Week Ten - March 12, 2010

This electronic publication, known as The Advocate, is brought to you each Friday by your Greater Nashua Chamber of Commerce, in partnership with our friends at Devine Millimet & Branch, and ActiveEdge. Please use this piece to review what has happened in Concord this past week, read about our Chamber's lobbying efforts relating to those activities, and preview what we are doing on behalf of our Chamber members in the coming week.

This Week’s Update

Remember last spring when Concord was coming up with things like the LLC tax, an increase in the Rooms & Meals tax and the creation of the campgrounds tax, and a potential capital gains tax? We’re happy to report that the tide seems to be turning. This past week was a good week for the business community at the State House. Your voices clearly are being heard.


Senate Passes SB 383 (Net Operating Loss) Bill

Last week, we reported that the Senate Ways and Means Committee had voted to recommend the passage of SB 383, which increases the NOL cap from its current level of $1M to $10M. This past Wednesday, the full Senate voted to pass the bill. The bill as passed also includes an amendment that “repeals the repeal” of the economic revitalization zone tax credit law, which is slated to sunset in 2011. Now it is doubly the case that this is a Nashua Chamber bill, because we requested this NOL change and, as you may recall, the enactment of the first economic revitalization zone law in this state several years ago.

So it is on to the House, where we know that we are going to face strong opposition from the Department of Revenue Administration, which argued to the Senate Ways and Means Committee that the increase in the NOL deduction would result in a “substantial loss in BPT revenue.” Given the fact that, even with the increase of the NOL to $10M, we would still be the lowest state in the country, it is somewhat astounding that there is so much push-back by the Dept. of Revenue. Hopefully, the House will agree with the Senate that it is important to help businesses climb out of the recession by hanging on to their own funds and reinvesting the money in things like new jobs.

Once again, we owe a huge debt of thanks to Senator Bette Lasky, the prime sponsor of the bill, and Senator Peggy Gilmour, who was a driving force in getting this bill passed favorably out of the Ways and Means Committee.

Reasonable Compensation And Repeal Of The LLC Tax

When the state budget was being completed in the latter part of June last year, the LLC Tax was included supposedly because it was an essential revenue-raising measure and that it was important to do as a matter of fairness. Although it is unfortunate that this tax was enacted at all, at least the Governor and the members of the General Court seem to have gotten the message over recent weeks. Repeal of the LLC Tax (and other taxes) is the rallying cry these days.

The newest development came yesterday, when Senator Cilley came into a hearing on SB 450, a bill addressing funding for the Dept. of Health & Human Services, and proposed an amendment that would repeal both the LLC Tax and the campground tax, both of which were created last year. Under her amendment, those revenue sources would be replaced with resurrected versions of the Insurance Premium tax and the tax on nuclear power property and assets. This amendment was not well-received by certain senators who felt completely blindsided by it, and it will be interesting to see if this amendment becomes a major vehicle for any tax reform.

On Wednesday, the full Senate approved SB 497, Senator D’Allesandro’s bill which addresses the reasonable compensation problem and also brings the Interest & Dividends tax in New Hampshire out of the dark ages and makes it consistent with provisions of federal law (as is the case in virtually every other state). SB 497 passed by a unanimous voice vote.

During the floor discussions concerning the bill, Senator D’Allesandro complimented the efforts of the working group which is looking at ways to improve this bill and is especially taking a look at the DRA’s revenue estimates for this bill. The Chamber is proud that our Advocacy Committee Chair David Heath is a leading member of that small working group.

The bipartisan nature of this bill was demonstrated by the floor remarks of Republican Senator Jeb Bradley, who congratulated and complimented Senator D’Allesandro for the fact that the bill will take care of the reasonable compensation problem. Senator D’Allesandro and Senator Bradley agreed that the BPT was never intended to be a tax on personal services, and that if this bill did not pass, there would be severe repercussions for businesses.

This one now goes to the Senate Finance Committee, where we expect quick action and approval.

The finale of an eventful week on this front was the passage by the House on Thursday of HB 1607. That bill is the House’s solution to the reasonable compensation problem and is competing with SB 497 as a solution to Reasonable Compensation. It was an interesting debate. An amendment proposed by Republicans Representative Major and Representative Hess to increase the safe harbor from $50,000 to $100,000 failed by only four votes, so you can see that the House is closely divided on the issue. In the end, the House passed the version of the bill that came out of the Ways and Means Committee.

We appreciate the hard work of that Committee, and think they have produced a bill that is far better than the version that was originally introduced. However, the bill still does not go far enough. We will be supporting SB 497 as the best solution to this whole issue.

Like-Kind Transactions

The Senate was indeed busy on Wednesday. The full Senate also passed SB 483, which fixes the problem of “like-kind exchanges.” The Chamber supports this bill. New Hampshire businesses are currently at a competitive disadvantage, because New Hampshire subjects these types of transactions to the Business Profits Tax, and thus we are one of the few states (if not the only state) that treats these exchanges in a way different from the way that the IRS does. This bill brings the New Hampshire treatment of these transactions into line with the federal system. The Senate also passed an amendment that makes the bill effective on passage. We like that idea! The sooner the better.

Telecom Pole Tax Exemption Approved

The Senate on Wednesday also passed SB 492, which extends for two more years the existing local property tax exemption for telecommunications poles and conduits. Local governments put on a strong push in recent days to try to convince the Senate to vote down this bill. That would have had the effect of permitting cities and towns, for the first time, to assess property taxes on the telecommunications poles and wires. The Chamber supports this bill, because this is obviously no time to be creating or allowing any new taxes, especially as we are looking for the telecom providers to build out broadband within the state. The amended version of the bill that was passed by the Senate also creates a study committee to look at the fairness of the current application of the utility taxes and the financial implications, which a repeal of the exemption would have on telecom rates and on property taxes.

Acknowledgements

This weekly update is made possible by the generous support of Devine Millimet & Branch, one of the state’s top law firms and our Chamber’s contracted representative in Concord. If your business has a legislative or local issue that needs strategic consulting and attention, they are a valuable resource that can help navigate you through both local and state processes.

This weekly update is designed and maintained by our friends at ActiveEdge, and we thank them for their help in delivering this piece to your inbox every Friday!

If you have questions about this update, or comments to share with us about other issues in Concord, please email Chris Williams at cwilliams@nashuachamber.com. We want to be sure we're representing you to the best of our ability, so do not hesitate to reach out to us!

J. Christopher Williams
President & CEO
Greater Nashua Chamber of Commerce
151 Main St.
Nashua, NH 03060
Phone: 603.881.8333
Fax: 603.881.7323