03/24/2006
Internet users had two opportunities to watch March Madness in real time last week. Sports lovers could watch NCAA basketball games live (and for free!) at www.ncaasports.com. And, political junkies could watch politicians in the House and listen to politicians in the Senate as they battled their way through lengthy crossover calendars at www.gencourt.state.nh.us. Crossover is the date by which House bills must either be killed or sent to the Senate and vice versa. The most contentious issues are often delayed until this key mid-session deadline. This year was no different. This article will highlight legislative activity of interest to the business community as of the crossover deadline.
New Hampshire legislators have considered a number of important issues in the 2006 session, including many bills of concern to the state's business community. Crossover is a good time to review the status of bills to gauge where the Legislature is headed, and what remains to be done to promote good ideas and prevent bad ones from coming to fruition. Here are the highlights:
Employment law
Several employment bills that caused concern for the business community were killed early this session, as hoped. Among them were an effort to require the passage of at least 10 hours between shifts for any employee, whether hourly or salaried, and a mandate that large employers either spend a certain percentage of total wages on health insurance costs or make payments into a state "Fair Share Health Care Fund," which would be used to subsidize the state's Medicaid program.
One troubling employment bill remained alive right up until the crossover deadline, however, despite widespread opposition from health-care providers, farmers, restaurant owners, retailers and others. HB 1138 sought to double the minimum pay for employees called in to work, increasing it from two hours' pay to four hours. HB 1138 would have continued existing exemptions for employers who make a good-faith effort to notify an employee not to report to work and for county and municipal employers, and would have created new exemptions for hours added before or after an employee's regular shift, as well as for on-call employees who are paid an on-call stipend. Under the bill as originally drafted, an employee could volunteer to work and be paid for fewer than four hours; however, each instance of voluntary acceptance of fewer hours would have to be reported to the Labor commissioner within 72 hours.
Businesses of all kinds appeared at the hearing to oppose HB 1138, particularly industries that deliver services one-to-one, such as home health-care providers and industries that are weather dependent such as ski areas or farmers.
Ultimately, two amendments to HB 1138 were taken up on the House floor just before 9 p.m. on crossover day. Both amendments split the difference, so to speak, on the minimum-pay requirement, increasing it from two hours to three, rather than four. A proposed floor amendment would also have created new exemptions in the bill, including an exemption intended to alleviate concerns raised by health-care providers.
HB 1138 ultimately suffered the same fate as the other employment bills. It was killed in the House by a vote of 242-24.
Despite these successes, the business community should remain watchful. The efforts to increase mandates and restrictions on businesses are often well intentioned, though problematic, and they seem to be gaining more ground in the last year or two than they did in the past.
Health Insurance
Any businessperson will tell you that one of the biggest challenges faced by his or her company is the cost to provide health insurance to employees. Legislative efforts to stem the growth in insurance premiums have failed, in part because of flip-flopping from year to year before any particular idea can take hold.
At the same time legislators attempt to control the cost of health insurance through systemic changes aimed at increasing competition, or creating a more fair rate-setting structure, they are often faced with emotional pleas to extend insurance benefits to new treatments or beneficiaries. And, of course, these extensions of benefits often cost money and increase premiums.
This year, five such mandates have been under consideration. One, a bill that mandates coverage for services provided by certified midwives, has become law. Two others, one to require coverage of costs associated with antigen testing for bone marrow transplants and another to require extension of family plan coverage to all unmarried, financially dependent children under age 24 who live with the policy holder or are full- or part-time students, survived crossover and have moved from the House over to the Senate. The last two, one to require coverage for children's early intervention therapy services and another to provide coverage for hearing evaluation and devices, are being studied by the Insurance Department.
Immigration
The Senate this week passed a bill that seeks to address illegal immigration by imposing stricter mandates on all employers, and stricter penalties on those employers who hire illegal immigrants. SB 407 passed the Senate on a party line vote of 16-8. It requires all employers to file a statement with the Labor Department declaring whether or not aliens are employed, and to retain documentation to demonstrate compliance with existing employee protection laws. The bill also makes employers responsible for compliance with the new law by contractors and subcontractors with respect to persons employed directly or indirectly on premises that they own, manage or control. With respect to enforcement, SB 407 allows surprise inspections of businesses by state officials, and authorizes penalties of up to $2,500 per day for employers who have hired illegal immigrants.
