Q&A with: BIA President Jim Roche

Since Jim Roche became president of the Business and Industry Association of New Hampshire in 2005, the group has been much more activist on issues relating to business, and lately it has played a crucial role in opposing a variety of business taxes, including extending the interest and dividends tax on limited liability company distributions – otherwise known as the “LLC tax.”

Q. What were you doing before joining the BIA?

A. I was corporate communications director for the legal regulatory division of Thomson Financial and also worked in economic development.

When we made the decision to relocate from Minneapolis to move to the Northeast, I didn’t want to work for a huge corporation. So I looked at the landscape and actually visited with (former BIA president) John Crosier three years before I took his job, not knowing that he was going to be moving on. I ended up running The Mohawk Valley Chamber of Commerce based out of Utica, N.Y., and then did John announce his retirement. I got wind of that, and they hired me.

Q. What were some of the major changes or improvements that needed to be made?

A. We didn’t have a proactive business agenda. Now we go through a very elaborate four-month-long, four-step process that culminates with our public priorities. We also convene a group every Monday morning – our policy advisory subcommittee. It includes my 10-member executive committee, the chairs and vice chairs of the five policy committees. We provide a staff recommendation and then we talk about it. It’s never Jim Roche sticking my finger in the air trying to figure out which way the political winds are blowing.

Q. It seems like the BIA has become more aggressive politically in the last few years.

A. Perhaps, but a legislative scorecard is very common, so adding a scorecard of our own is something other states are doing. And by adding a political action committee, we are just doing what a state chamber ought to be doing.

Q. Tell us about the LLC tax and the budgetary crisis.

A. We were one of the very few groups to flag the middle-of-the-night introduction of this. We were in the room when they voted and approved that, and most of the other groups that were critical of us were not. We began a dialogue with [Department of Revenue Administration] Commissioner Clougherty. At the time, it was positioned as closing a loophole. So we did our best in the week or so between the conference committee vote and the final budget bill.

The rules weren’t in place. Nobody knew what the heck this thing was, and yet they inserted it into the budget. The budget didn’t include the two-year business enterprise tax credit suspension against the business profits tax, which we fought very hard against. It didn’t include the capital gains tax, didn’t include the estate tax. It didn’t include a number of things that we had fought mightily against.

So we got a call from the governor. He felt that without our support, that it would not pass and if it went back for round two, the business community would see a world of hurt. There was no guarantee that those things and other anti-business measures would find themselves in budget number two, and so we ended up publicly endorsing the budget. That left us vulnerable as the rulemaking process unfolded and growing concern emerged over the details of the LLC tax.

It became clear to us that this had shifted from a public policy discussion to a political and rhetorical football. We also had legislators and other groups mischaracterizing our support for the budget as supporting every single line item and provision in the budget – simply not true. That’s when we said, “You know what? We are done.” We wanted fast track repeal and so we called for that in early January. And we have been leading the charge – and I mean that – to insure that that tax is repealed.

Q. There are two versions in the House and Senate not just of the LLC tax repeal, but of reasonable compensation. Which version would you like to see?

A. Senate Bill 450, which is the budget fix, repeals the LLC tax by stripping out the language they added a year ago. SB 497 effectively repeals the LLC tax by following federal definitions and standards, and it also addresses the reasonable comp issue. House Bill 1607 has the safe harbors of $50,000.

SB 497 is the best vehicle. Some have characterized it as being more favorable to large businesses. Some have characterized HB 1607 as more favorable to smaller businesses. Combine the language of 497 as it relates to reasonable comp and the language of 1607 as it relates to the safe harbor – you effectively cover the entire business community.

It is unlikely that SB 497 will see the light of day because DRA has changed their estimate and now says the fiscal impact on the business profits tax would be greater than what the state is taking in. How that works, I’m not sure. Go figure.

Q. What about the long standing charge that the BIA represents the interests of bigger business and not small businesses?

A. It is not true. We have many more small businesses in our membership than large businesses. I make no apologies for our membership composition. We have some of the leading employers throughout the state, some of the state’s largest and many of the state’s of the smallest. The majority of our employers – 55 percent – employ 50 or fewer and 35 percent employ 10 or fewer.

Those who characterize us as a large business organization are characterizing us that way for their own motives.

We have another 2,700 small businesses that are Capital Connect members of the BIA. Three years ago, we launched a free electronic membership to the very small businesses (10 or fewer employees) in local chambers where the chamber itself is a member and choose to participate in Capital Connect.

Our database for dues-paying members goes three deep. If we are fired up on a bill and want to communicate, it goes to 1,200 businesspeople throughout the state. In addition, the Capital Connect program members are receiving the same communication. So regularly, we are communicating on a weekly basis with close to 4,000 business leaders throughout the state.

No other broad-based business advocacy group in New Hampshire with members throughout the state represents virtually every economic sector. We are it. No other group comes close.

Q. Is there a need for a separate organization for small business?

A. I don’t agree small businesses are not represented. That’s simply not true. To the extent that other groups want to get into the public policy debate and are singing from the same hymnal, I think that makes the voice of the business community that much louder.

I’m damn proud of the fact that on my five years on the job, membership has grown. We were declining, and we stabilized that my first year on the job. We grew in 2006, 2007, 2008. Last year we were flat when most chambers lost a significant amount of members. Our value proposition is pretty narrow. We don’t offer an affinity program through Verizon wireless or a discount on rental cars through Avis. We are focused on representing the business community at the State House, advocating for issues. We put on substantive programming on business issues of the day, and we create opportunities for networking with business leaders around the state.

It has been a tough slog and the slings and arrows we take are a backhanded compliment. If we didn’t matter, then nobody would bother.

Q. We know what you are against in this year’s budget battle. Is there any solution or fix to close the budget gap?

A. Among business groups we lead the charge for a constitutional amendment related to education funding, to allow the state to target its resources to districts most in need. Beyond that, the Legislature needs to model its actions on what every business up and down Main Street has done over the last two years – make the tough decisions to try to stay afloat. The private sector will lead the state out of its economic challenges if they are given the opportunity and not saddled with additional tax and regulatory burdens.

Q. What do you have coming up on the horizon?

A. New Hampshire is in danger of losing its advanced manufacturing high-tech base. There is no secret that that sector of the economy has shrunk.Nonetheless, if you look at the economic pie that is New Hampshire, the most important slice is advanced manufacturing high tech by virtually any measure – gross state product, wages, more employees. In the last two years, we organized a series of 20 legislative tours of plants that have other operations beyond New Hampshire.

The first hour was an overview emphasizing the importance of manufacturing. The next hour they get to kick the tires and see what is being made and the third hour is where they came back and we have the host talk about the cost of doing business in New Hampshire – taxes, wages, health care, energy, environmental regulatory environment, labor regulatory environment – and then they would talk about those same things in other locations around the country. They don’t have to be here. They don’t have to grow here. I think it had some impact on raising the awareness of legislators. We are also going to do an analysis of advanced manufacturing high tech by a third party. Hopefully, we will be able to build on the recommendations – how do we preserve what we have and see it grow?

Bob Sanders can be reached at bsanders@nhbr.com.