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The Chamber's legislative priorities affecting your business
This legislative update, written on behalf of the Chamber's Government Affairs Committee, is designed to keep Chamber members posted on legislation affecting your business, your employees, and your quality of life. If you have any questions, please contact the Chamber at (603) 224-2508.
February 2, 2017
With the inauguration of Chris Sununu as New Hampshire's governor, it is the first time in 12 years that a Republican has been in the corner office. The Senate and the House both remain Republican and have elected the same leadership for this biennium. All of our elected officials are now firmly ensconced in Concord, and at least a third of the legislature is new.
Here's a recap of the bills that we think Greater Concord Chamber members will want to know more about.
There are a number of bills that have been introduced relating to the methods towns used to value utility property. High utility prices, water, gas, and electric, are all on members' minds.
The House Science Committee listened to three hours of testimony on a bill, HB 324, which would bring uniformity and predictability to municipal utility property taxes. Local property taxes imposed on utilities are ultimately paid by the utility customers (you!) dollar-for-dollar. As utility assessing is particularly specialized, whether it's water, gas, electric or telephone, it is important to have one standard for assessing these properties. Towns are currently assessing utility property using their own method, which may be completely different and inconsistent with other towns' assessing methods. Utility infrastructure is spread over multiple towns across the state, and works as a whole, not as individual units. One town may be assessing the same property 300 percent above another town. So what happens? Each town's property taxes go into the utility rate base and are passed through to the customer. Town A residents (ratepayers) may be actually paying for Town B's higher taxes...cost shifting by the towns to other towns' ratepayers.
The towns are actually raising the residents' property taxes but through the back door. Instead of telling townspeople that they are raising their taxes, the town just raises the utility property tax which is passed through to customers, who are the same townspeople. We think our utility rates are going up when in fact, it's our property taxes going up. A truly hidden tax.
It gets worse! Many towns have increased utility valuations without real justification. The utilities have had no choice but to litigate these increased valuations. Who is paying for this litigation? The ratepayer and the taxpayer, one in the same. All of the expenses from litigation go into the rate base. All of the expenses from town litigation go into your tax base. You the taxpayer/ratepayer are paying for both sides of the litigation and expert witnesses.
HB 324 proposed to have the Department of Revenue Administration (DRA) do the utility assessments on a uniform state basis and apportion the taxes collected to the town depending on their utility property. DRA, by law, assesses utility property now for the statewide utility property tax. Over a third of the towns now use the DRA valuation. Uniformity would not only benefit the utility customers with lower rates, it would also benefit the taxpayer with undue litigation expenses.
The objective in HB 324 is transparency in municipal taxation; lowering utility costs for businesses and residents by ensuring that all municipalities value utility property consistently and fairly, and that no town is able to shift its tax burden to other towns by exponentially hiking the tax it imposes on utility property.
The system is broken, and we're hoping the Legislature will fix it.
On February 8, 2017 the NH House Science, Technology and Energy committee decided to retain HB 324 for further study.
HB 254 rebalances the composition of the State Assessing Standards Board (ASB) by adding public members who specifically represent residential, business, and utility taxpayers.
The issue behind this bill is the same as above: how municipalities assess utility property with direct impact on utility property taxes and utility rates.
In the past several years, it's become apparent that in a number of municipalities, the assessments on utility property have been increasing exponentially. At least one utility has seen an increase in its property taxes by almost 80% since 2011. In addition, valuations from town to town for similar types of property are varying wildly. This means that many of the municipal valuations are at odds with the valuations done by the DRA, which values utility property as a whole system for purposes of the statewide utility property tax.
Hundreds of abatement cases have been filed by the utilities to challenge the town assessments. The ratepayers/taxpayers end up footing the bill for both sides in the abatement cases. It is in everyone's best interest, therefore, that the valuation system be objectively uniform and reliable so that the number of utility property tax abatement cases can be reduced or eliminated. It appears that some assessors are going to municipalities and making a pitch that additional revenue can be brought in from the property tax on utilities. One assessor suggested to a town that the assessment on all utility property could be increased by 300% - and that is just what happened. You can just imagine how your utility rates would increase if every town decided to do this.