SB 407 may face a tougher challenge in the House, which has passed a bill to create a study committee on immigration issues, but killed several bills with specific proposals to address the problem. For example, the House killed a bill that would have required employers to review and verify the validity of employee documentation, to pay medical costs and the cost of transportation to the country of origin for an illegal immigrant employed and then injured on the job, and to pay civil penalties of $500 to $5,000 for violations of the law related to employment of immigrants. The House also killed two bills that would have prohibited employers and social service agencies from providing services to illegal immigrants, one of which would have imposed criminal penalties for such support.
Immigration is emerging as a key campaign issue for the upcoming elections, both state and federal. Since many proposals seek to resolve this problem by controlling and punishing employers rather than illegal immigrants themselves, this will be a key business issue going forward.
Taxes
The Legislature has taken action on a number of tax measures this session, most of the time to the benefit of the business community.
A proposal to establish a $1 per ton tax on trash, with half of the revenues going to the Department of Environmental Services and the other half going to non-profit organizations to assist cities and towns with recycling efforts, was referred for interim study in the House. The bill had passed the House previously by a vote of 176-168, but after review of the financial impact by the House Ways and Means Committee, the House opted to study the issue further by a vote of 175-94. The issue may be studied during the summer and fall but, due to elections and the beginning of a new biennium in January, a new bill will be needed to continue formal action on this proposal. This proposal, if pursued next year, could prove costly to businesses, cities and towns, and ultimately to consumers and local property taxpayers.
A proposal to eliminate the 3 percent share of the state's rooms and meals tax that restaurants, hotels, and car rental firms may retain as compensation for costs associated with collecting and accounting for the tax was killed in the House by a vote of 231-53. This vote was crucial to the state's economy, which relies heavily on hospitality and tourism revenues.
A proposal to reduce the insurance-premium tax from 2 percent to 1 percent passed the House for the second time on crossover, this time by a strong margin of nearly a hundred votes. The House Ways and Means Committee amended the bill so that the reduction will occur in four phases, reaching the 1 percent target as of Jan. 1, 2011. The phase-in approach was taken to avoid an abrupt and significant negative impact on state revenues while achieving the goal of retaining existing domestic insurance companies and attracting new insurance companies to domesticate in New Hampshire. This bill is considered an investment in the state's economy and the hope is that it will lead to the creation of jobs, particularly well-paying jobs that require a high level of education.
The Senate adopted a bill to reinstate the business research and development tax credit by voice vote on crossover. Under SB 380, a company may take a credit of 15 percent of qualified research and development expenditures against its business profits or business enterprise tax. The bill does contain certain caps on the tax credit including a $1 million aggregate cap in any fiscal year and a company-specific cap of $100,000 or 5 percent of its tax obligation, whichever is lower. Enacting this bill was a top priority for many business groups, as it is viewed as a means to support manufacturing, telecommunications, biotechnology and similar industries. The bill will now cross over for consideration in the House.
The House killed a proposed tax on beverage manufacturers of 2 cents per container for containers up to one gallon, and 5 cents per container for containers over one gallon. Although it was called a fee in the bill, it was essentially a tax, with revenues allocated for such purposes as funding the land and community heritage investment program, dam management, water supply protection programs and maintenance of in-stream flows. A House committee voted overwhelmingly to recommend further study of the issue, but House members rejected that recommendation by a vote of 207-119 and ultimately killed the bill outright.
The one downside on the tax front this year is a proposed tax on tobacco manufacturers. Unlike the existing tobacco tax, which, according to state law, is a direct tax on the consumer at retail, the newly proposed tax would be specifically levied on manufacturers whose products are sold in the state. The tax would be imposed at a rate of $0.415 per pack beginning Jan. 1, 2008, and the rate would automatically increase each Jan. 1 by 3 percent or by the consumer price index inflation factor for the preceding year, whichever is greater. A Senate committee voted 5 to 3 to support this tax; however, it was laid on the table on crossover and now will require a two-thirds vote in the Senate for further consideration. This bill, combined with the proposed tax on beverage manufacturers, is cause for concern, since the state has not directly taxed manufacturers in many years.
