It was a busy week in Concord for the Chamber and the months ahead look to be even busier as end of the session legislative deadlines are not far off. As mentioned above, with big issues like the budget deficit, gambling, and the LLC tax pending expect action at the State House to be fast and furious.
 
LLC Tax & Reasonable Compensation
 
"Shock and awe" perhaps best sums up the House Ways and Means public hearing on SB 497 earlier this week. Sponsors and business groups like the Chamber who support SB 497 were shocked and mystified by a new fiscal note created by the Department of Revenue Administration (DRA). DRA now contends the bill will cost the state $326 million in business profits tax (BPT) revenue and additional $12 million in interest and dividends tax revenue, which is an dramatic increase from past fiscal notes which pegged the total cost of the bill to be less $10 million or perhaps break even. Most shocking is the fact that New Hampshire collects $306 million total from the BPT annually, which means DRA projects SB 497 to cost more tax revenue than the tax collects in the first place. Confused yet? So are we.
 
DRA chalked up the change to taking a "fresh look" at bill's language. Needless to say, tax attorneys and experts supporting the bill disagree with DRA's methodology and conclusions about the fiscal impact of the bill. From the Chamber's perspective, dramatically increasing the fiscal impact of bill hours before the public hearing appears to be a tactic aimed at sinking the bill's chances at passage.
 
Moving forward the Chamber plans to continue the fight on this issue on two fronts - first, by continuing to advocate for a repeal of the LLC tax and second, by advocating for business tax reforms that will provide clear and definable rules that will end the excessive auditing practices of the DRA. Reforming of the state's antiquated reasonable compensation rules is the way to provide the business community with more clarity and certainty when paying business taxes. SB 497, HB 1607, and SB 450 all address one or both of these issues in various forms and will certainly be key targets for the Chamber for the rest of the session.
 
The Chamber's preference would be a passage of SB 497 as it deals with both the repeal of the LLC tax and reasonable compensation as part of one integrated solution that also modernizes business taxes and adopts federal tax standards, which in the end will provide businesses with the clarity and certainty they need and deserve when trying to pay their fair share of taxes.
 
Manchester Solar Project: 4 Hours of testimony and counting!
 
SB 334, the Manchester Solar Array bill, was heard in the House Science committee this week. Testimony dragged on for more than four hours and is slated to continue Tuesday morning. The Chamber didn't get a chance to weigh in during the initial hearing but plans to testify in support next week.
 
As a quick reminder, SB 334 allows Public Service of New Hampshire to retain up to $5 million in funds (paid by ratepayers) slated to go into the Renewable Portfolio Standard fund in order to facilitate the development of a massive solar array project on the capped landfill in Manchester in partnership with the City.
 
Manchester Mayor Ted Gatsas, a bipartisan group of state senators, and some renewable energy experts came forward to support the measure. Others in the renewable energy industry testified in opposition and criticized the bill for changing the RPS fund process too soon after the programs implementation.
 
The Chamber supports SB 334 as it makes an ideal project a reality and clearly is an effective and efficient use of RPS funds. Documents provided by the PUC at the hearing show that $6.1 million (both RPS and private dollars) have collectively been spent statewide on solar panel rooftop projects that generate only .81 megawatts of renewable energy. The Manchester Solar landfill project will generate at least 1 megawatt and will cost no more than $5 million of RPS funds. Manchester Mayor Ted Gatsas also correctly pointed out at the hearing that Manchester (which is home to 15% of PSNH's customer base) ratepayers are scheduled to pay $11.5 million into the RPS fund, yet are only asking for $5 million for this project. He stressed the inequity of Manchester paying a large share into the fund and not seeing an equal benefit.
 
The fact is New Hampshire has a long way to go to reach its obligation to produce 25% of its energy from renewable sources by 2025 (mandated by the RPS law). If the legislature is serious about meeting this obligation, it should not be saying no to proposals like SB 334. The public hearing on SB 334 is scheduled to continue on Tuesday and be followed by a committee work session.
 
The Pole Tax is back (again)
 
SB 492, which extends a tax exemption on poles and conduits, is headed to the House floor next week after the House Local and Regulated Revenues committee voted 15 to 4 to recommend the bill be killed. This issue has been debated in Concord for some 20 years and deals with a property tax exemption given to telecommunication companies for telephone poles and conduits.
 
The Chamber has supported past efforts to extend this exemption. Loss of the exemption would mean increased costs to residents and businesses everywhere and be akin to the enactment of a new tax. Despite easily passing the Senate, the House floor debate on this issue is sure to be contentious and a very close vote. Stay tuned for more information.