The Senate killed the latter by attaching an amendment that would have allowed a company to require workers to give up their paycheck for a debit card, and all the fees that come along with the card.

So everyone’s worst fears were not realized. And that just about sums up the session.

“On the whole, they did a fairly decent job,” said Stewart of the Manchester chamber. “It was definitely better than last session. Not as much drama.”