Cook On Concord: Too many good ideas can cost business a lot

As this column has noted many times in the past, the 424 people in the Legislature are activists or they would not run. If each of them has one “good idea” that he or she wants to advance, there will be 424 bills. Many legislators have more than one, and the result is the thousand or more bills that lawmakers have to handle each year.

This year, there is a growing awareness in the business community that the cumulative effect of the “good ideas” that legislators have proposed, if passed, would have a significantly detrimental effect on business.

What is not readily apparent when measures are introduced is that all small increases in the costs of doing business in New Hampshire add up.

The Business & Industry Association of New Hampshire, working through its policy advisory subcommittee, recently started to consider the cumulative effect of the many such 2007 proposals, if they were to pass. While certain pro-business proposals have the support of the governor and legislative leadership, the relative inexperience of the legislative leadership, coupled with the newly elected Democratic majorities in both House and Senate, make business leaders wonder if there is a general understanding of what is increasingly viewed as a threat.

Consider some of the proposals that cause this concern:

• There is an omnibus tax proposal that contains many different provisions, including a luxury sales tax, a tax on motor vehicles costing $30,000 or more and any item costing $10,000 or more, a tax on entertainment admission charges, a tax on gambling winnings, expanded definition of tobacco products subject to tobacco tax, changes in the method of calculating the beer tax, establishment of a tax on estates exceeding $3 million, imposition of a payroll tax on businesses with payrolls exceeding $10,000 per week, and changes in the rate of the statewide enhanced education tax. All of these taxes are intended to fund education. Most of the taxes proposed would have an effect on certain businesses or consumers and all would take money out of the economy. It looks as if this bill will be “retained in committee” to see what will be needed to fund the ultimate definition of an “adequate education.”

• House Bill 143, which changes the apportionment of damages in litigation cases sounds technical but could add to business insurance costs. House Bill 455 repeals the law relative to screening panels for medical injury claims, a newly adopted procedure in use to evaluate medical malpractice cases which, some fear, could raise the cost of health insurance, medical malpractice insurance and health care. These indirect “taxes” cost businesses premium money.

• There are several bills that increase fees for hazardous waste, contaminated site cleanup, establish minimum renewable standards for energy portfolios, and have other effects on the environmental and energy practices of businesses.

• Every time someone proposes a “mandatory” coverage bill for certain kinds of medical procedures under health insurance, the cost of premiums can go up, potentially. There are several bills this year as there always are to do that, including payment for infertility treatment, and various specific maladies. House Bill 711 would require insurance coverage for the cost of hormone treatment drugs for transsexuals. While well-meaning, these could raise the costs.

• House Bill 808 gives employees a right to bring court actions against employers in “whistleblower” cases. While the merits of this bill can be debated, the ultimate effect of allowing employees to sue employers would be an increase in the cost of doing business.

• House Bill 635 removes exemptions under the interest and dividends tax for certain taxpayers, undoubtedly resulting in higher tax costs for those affected.

• House Bill 605 is relative to the employment eligibility verification by employers, potentially costing businesses. Other employment related bills require an increased minimum time for work for those called in to work and raise the minimum wage.

There are literally hundreds of bills on the radar screen of business organizations, and the above are only a smattering. The point to be made to legislators, leadership and the governor is that a comprehensive view of what is being proposed needs to be undertaken so businesses do not suffer from the cumulative effect of hundreds of proposals.

Relying on a gubernatorial veto at the end of the process is not a good solution, since the governor understandably is reluctant to veto legislation popular enough among legislators to pass both houses. Therefore, input at the committee level and at “committee of conference” time, if bills pass both houses in different forms, is required.

How the new Democratic leadership of the House and Senate and Governor work together to review such items and protect the “New Hampshire Advantage” that businesses claim to enjoy, will be an interesting study of the 2007 legislative process.

Brad Cook is a partner in the Manchester law firm of Sheehan Phinney Bass + Green and heads its government relations and estate planning groups.