From the Dome – May 14, 2013 – Dealer Bill of Rights, Gaming, Gas Tax More

An Article in the From the Dome Series for the Greater Concord Chamber of Commerce. Originally published May 14, 2013.

By: Martin P. Honigberg and Jay Surdukowski

It’s mid-May and the State House is bustling with activity as the session’s close draws near. This alert focuses on the debate over SB 126 which would make changes to the “Dealer Bill of Rights,” the latest on the gaming and gas tax debates, and the newest installment of G & C Watch which focuses on developments in the corner office and the Executive Council.

I. SB 126 – Dealers and Manufacturers Square Off

If you read local papers, you probably have not missed the full-page ads taken out by manufacturers seeking to defeat SB 126 – amendments to the New Hampshire “Dealer Bill of Rights” (RSA 357-C) which passed the State Senate on a 21-2 vote (the vote would have even been one vote higher because Senator Andrew Hosmer, who works for AutoServ and whose wife is head of the New Hampshire Auto Dealers Association, recused himself).

In a nutshell, the bill seeks to refashion the relationship between manufacturers and dealers of cars and other products such as lawn tractors and construction and farm equipment. Currently, automobiles and equipment, like any other national “brand” product (think Chevrolet or John Deere), are sold by local dealers who typically have franchises from national and international manufacturers. The big-time manufacturers – such as Ford, Volkswagen, and GM – retain a high degree of control and oversight over how a car dealer may sell their product. For example, in order to convey a certain image, a manufacturer may require a local dealer to rebuild its showrooms frequently to keep up with latest image decisions and to use only dealer-specified vendors for such makeovers (this is why you often see showrooms under construction). Among other things, SB 126 would allow local dealers to choose their own vendors for required upgrades to their facilities. The bill would also give dealers access to corporate records about how they are performing in comparison to other dealers in the region. Such information is currently proprietary. The bill would also give dealers market-based reimbursement for warranty work done by local dealers, and, more local control over significant capital renovations.

The bill has its origin in the aftershocks of the 2009 Auto Bailout in which two of the “Big Three” automakers received significant bailout assistance from the federal government. One of the government’s requirements for participation in the bailout was that the manufacturers had to consolidate their dealer networks, ending some longstanding relationships with local dealers. Many dealerships who lost their franchises complained that they were not given much of an explanation for some of the decisions that were made. Among the dealerships affected were Rochester’s Ron Poulin, who lost his Chevy franchise; and locally, Chrysler dropped Carlson’s – a Chrysler franchisee and fixture of the Concord Community for generations.

Proponents of SB 126 say the bill prevents such revocations of franchises without explanation, and otherwise gives local dealers more control over how they do business and with whom. Dealers state that the hundreds of thousands and even millions they must spend in upgrades do not stay in the local economy because they must use exclusive vendors designated by the dealers, even though the goods may be half as expensive from a local supplier. The state and national Auto Dealers Associations are the most vocal proponents of the bill.

Opponents of the bill, on the other hand, say that it is an unprecedented overreach into private business transactions and that auto dealers will pocket greater profits as opposed to passing along savings to local consumers. Opponents are also concerned that the legislation upends “balanced and strict” franchise agreements which “ensure both parties can be counted on to fulfill corporate commitments,” as Stephen DeMaura of Americans for Job Security wrote in an op-ed published in Foster’s Daily Democrat. DeMaura also believes costs for consumers will be driven up by litigation that will ensue if the new law goes into effect. Equipment manufacturers, for their part, are rather alarmed to be brought under the bill which arose from an issue involving automobiles, not lawn mowers or other non-automotive equipment. Americans for Job Security, Americans for Prosperity, the Josiah Bartlett Center, and the Alliance of Auto Manufacturers are the most vocal opponents of SB 126.

Why has the debate attracted so much attention? One reason is that auto dealers are some of the most prominent corporate citizens in the state and are calling in a lot of political “chits” in this debate. In addition, newspapers such as Foster’s,the Portsmouth Herald,and the Union Leader have editorialized in favor of SB 126 while also running large ads and detailed op-eds submitted by opponents. The opponents are just as passionate, and this debate is a rare one where interests of business people have diverged and support or opposition eludes easy party-line characterization.

The bill is up today, Tuesday, May 14th in the House Commerce and Consumer Affairs Committee at 10:30 AM where it will be “exec’ed” – which is legislative parlance for an “executive session” to consider a bill and any possible amendments, and to make a recommendation about whether the bill, in one form or another, should become law. All indications are that the dealers hold the upper hand headed into the House Committee. Regardless of what the committee decides, however, expect the debate to continue in the press and then on the floor when the full House takes up the measure in the next few weeks. Stay tuned to see how this one shakes out.

