Senate panel backs R&D, energy tax breaks
The Senate Finance Committee approved $19 million in business tax breaks Monday, accounting for more than half a projected budget surplus after 20 minutes of debate.
Senate Bill 380, sponsored by Sen. Bob O’Dell, R-Lempster, passed the committee 8-0. It would give businesses up to $1 million in research and development credits against the business profits tax.
SB 397, which passed on a 5-3 vote, would grant $18 million in one-time energy cost credits against the business enterprise tax. Business would be able to claim half of their energy expenses up to a credit of $500.
Three powerful Republicans co-sponsored and voted for that bill in committee: Finance Chairman Chuck Morse of Salem, Majority leader Bob Clegg of Hudson, and Deputy Majority Leader Richard Green of Rochester. Senate President Ted Gatsas of Manchester voted for both bills, which go to the full Senate on Wednesday.
Most of the money for tax relief comes from a one-year windfall under a new federal law that declared a national mini-moratorium on the filing of earnings retained abroad. It lets firms pay a federal tax of 5.25 percent instead of the top corporate rate of 35 percent on these profits.
As first introduced, SB 380 allowed any firm to claim 15 percent of the research and development credit reported on its IRS return. Under the federal formula, that’s a small percentage of the actual expense.
The committee approved an amendment Monday capping the total New Hampshire credit. Now if too many firms apply for it, each will receive a prorated share, with none ever getting more than $100,000.
“We thought the original version of SB 380 would have cost us more than its $1 million estimate,” said Green. “Now it’s a flat, finite amount.”
Revenue Commissioner Phil Blatsos testified last month the credit might cost as much as $1.2 million.
O’Dell joined Senate Democrats Lou D’Alessandro of Manchester and Sylvia Larsen of Concord in opposing the energy tax credit as a poor use of public dollars. All three preferred putting the excess revenue into the rainy day fund or a program with lasting benefits.
“This cuts $18 million in revenue, and we’re going to pass it?” asked Larsen. “This is wildly spending money without even asking them to improve their energy efficiency. That’s a drop in a bucket with a hole in it.”
D’Alessandro said giving the money back might feel good, but the economy is teetering.
“We have to be very careful what’s happening here,” he warned. “It will reduce our income significantly without really helping anybody.”
Gatsas said the refund would go right back into the economy. Clegg said mom-and-pop businesses badly need help with their heating bills.
“It’ll be a lot of money to these guys,” he said.
Several lawmakers, including Morse, said they’d like to reduce the busines enterprise tax rate if it were possible.
“But we can’t sustain that in the next biennium,” he said. – CHRIS DORNIN/GOLDEN DOME NEWS