NH Legislative Update – June 2013
By the time this report appears in the NHHTC newsletter, the NH Legislature will have taken final votes in the House and Senate to approve a Conference Committee agreement on a two-year, $10.7 billion state budget that is a compromise between reluctant but realistic legislative partners. The Conference Committee vote was 9–0. It’s more in line with a $10.7 billion budget crafted by Republican members of the NH Senate. It’s less than the Democratic controlled NH House-passed budget by some $300 million.
The Senate Republican majority had earlier rejected revenue measures such as a gasoline tax hike, and had rejected an immediate expansion of Medicaid under the federal Affordable Care Act which would bring $2.5 billion in federal funds over seven years to the state for that expansion. The Republican positions carried over into the Conference Committee, where Medicaid was the big sticking point in budget negotiations. After tense negotiations, the Conference Committee agreed to create a commission to study the potential costs and benefits of expanding Medicaid and how to tailor it to NH. Expansion would add some 58,000 to Medicaid rolls. Senate Republicans say they don’t trust the federal government to keep its word to fund the expansion.
Business Provisions: The Senate budget de-funds the Green Launching Pad program at UNH which helped “green” business startups. However, it adds back into the budget $13 million of business tax initiatives that were passed in the last legislative session, but suspended. They include an increase in the Business Enterprise Tax (BET) credit carry forward, an increase in the reporting thresholds for BET, and an increase to Net Operating Loss cap from $1 million to $10 million.
Casino legislation, that would have initially brought the state $85 million in an up-front fee from a casino company, was rejected by the House after passing the Senate. It never made it to the Conference Committee. The Governor’s budget had assumed the $85 million.
In a major reversal from two Legislatures ago, there is a restoration of funding cuts to the University System of NH in exchange for a freeze of in-state tuition for two years. State funding of the System would go from $55 million now to $69 million this coming year, then to $84 million after that. Originally, before the cut two years ago, the state funding was at $100 million.
Here are some other budget provisions of note:
- Return of a scholarship fund for NH students. The so called “UNIQUE” fund was fully restored. It provides funding to both the University System and the Community College System for scholarships for qualified NH students. Thus, NH loses the distinction of being the only state without a scholarship fund.
- Investment in economic development at DRED in 3 areas: tourism, trade promotion, technical assistance for businesses.
- Increase in aid to cities and towns.
- State personnel spending cut of $10 million to pay for a 6% pay raise negotiated with public employee unions.
- Increase in tobacco tax by 10 cents. State lost $11 million when the last Legislature cut the tax by 10 cents.
- $3 million more to the Land and Community Heritage Investment Program.
- $3.4 million for four new charter schools.
- $7 million cut to Health and Human Services.
- $10 million cut to Judicial Branch.
- $500,000 cut to NH Veterans Home.
Legislative leaders on both sides of the aisle say it’s the best budget they could craft, given revenue realities and political differences. Governor Hassan says she will sign the budget compromise bill—if the legislative waltz continues, and it reaches her desk.
NH Legislative Update – April 22, 2013
Revision of NH Business Corporations Act – SB 41
One of the most voluminous bills before the NH Legislature this session is the proposed revision of NH’s Business Corporations Act which provides guidance for corporate governance for domestic corporations. It has a bi-partisan group of sponsors, with Senator Jeb Bradley in the lead. NHHTC supported the bill before the House Commerce and Consumer Affairs Committee in an April hearing. It has already passed the NH Senate. The bill is the result of a major initiative by the State’s top business lawyers and the Business & Industry Association of NH. The bill covers issues such as incorporation, powers of corporations, shares and distributions, domestication and conversion, bylaws, etc. etc. It’s been some 20 years since the total Act was updated, thus making it outdated in this electronic age, and in light of court decisions and regulations enacted since the Act was originally written.
NH Legislative Update, April 16, 2013
H-1B Visas for High Skilled Foreign Workers (TechNET)
Under the umbrella of TechNET (the national network of tech company CEOs), the NHHTC joined with state technology organizations across the country to support a bill – the Immigration Innovation Act – sponsored by a bi-partisan group of 9 U.S. Senators, including NH’s Jeanne Shaheen, that would nearly double the number of H-1B Visas for high skilled foreign workers from 65,000 to 115,000. And, the number of visas would be adjustable based on economic demand. Foreign students at U.S. institutions would be allowed to apply for green cards while on their student visas. The plan would also allow Congress to roll-over unused green cards from year to year. Finally, the bill would promote education and training in STEM fields, with the money generated by fees for H-1B Visas used to pay for worker retraining in STEM.