II. The Stakes Rise in Gambling Debate

rockingham

The latest design for a proposed “high-end” casino in Salem. (Source: Union Leader.com)
The House Super Committee made up of both the Ways and Means and Finance Committees is hard at work on preparing amendments to the Senate’s gaming bill. Last Thursday, the heads of various subcommittees reported out their findings and previewed likely subjects for amendments which are due today for final committee votes tomorrow afternoon. At the time of this writing, sources believe the vote for a favorable recommendation on the casino bill is split almost evenly with about 5 members undecided on the Super Committee. The meeting was a pretty dramatic sight with many prominent politicians sitting on the panel including long-time area representatives Mary Jane Wallner, D-Concord, the chair of House Finance, and Neal Kurk, R-Weare, a long-time Republican leader of the Finance Committee and the only Republican to get a nod as a gaming subcommittee chair. Forty-five representatives crammed around a too-small table and a sea of orange badged lobbyists and other lawmakers and citizens watched the proceedings like hawks for hours. Prominent gambling revenue supporters in attendance included union representatives; Rockingham Park’s General Manager Ed Callahan; and Senator Lou D’Alessandro of Manchester, the bill’s prime sponsor and gaming’s historic champion in recent years. Prominent opponents in attendance included Hancock civic activist Lew Feldstein, Senator Martha Fuller Clark, D-Portsmouth, and Fmr. Democratic Senator Harold Janeway of Webster; all three are leaders of Casino Free New Hampshire. Perhaps as a signal of the true “anything could happen” nature of the debate, the Speaker of the House herself, Terie Norelli, D-Portsmouth, sat in an inconspicuous and barely visible seat in the corner near the committee staff room where she could eye the proceedings for herself in semi-anonymity. The Majority Leader, Steve Shurtleff of Concord, who is undecided on the bill, was also in attendance and listening closely.Perhaps not coincidentally, the night before the Super Committee’s meeting, Millennium Gaming unveiled a new design for its proposed facility at Rockingham Park, should it be the wining bidder under the Senate Bill. Two hundred fifty people packed the room to hear more about Millennium’s proposal. The new plan ups the cost for the new building and hotel from $450 million to $600 million. The design unveiled was described as more “elegant” than the last one. Millennium spokespeople stated that they were seeking a casino with refined elegance instead of crass opulence. Indeed, the much-publicized photo unveiled shows a Great Gatsby-like scene of people in evening clothes trotting along the walk and fine German luxury cars pulling up to the front door. To top off the nostalgic play for the hearts of voters, Millennium representatives once again promised a return of horse racing to Rockingham Park should they be successful. Some supporters of gaming would like to see a return of the “Mad Men” era chic of the 1960s horse races that used to go down at “The Rock.”Will this latest push by Millennium pay off? The outfit clearly is trying to show what “high end” could mean in the phrase “high-end, highly regulated casino” as Governor Hassan has stated repeatedly. But will the historically casino-hostile House be moved? Depending on who you talk to, the vote is excruciatingly close or not close at all. Go figure. We should know soon enough with a vote scheduled for the next few weeks…

III. Gas Tax Riding on a Broken Axle in Senate

The Gas Tax limped through a hearing of the Senate Ways and Means Committee last week, with casino politics spilling over into the debate in a very public way. Recall The House passed a 12 cent increase to the gasoline and diesel taxes which have not been adjusted in more than twenty years. Advocates say the revenue is badly needed for roads and bridges in disrepair across the state. Among other things, the bill would raise by 51% the amount of money sent to local communities for such projects.Opponents of the gas tax say raising it is wrong for business and even more wrong if a steady stream of gambling revenue can be relied upon instead. Senator Chuck Morse, R-Salem, co-leading the charge for casino gaming, has sent a strong signal to the House by saying repeatedly the gas tax hike is “dead on arrival” in the upper chamber. Several House members who testified said that they, too, support casino gaming. The Concord Monitor reported that Representative Kevin Waterhouse, R-Windham, testified that he wants to see a casino “right on 93” but that “we need to make sure there will be funding no matter what happens in the House.” Representative David Campbell, D-Nashua, the gas tax bill sponsor, is also an avowed proponent of both the gaming and gas revenue measures.With each chamber championing a near and dear project that is literally decades in the making, could the House and Senate be headed for a “grand bargain,” trading slots for a more modest increase in the gas tax? Stay tuned to see if that is the way the political winds will blow. As we’ve observed before, funny things can happen at the end of a session.

IV. G & C Watch

Governor Hassan continues to use the bully pulpit of her office to call for casino gambling as a means of raising badly-needed revenue. She recently spoke to a large crowd of non-profit leaders in Concord stating that “a high-end casino would bring a significant economic boost, creating more than an estimated 2,000 jobs during construction and 1,000 long-term jobs, while attracting new businesses and economic development.” This economic aspect caught the attention of Concord’s Executive Councilor Colin Van Ostern, a businessman who campaigned on job creation. Van Ostern re-tweeted a Concord Monitor dispatch from the Millennium forum: “Enough to sit up & take notice” when the news of 2,000 construction jobs and 1,300 permanent full-time jobs was touted. We will have to wait and see how the amendments go for the casino bill, but at least several Representatives believe the Executive Council should have some roll in awarding any winning bid for a casino. Councilor Van Ostern and his four colleagues may be taking a lot more notice if vetting casino bids ends up being part of their job description.

In other governor and council news, Governor Hassan has carried on a tradition started by Governor Shaheen of naming a commission to vet potential judicial nominations. Concord residents will have a big say in the selection of state judges with both co-chairs from Concord – Emily Rice of the Bernstein Shur law firm and Jim Rosenberg of Shaheen & Gordon. Mike Lewis, a young associate at Rath, Young & Pignatelli, is another Concord resident who will sit on the panel that spends many hours sifting through applications and sometimes spends days interviewing potential nominees for the governor to consider.

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This article was initially prepared for the Greater Concord Chamber of Commerce “From the Dome” series.www.concordnhchamber.com