budget equations

Gambling on slot machines instead of two new taxes, the N.H. Senate Finance Committee last week completed its proposed two-year state budget, making significant changes to a House version. The full Senate will vote on the budget on Wednesday, June 3, after which a Committee of Conference will be formed between the House and Senate to hammer out compromises and get a final version to Gov. John Lynch. His power to veto the whole package because of parts he doesn’t like is already holding sway.

The Senate committee replaced revenue from the House’s proposed capital gains and estate taxes with $185 million the committee says the state could raise from gambling. That plan counts on turning the state’s three horse and dog tracks into “racinos” by adding slot machines, permitting two slots parlors to open in the North Country, and taxing the proceeds at 49 percent.

While the House had proposed increasing taxes on gambling winnings, it historically has shown strong resistance to increased gambling. House Finance Committee Chair Marjorie Smith (D-Durham) has said there’s no reason to believe this position will change now. Lynch, for his part, has said that he’s “skeptical” of expanded gambling, but he is not closed to the possibility.

One door Lynch did effectively shut last week, however, was on the so-called “gas tax.” Approved by the House with Senate support, Lynch stated last week that he would veto any budget that includes increased fees on gasoline. The Senate responded, instead basing road maintenance on Lynch’s plan to fund it with increased tolls and registration fees.

Other increases from both the House and Senate budgets apply to the rooms and meals and cigarette taxes.

More money would also come in from a two-year suspension of a businesses enterprise tax credit. This proposal is getting strong pushback from the business community, in particular from the Business and Industry Association, a legislative advocacy group representing more than 400 companies active in New Hampshire. The BIA believes suspending the tax credit would be “disastrous” for companies already struggling in the recession. The group has also expressed concern that it represents a first step toward permanently repealing the credit.

layoff warnings

While the Senate is voting on the budget June 3, the House will take its turn at Senate Bill 40, New Hampshire’s version of the federal WARN Act, sponsored by Sen. Betsi DeVries (D-Manchester). Requiring companies of 80 employees—rather than the current 100-emlpoyee threshold—to provide 60 days notice of impending plant closings or mass layoffs, SB 40 tightens existing regulations and allows the N.H. Department of Labor to assess civil penalties for non-compliance.

The majority of the House Labor, Industrial and Rehabilitative Services Committee supports the bill, which passed the Senate after much discussion. According to Rep. Sally Kelly (D-Chichester), SB 40 contains safeguards to protect employers making good-faith efforts to stay in business. On the other hand, she cites New Hampshire business closings in which employees received neither notice nor final paychecks, and some cases of employees discovering after their company had closed that their health insurance premium deductions had not been paid. “SB 40,” she writes simply, “protects employers and employees.”

Opponents, however, cite the 100-employee threshold maintained by all other New England states. Writing for the minority of the House committee, Rep. John Sedensky (R-Hampstead) said SB 40 would put New Hampshire at an economic disadvantage compared to our neighbors. “We should be passing legislation that lessens the regulatory burden on business, not legislation like SB 40 that gives business a reason to look elsewhere when they are looking for a place to move or expand,” he writes.

upgrades for renewable electricity

The House will also vote June 3 on Senate Bill 85, extending the life of a commission planning upgrades to the North Country electric grid. The new and improved grid would generate renewable energy in the north that could be transmitted to the rest of the state. The improvements would cost money but also provide for economic development in the long run, according to Rep. David Borden (D-New Castle), who wrote for the majority of the House Science, Technology & Energy Committee in support of the bill.

The committee did propose some changes to SB 85. A non-voting member from the Business and Industry Association was added to the commission’s personnel, and an exemption from a competitive bidding process was removed. The House committee also specified that the commission’s final report should include a detailed plan of action for accomplishing the upgrade goals.

A related bill that would have pre-empted the planning commission and gone straight to a 10-year, $155 million funding mechanism for North Country grid expansion stalled earlier in the Senate. SB 164, sponsored by Sen. John Gallus (R-Berlin), was laid on the table after getting no support from the Senate Energy, Environment & Economic Development Committee that studied it.

Front Door Politics is a weekly legislative update for everyone affected by New Hampshire laws. An online learning center, additional reporting, and a blog subscription are available at www.frontdoorpolitics.com.