Week Twenty Two - June 04, 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

Budget Talks Break Down

Last Friday afternoon, negotiations between House and Senate conferees on the budget balancing bills reached an impasse. Senate President Sylvia Larsen told the House conferees that the Senators did not think it would be fruitful to continue the discussions, given the unwillingness of the House conferees to consider gaming as a revenue source, and given that the Senators did not want to make the cuts in HHS services or pass the taxes upon which the House budget plan was based. When Representative Marjorie Smith, the chairwoman of the committee of conference, told the committee that the House members would sign a version of the committee of conference report that reflected only the areas which the House and Senate had agreed upon, and invited the Senators to sign-off by Tuesday morning, Senator Larsen essentially told Representative Smith not to hold her breath. When this past Tuesday came and went without any Senate signatures, the two competing budget bills, SB 450 and HB 1128, both died. As a result, when the House and Senate completed their work for the 2010 session two days ago, they had enacted no legislation to address the roughly $300 million budgetary shortfall which they have forecast for the remainder of this biennium (through the end of June 30, 2011).

What Happens Next?

To address the budgetary situation, the Governor and Executive Council have summoned a special session of the legislature to convene next Wednesday, June 9th. Technically speaking, there is no need to have the budget in balance until June 30, 2011, when the biennium ends; however, many legislators in Concord share a consensus that it is necessary to deal with this problem right away so that there is not an even deeper hole to fill in the coming months. As it is, there are some who think that the budget deficit is far higher than the $300 million that was settled upon by the House and Senate budget conferees as the working deficit number.

Regardless of the actual size of the deficit, there is really only one number that will count next week: 13. That is the number of votes that it will take to get a budget passed in the Senate, and what happens next Wednesday is going to depend in large part on how far the Senate is willing to go in standing by its gaming proposal. Since neither the Governor nor the House can pass a budget bill alone, the Senate has it within its power to say that it will be gaming or nothing. The Senate has the popular will of the people on its side, since most polls show a majority of NH voters support gaming. The Senate also has an increasing number of business groups and other organizations over the last year that have endorsed expanded gaming, including our own Chamber of Commerce. The other side of the coin is the political calculation involved; what will be the fallout if no budget agreement is reached?

If the Senate President has at least 13 votes in the Senate that will stand fast on gaming, then the House will need to make a calculation about whether the consequences of a failure to address the budget outweigh the consequences they think will arise from the enactment of a gaming package. If there are not 13 votes in the Senate, then the special session is likely to end in fairly short order, with an agreement which looks very similar to the one that fell apart last week at the last minute.

The next few days will tell the tale.

Disturbing Turn of Events On LLC Tax Repeal

On Wednesday, the House and Senate approved a final version of HB 1607, which did not include the LLC tax repeal. How that came about can only be described as a fiasco.

When the House and Senate reached the final day of voting on the text of all bills prior to committees of conference, the LLC tax repeal was still being included in three different places: SB 450 and HB 1128 (the House and Senate budget bills) and HB 1607 (the Senate-amended version of the “reasonable compensation” bill). As we reported here a couple of weeks ago, the Senate had intentionally kept HB 1607 clear of any significant baggage (such as a gaming amendment), in recognition of the importance of getting the LLC tax repeal enacted. Having the repeal only in the House and Senate budget bills did not provide enough certainty, because the Senate recognized (accurately, as it turned out) that there was a risk that both of those bills would die. HB 1607, therefore, was intended to be the fail-safe engine that would carry forward the repeal of the LLC tax once and for all.

At the committee of conference on HB 1607, which met on May 26, the conferees reached agreement on a version of HB 1607 that included the LLC tax repeal - or, at least, that is what the Senators and the members of the public sitting in the audience thought. When the Senators went to sign the committee of conference report, which had been drafted by the House conferees, they discovered that the LLC tax repeal was no longer included in the report. The Senators’ initial reaction, naturally enough, was that the omission of the LLC tax repeal was simply a mistake, and that it could be corrected by quickly fixing the report and sending it back to the House and Senate for passage. But, when the Senators approached members of the House Ways and Means Committee about this, they learned that the omission of the LLC tax repeal was intentional. The House members denied that they had ever agreed to the repeal.

It’s now obvious that the House conferees took this action as a means of trying to force the Senate into voting for a budget bill that included the repeal. It is astounding, after all that has happened on this issue, that the House conferees could have been so cavalier about the repeal. One of the House conferees, Representative Dennis Vachon, was actually quoted in the press as saying the Senate (and the business community) “can’t have their little LLC repeal unless it’s in the budget.” Representative Susan Almy, the chairwoman of the House Ways & Means Committee, was also quoted in the same press article in which she confirmed that she and her House colleagues intentionally took the LLC Tax repeal as a hostage for the budget debate. It is hard not to compare this to what happened a year ago when the tax was created at the end of the session and almost literally under the cover of darkness.

We trust that the repeal will be taken up and passed in the special session next week. However, regardless of what happens next week, the business community has every right to be extremely upset with the way that this has all turned out. There are clearly some in the House who do not understand the level of concern that businesses in New Hampshire have over the tax situation in this state. For that, the House leadership and the majority party should be ashamed over these developments and for allowing them to happen.

As hard as it may be to believe that this is true in 2010, there are obviously some who still see businesses as little more than funding sources for the State. That is a misconception that your Chamber will continue to work hard to dispel.

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