January 13, 2017
Last week saw the first hearings on bills that are being considered in the 2017 legislative session, and we appropriately started off bright and early on Monday morning, January 9 with the first 2017 meeting of our State Advocacy Committee, reviewing the bills that the Chamber will be following during this session. Bill texts are still emerging from the Office of Legislative Services, but within the next several weeks we should have a full idea of the bills that will be the top priorities for us this year.
Two of the bills that we already have identified had hearings right off the bat, and so I spent parts of last Tuesday and Wednesday in the Legislative Office Building in Concord to weigh in on our members’ behalves.
Rebalancing the Assessing Standards Board (HB 254)
Tuesday’s trip to Concord focused on supporting HB 254, which rebalances the composition of the State Assessing Standards Board. Although there is something of an “inside baseball” aspect to this bill, it is an important piece of legislation because it has implications for the electric, water and gas costs that businesses have to pay. Bear with me for a second while I explain the background of this one.
The issue behind this bill, and several others that we will be working on this year, is how municipalities assess utility property, with direct impact on utility property taxes. Why do we care? Because utilities recover the costs of these property taxes from their ratepayers – so if the property taxes on the utilities go up, ratepayers’ utility bills also go up. Moreover, since utilities don’t set their rates town-by-town, when one town sets its rates much higher and out of alignment with others in the state, then the ratepayers in other cities and towns end up subsidizing the over-valuation.
Looked at this way, it’s obvious that utility property needs to be assessed in a fair and reliable manner in every city and town.
However, in the past several years it’s become apparent that this isn’t happening. In a number of municipalities, the assessments on utility property have been increasing exponentially. At least one utility has seen an increase in its property taxes by almost 80% since 2011. In addition, valuations from town to town for similar types of property are varying wildly (curiously so, in view of the fact that when the local governments were arguing for an end to the exemption on property taxes for telephone poles, one of the rallying cries was “a pole is a pole is a pole”).
This means that many of the municipal valuations are at odds with the valuations done by the NH Department of Revenue Administration, which values utility property as a whole system for purposes of the statewide utility property tax. (You may recall that there was an attempt two years ago to pass a bill to prevent the utilities from introducing the DRA valuations into evidence in abatement cases; we opposed that bill, and fortunately the legislature rejected the proposal.)
A number of abatement cases have been filed by the utilities to challenge assessments. As has been pointed out in the various legislative discussions that have taken place surrounding this issue, the ratepayers end up footing the bill for both sides in the abatement cases, because as ratepayers they are paying for the lawyers for the utility and as citizens they are paying for the lawyers for the town. It is in everyone’s best interest, therefore, that the valuation system be objectively uniform and reliable so that the number of utility property tax abatement cases can be reduced or eliminated.
Why is all this happening?
It appears that some assessors are going to municipalities and making a pitch that additional revenue can be brought in from the property tax on utilities. It seems that one assessor suggested to a town that the assessment on utility property could be increased by 200% – and that is just what happened. It would be hard to argue that, at the very least, this presents the appearance of a result-oriented approach. The lack of uniformity only contributes to the sense that the valuations are not always truly reliable.
What’s the solution?
The solution to the problem seems obvious to us: use a statewide valuation formula that is developed by a neutral and reliable third-party. This would ensure that a 50- foot electric pole in one town is valued the same as an identical 50-foot electric pole in the next town over, and taxpayers would not have to foot the bills for the assessors hired by each town or the lawyers on both sides of the abatement cases.
This brings us back to the Assessing Standards Board. The ASB is set up by statute to provide assessing standards and rules. As currently set up, the ASB is a strong voice for assessors but is a very weak voice for the residential, commercial and utility taxpayers. Since there could be occasions when the perspectives of the assessors are not necessarily aligned with the interests of the taxpayers, it makes sense to us that the ASB should have an appropriate balance in order to insure that the advice being rendered by the ASB is equally balanced. Although this legislation (which reduces the number of assessors and adds members representing the residential, commercial and utility points of view) will not in and of itself create the uniform valuation system that we would like to see in place, it hopefully will create a good platform to move in that direction.
The bill has been sent to a subcommittee for further review, so we will continue to be working on this over the course of the next few weeks. We will keep you updated.
High Voltage Lines (HB 145)
On last Wednesday, I stayed with the energy theme from Tuesday, and testified before the House Municipal & County Government Committee on HB 145, which would give each municipality the power to veto the presence of high voltage lines in that municipality. The Chamber strongly opposes this bill.
Last year, as you may remember, we created five criteria to use in evaluating proposed legislation that deals with energy-related projects:
- Is the bill project-specific, or is it a general bill aimed at improving overall public policy for energy needs in New Hampshire?
- Will the bill help to lower energy costs (or at least provide downward pressure on rising energy costs), or will it likely contribute to increased energy costs?
- Is the proposal preempted by federal law?
- Are there existing forums (such as FERC, NH PUC, and the NH Site Evaluation Commission) which allow New Hampshire citizens and communities to voice their concerns and potentially to impact the proposed project?
- Will the proposal create jobs or will the proposal inhibit job growth?
Based on these criteria, we think that HB 145 is a bad idea.
First, there are clearly existing forums to address siting questions and approvals. These forums appropriately look at these questions from a statewide perspective, but still take into account local concerns and interests.
Second, the proposal is likely to drive up costs by adding additional steps to an already intensive siting process. For instance, if a special town meeting is needed to take the vote on the high voltage question, the town will incur the costs associated with that meeting. If the question is voted on at a regular town meeting, that imposes a narrow window of time for any municipal approval, and causes delays in approval (and resulting additional costs to the utility). And finally, of course, if just one town should stand in opposition, the utility would have to incur the costs of going around that artificially-created boundary. (Just imagine if this system had been in place for the construction of highways at the time that the interstate system was created – a pertinent example, because highways, like electrical systems, have a benefit wider than a particular municipality and therefore cannot be made subject to the decision-making power of a single municipality).
Third, this legislation is indeed project-specific. The prime sponsor of the bill said in his remarks to the committee that it was directed at a project being done in his district. As we have repeated over and over again, there is a tremendous potential for unintended consequences if a bill is passed to deal with a specific project.
Fourth, the practice of changing approval processes in midstream would be disastrous for New Hampshire economic development. This tells businesses that the rules can change at any time, and that they cannot simply rely on diligently carrying out their side of the approval process. Even just the filing of these sorts of bills sends the wrong message to new businesses thinking about coming to New Hampshire. Let the processes in place do their job.
It’s all about energy costs, folks.
President, CEO of the Greater Nashua Chamber of Commerce