Startup Act 3.0
Under the umbrella of CompTIA/TechVoice (a partnership of regional and state technology organizations) the NHHTC is supporting a similar bill – Startup Act 3.0 – in the U.S. Senate and U.S. House that would increase U.S. access to talent in the fields of science, technology, engineering and math by reforming high-skilled visa policies, but also create opportunities for startup businesses with tax incentives and access to resources for innovation. It creates a new set of conditional visas for 75,000 immigrant entrepreneurs and 50,000 foreign STEM graduate student visas. It also allows qualified companies to apply R&D tax credits to their payroll tax liability up to $250,000. And, for small startups, it makes permanent the 100% capital gains tax exemption on investments that are held for more than 5 years, in addition to the 28% exemption on qualified small business stock. Finally, the bill cuts red tape by requiring a cost-benefit analysis of any significant rule being proposed by a federal or independent agency.
NH LEGISLATION & BUDGET:
R&D Tax Credit
An increase in the amount of state funds for the R&D Tax Credit is now law in NH. Governor Hassan has signed the legislation into law after it passed both the NH Senate and NH House. The legislation increases the overall cap of state funds available for the credit from $1 million to $2 million. It also repeals a sunset of the credit passed by a previous legislature. The NHHTC was a strong advocate for the increase, and testified in favor of the increase in both legislative bodies this session and in the previous two sessions. NH companies that use the R&D Tax Credit should thank State Senator Bob O’Dell for his persistence in leading the effort to increase the credit.
Right to Work
The NH House killed a right-to-work bill proposed for former House Speaker William O’Brien. The bill would have prohibited employers and labor organizations from including fees for non-union members in collective bargaining agreements. A similar bill was vetoed by former Gov. Lynch in 2011.
The NH Senate has approved SB-152 that would allow up to 5,000 video slots machines and up to 150 table games at one casino – probably along the MA border. The vote was 16 to 8. It’s now in the NH House where the prospect of passage is up for grabs. It’s estimated that the casino wold provide the State with $130 million in new annual revenues, plus a one-time licensing fee from the group that establishes the casino. A significant part of Governor Hassan’s budget depends on passage of this casino legislation. The NHHTC has not taken a position on the bill, and neither have most other business organizations in NH.
The NH House has voted to reinstate NH’s minimum wage, setting the pay rate at the same level as the federal minimum wage at $7.25 an hour. NH’s minimum wage was repealed by the last legislature. It now goes to the NH Senate where passage in not certain, due to opposition by several in the Republican controlled body. NHHTC has not taken a position on the bill, since proposed State wage level is the same as the federal wage level.
State Merit Scholarship Program
The NH Senate has passed a bill that would create a merit scholarship program for NH students who qualify for in-state tuition within the University System of NH and the NH Community College System. It’s called the Making Opportunities Occur for Student Excellence, or MOOSE bill. The vote was 24 to 0. Full-time or part-time students would have to have a 3.0 grade-point average and have an SAT score above the national average. The amount of the scholarship will be determined through the state budget process, but will probably be $1,000 each year they attend college up to 4 years. The chief sponsor is State Senator Chuck Morse who is chair of the Senate Finance Committee. The NHHTC supported this bill before the Senate Finance Committee as one way to help NH college students, who bear one of the largest college debt burdens in the country. We also indicated it would work with the Committee to address any concerns from the University System and Community College System. Some in the college community are concerned that the funds for this program would subtract from the restoration of operating funds cut by the Legislature two years ago.
Education Tax Credit
A bill to repeal NH’s new education tax credit program comes before the State Senate this month. The House Bill repeals the program passed last year that allows businesses to reduce their state tax bills by donating money to nonprofit groups which can then provide scholarships to students and their families to attend out-of-district schools. The students can receive up to a $2,500 scholarship to attend private or parochial schools. Home-schooled students could receive up to a $625 scholarship. Some businesses have already filed for the credit. The effort to repeal is based on the argument from some legislators that the program lacks accountability, creates administrative costs, and may be unconstitutional. It’s already been challenged in court by the NH Civil Liberties Union and Americans United for Separation of Church and State because it provides money to religious schools. The NHHTC has not taken a position on this from the beginning because of its controversial provisions.
State Operating Budget
The NH House has passed a two-year, $11 billion state budget bill – 10% higher than the last budget – which restores some of the controversial cuts of two years ago. It’s now in the NH Senate, where its chief budget writer, Senator Chuck Morse, said his body would make plenty of changes, because the House budget relies on inflated revenue estimates as well as unnecessary tax increases on gas, diesel and cigarettes. Some of the budget depends on what happens to anticipated revenues from casino legislation.
Business Tax Receipts
State taxes and fees brought in $616 million for March — $26.6 million more that was expected. There are 3 months left in the State’s fiscal year, with a shortfall of $14.5 million in all taxes and fees to date.
NH Legislative Additional Update, Feb 2013
Business Enterprise Tax (BET) Threshold
The 2012 Legislature increased the “thresholds” for businesses to $200,000 of gross receipts, and $100,000 of BET base from the former $150,000 and $75,000 thresholds. Business Profits Tax thresholds remained the same. In her budget message to the State Legislature last week (Feb 14), Governor Hassan recommends delaying their implementation until the next biennium.