The solution to the problem seems obvious: Use a statewide valuation formula that is developed by a neutral and reliable third-party DRA. This would ensure that a 50-foot electric pole in one town is valued the same as an identical 50-foot electric pole in the next town over, and taxpayers would not have to foot the bills for the assessors hired by each town or the lawyers on both sides of the abatement cases.
Back to the Assessing Standards Board. The ASB is set up by statute to provide assessing standards and rules. As it currently stands, the ASB is a strong voice for assessors and municipalities but a very weak voice for the residential, commercial, and utility taxpayers. Since there could be occasions when the perspectives of the assessors are not necessarily aligned with the interests of the taxpayers, it makes sense that the ASB should have an appropriate balance in order to insure that the advice being rendered by the ASB is balanced. This country was founded on taxation with representation. We need to go back to that same principle in the Assessing Standards Board makeup. All voices, including taxpayers, should be heard in creating taxing policy.
On March 8, 2017, the bill was voted Inexpedient to Legislate during regular session.
For those of you who have been around the Chamber for quite a while, you may recall that in 2003 the N.H. business community, through many of the state's chambers, wholeheartedly endorsed the passage of legislation creating economic revitalization zones. They have a single, continuous boundary that is an unused or underutilized industrial park; vacant land or structures previously used for industrial, commercial, or retail purposes but not currently so used, due to demolition, age, obsolescence, deterioration, brownfields, relocation of the former occupant's operations, or cessation of operation resulting from unfavorable economic conditions, either generally or in a specific economic sector.
The commissioner of resources and economic development, only upon petition by the town, designates the zones. The businesses locating in these zones can utilize tax credits against the BPT and/or the BET. However, the credits are currently capped: a maximum in aggregate of $825,000 in any year, and a maximum of $40,000 per business in any year.
These economic development revitalization zones have been successfully used as a tool for recruiting new businesses to come to New Hampshire. The success of the program has necessitated SB 74, which would increase the level of the caps on the amounts of the credits that are available for businesses in economic revitalization zones from $825,000 to $3,000,000 per year and an increase from $40,000 to $50,000 per individual taxpayer.
As Chris Way of DRED told the Senate Ways and Means Committee at the hearing, there are far more businesses that could employ these credits than what is possible under the restraints of the current law. If the maximum had been at the proposed rate from 2010 to today, over $1.1 million in additional credits could have been awarded. And even more telling numbers - companies awarded credits in the past three years used these credits to invest the following back into our communities: $2,937,399 (2013), $25,467,595 (2014), and $15,744,792 in 2015.
Given the fact that DRED has very few incentives to roll out to prospective businesses, and given the proven success of these zones, it would be wise to enhance DRED's ability to market the availability of the credits. We are hoping SB 74 has a positive vote out of the Senate Ways and Means committee shortly.
As of June 15, 2017 a Conference Committee Report has not been filed.
The New Hampshire house unanimously voted last week to name the old Concord Hospital on Pillsbury Street, which now houses the Department of Historical Resources, for a baby born in the hospital some 70 years ago...the late Van McLeod, former Commissioner of the Division of Cultural Resources. Van served as Commissioner for 24 years, and his name is synonymous with arts, film, and culture in New Hampshire. Van was an early and tremendous supporter of Concord's creative economy initiative. There could be no more fitting tribute than to name a historic Concord building in his honor. We hope the New Hampshire Senate will also see fit to honor a dear friend of Concord, the arts, and business.
On March 23, 2017, the senate unanimously voted to pass the bill and it is currently being enrolled.
This legislative update was provided by Teresa Rosenberger, president of Devine Strategies, on behalf of the Chamber's Government Affairs Committee.