Week Twenty One- May 28, 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

No Agreement Yet On Budget

Conferees from the House and Senate who have been negotiating over HB 1128 and SB 450, the two budget bills, still had failed to reach agreement as of 10:00 a.m. this morning. The House is refusing to yield on gaming, while the Senate is objecting to cuts in services related to Health & Human Services (HHS) and to tax increases contained in the House’s version of the budget. The Senate conferees rejected the Electric Generation Tax and the Estate Tax contained in the House proposal, and it looks like the House recommendation to increase the Insurance Premium Tax to 2% also is going down in defeat. The biggest fireworks of the week came late on Wednesday night, when the House introduced an amendment on behalf of the Governor that would create yet another study of gaming. That prompted a visibly angry Senator Lou D’Allesandro to note, in very animated fashion, that studies of gaming have been done repeatedly over the years. He saw the proposed amendment as nothing more than an effort to once again avoid reaching a decision on gaming. The Senate conferees at that point asked for a recess until Thursday morning, and when the conferees reconvened on Thursday morning they were not able to reach any agreement prior to the noontime deadline for the final report to be agreed upon. Shortly before noon, Senate President Sylvia Larsen announced that she had “stopped the clock,” a parliamentary trick sometimes used to avoid real-time deadlines. And so the time in Concord is still, even now, 11: 59 a.m. on Thursday, May 27th.

Among the areas where it appears that the committee will reach agreement were $32 million in executive branch spending cuts (chiefly from HHS), about $65 million in state debt restructuring and bonding, and the sale or lease of enough state property to obtain at least $50 million.

Very late last night, Senator D’Allesandro presented a last-ditch gaming proposal, which would allow for the creation of two casinos and a total of 5,500 slot machines. The committee adjourned at around 11:00 p.m. to consider this new proposal. Deliberations reconvened at 10:00 a.m. this morning.

At this point it seems pretty clear that there will be no consensus on gambling, or on the taxes contained in the House package. Even with the inclusion of the “soft” sources of revenue such as the undefined state property sale, the package likely is still going to be tens of millions of dollars short in filling the $295 million hole that the House and Senate agreed Monday as being the amount of the State deficit.

Senate Bows To House On Reasonable Compensation Fix

On Wednesday afternoon, the conference committee on HB 1607 and SB 497 reached agreement on a final version of the reasonable compensation/LLC tax legislation. The final version that the conferees approved was the House version of HB 1607, which repeals the LLC tax. The final bill utilizes the Senate method of determining reasonable compensation, which calls for the State to employ Section 162(a) of the federal Internal Revenue Service codes along with the various court decisions and revenue rulings interpreting that provision. This will finally give DRA some concrete parameters under which they should treat this issue. One of the major topics of discussion during the long months that the House and Senate have been reviewing the reasonable compensation issue, has been the question of “safe harbors”. The final agreed-upon bill, however, does not include any safe harbors except for the $50,000 safe harbor per business entity, which was included in the original House version. At Governor Lynch’s insistence, the final bill provides that this safe harbor provision does not go into effect until June 1, 2011, so it will have no revenue impact on this current State budgetary biennium.

At the end of the day, we can say that this final bill is better than where we started at the beginning of the session, with regard to NH’s approach to reasonable compensation. However, it is a far cry from where we had hoped to end the session. We can thank the Senate for their strong support of our position on this issue throughout the entire session, but unfortunately cannot say the same about the House and the Governor, all of whom preferred to protect the state’s wallet than those of the thousands of business owners who get audited by the State Department of Revenue under these reasonable compensation rules.

Net Operating Loss Threshold Increase Dies

Perhaps the worst news of the week came from the conference committee on Senate Bill 383, the Net Operating Loss (NOL) increase that was initiated by our Chamber as our primary legislative goal for this session. Nashua’s own Senator Bette Lasky chaired this conference committee, which lasted over two days, and she did a tremendous job in advocating for the NOL increase. In the end, however, the conferees from the House Ways & Means Committee were unwilling to reinstate the NOL threshold increase that the House Ways & Means Committee had removed from the bill. Senator Lasky, along with fellow conferee Senator Bob Odell of Lempster, urged the House conferees to reconsider. Senator Lasky asked the House conferees the most important question of all: what kind of a signal does it send to small business in this state if we fail to pass this NOL bill? Despite her attempts, SB 383 will go back to the House and Senate on Wednesday sans any NOL reform.

We are extremely disappointed that the House Ways & Means Committee was so short-sighted in what it did on this bill. We couldn’t put it any better than Senator Lasky did. Small businesses in the Nashua region owe a debt of gratitude to Senator Lasky and to Senator Peggy Gilmour, who together worked extremely hard to get this bill passed. The one consolation we take from all this is that, when the Governor’s business tax study commission forms later this summer, Senators Lasky, Gilmour and Odell have already made it clear that they will be making sure that the NOL issue is front and center.

Happy Memorial Day

At this time of the year, it is our honor and privilege to salute all of the men and women from the Nashua Region who have served their country, and especially those who have paid the ultimate sacrifice in defense of our liberties.

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