Increased Expense Allowance for Equipment Purchases
The 2012 Legislature approved what’s termed the “Section 179 Deduction” that allows businesses to expense rather than capitalize its purchases of certain equipment. This provision increases the annual expense to $25,000 from $20,000. Governor Hassan recommends delaying this provision until the next biennium. The combination of this delay with the BET threshold delay would save the State a projected $17 million.
Accelerated Increase to Net Operating Loss (NOL) Deduction
Past legislation increased to $10 million the amount of a business NOLthat may be carried forward to future years. The 2012 Legislature accelerated the effective date to Jan. 1, 2013 from July 1, 2013. Governor Hassan says she supports that change and will not ask for a delay.
NH Legislative Update – Feb 14, 2013
NH House has voted 212 to 141 to kill right-to-work legislation proposed by former House Speaker, Bill O’Brien. The bill would prohibit employers and labor groups from including fees for non-union members in collective bargaining agreements. A similar bill was vetoed by Gov. Lynch in 2011. In 2012, the bill died in the State Senate.
Health Insurance Exchange
A joint legislative committee, that oversees health care reform in NH, has approved Gov. Hassan’s decision to enter partnerships with the federal government for regulating a health insurance exchange that is part of ObamaCare. The Exchange is a marketplace where consumers and small businesses will be able to shop for insurance plans. The Gov. has asked US Health & Human Services Secretary Sebelius for state control on plan management and consumer assistance.
There will reportedly be no cost to the State in this partnership. The NH Insurance Dept. will use federal grants.
Education Tax Credit Program
A bill to repeal NH’s new education tax credit program has been approved by the NH House Ways & Means Committee on a party-line vote. The Program was enacted last year by the then GOP-controlled Legislature. The Committee found that the Program lacks accountability, creates administrative costs, and may not attract sufficient interest from businesses to be successful. There was also a question raised about it constitutionality. The Program allows businesses to reduce state tax bills by donating money to nonprofit groups, which then provide scholarships to help families pay to send their children to private schools or to out-of-district public schools. It would also defray the cost of home-schooling. The scholarships average $2,500 per student per year, or $625 for home schoolers.
According to the Associated Press, NH businesses are opposing a series of bills in the Legislature aimed at slowing down or stopping Northeast Utilities’ construction of a 180-mile, high-voltage power line that would originate in Northern NH. It would transmit 1,200 megawatts of Canadian hydro power into New England. Businesses and chambers are saying that the bills are changing the rules and process in creating public policy on energy projects in the State with only one project in mind. Issues include the power line’s high towers above the trees, lower property values, impacts on tourism, actual costs of project (estimate $1.2B), the State’s site evaluation review role, and jobs and revenues.
In-State Tuition for Undocumented Residents
NH House Education Committee has debated the issue of undocumented residents/students, and whether they should qualify for in-state tuition to the State’s public colleges. On one side, the argument is that the students are here, so we should allow them in-state tuition. On the other side, there is concern about the $14,000 discount for each of these students at a time of a budget crunch for higher education. 12 states now permit undocumented students, who meet certain criteria, to get in-state tuition at public colleges.
R&D Tax Credit
A bill to increase the cap on the R&D tax credit from $1M to $2M has unanimously passed the NH Senate and is now in the NH House. It increase would become effective in 2016 so as not to impact the State’s budget deficit now. Gov. Hassan would sign the bill if it reaches her desk.
NH’s Business Corporations Statutes
A voluminous bill in the NH Senate would overhaul and update the NH Corporations Act, which provides a guide for corporate governance for domestic corporations. It has a bi-partisan group of sponsors, with Senator Jeb Bradley in the lead. The bill is the result of a major initiative by the State’s top business lawyers and the BIA. There’s not room here to get into the weeds of the bill, but it covers issues like incorporation, powers of corporations, corporate name, shares and distributions, shareholder meetings, directors and officers, domestication and conversion, bylaws, etc.
Minimum Wage Hike
Two bills would hike NH’s minimum wage which is now $7.25 – the same as the federal minimum wage. One bill would set NH’s minimum at $9.25, and the other would set the minimum at $1 above the federal minimum, whatever it is. Opposition is strong in the business community. The House Labor Committee is scrutinizing both bills.
(Something to watch) — A bill to allow Keno gambling in NH may foreshadow the coming battle over casino gambling legislation.
NH State Government Revenues
January revenues took a dive, especially business tax revenues. The State now faces nearly a $50M shortfall.
It’s only a sign of where the revenue sentiment is in the Legislature, but a 10 cent increase in the beer tax was defeated in the NH House. It would have raised an estimated $4M.