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|Op-ed: What the BIA Would Like to See From the Legislature|
|Published Friday, March 24, 2017|
There is a lot to like about Governor Sununu’s proposed $12.1 billion budget, particularly his goal to create a fiscal and regulatory environment that promises greater job growth, job retention, workforce development and economic opportunity for all. The governor’s budget preserves the modest reductions in business profits tax (BPT) and business enterprise tax (BET) established in the last budget (BPT dropping from 8.5 percent to 7.9 percent and BET dropping from .75 percent to .675 percent phased in over the two years of the biennium). His budget is also balanced without a sales or income tax and without any new fees. This is all very good. Nevertheless, BIA has some recommendations to make it even better.
New Hampshire’s business tax rates will remain among the highest in the country even after the modest reductions noted above. And while New Hampshire was working to lower its business taxes, so were many states around the country. Our rates need to go lower. BIA is aware of several bills circulating at the State House to enact further business tax reductions and we support them. As NH’s economic engine continues to build steam—and with consumer confidence in our state and national economies very high – the time is right for continued reductions in business taxes.
We’re also asking House and Senate budget writers to remove the $7 million cap on the research and development tax credit. Since 2008, when BIA led efforts to reinstate NH’s R&D tax credit, an overall cap has been written into the law limiting the total dollar amount the state will distribute in credits. Not only does this result in smaller tax credits than companies are eligible for, but it also delays receiving the credits for a year or more while the Department of Revenue Administration totals all R&D credit requests up to the $7 million cap, then distributes them on a pro-rata basis. Eliminating the cap will provide immediate tax relief at a predictable rate and send the message that New Hampshire encourages innovation. Removing the cap will result in new product innovations and prototypes, technological advances, more high-margin manufacturing, and most importantly, high-paying jobs in the state’s manufacturing and technology sectors.
BIA is also encouraging House and Senate budget writers to adequately fund Medicaid reimbursements to healthcare providers. For far too long, the state has reimbursed hospitals and other care providers at rates far less than cost (50 cents or less on the dollar). When healthcare providers are not sufficiently reimbursed for the costs they incur providing Medicaid services, a “cost-shift” to businesses occurs, driving up health insurance prices. Providing higher Medicaid reimbursements to providers will put downward pressure health insurance premiums paid by businesses and employees alike.
Governor Sununu’s proposed budget provides a much needed boost to the Community College System, increasing their appropriation by $6 million over the biennium. Even so, the increase is less than what was requested. It allows the Community College System to meet salary and benefit increases agreed to by collective bargaining, but comes up short of enabling the System to fully implement new STEM initiatives and avoid tuition increases. The governor’s budget plan was less kind to the University System leaving its funding essentially flat. Absent the increase the University System requested, freezing in-state tuition and developing the kind of graduates required for 21 century occupations may be in jeopardy.
There are still several months and numerous budget iterations to go before the FY18/19 budget is signed into law. Between now and then revenue projections may change. Spending priorities may change. What will not change is the need for a state budget that reinforces BIA’s mission: to promote a healthy climate for job creation and a strong New Hampshire economy.
Linda Fanaras is president of Millennium Integrated Marketing in Manchester and chair-elect of the board of the Business & Industry Association, NH’s statewide chamber of commerce. The Business and Industry Association represents more than 400 members in a variety of industries, including advanced manufacturing, high technology, professional services, financial services, health care, hospitality and tourism, public utilities, higher education and insurance. Member firms employ 86,000 people throughout the state, which represents one in eight jobs, and contribute $4.5 billion annually to the state’s economy. Through advocacy with state legislators and regulators, the BIA works to promote a healthy business climate and robust economic future for NH.
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