News & Thought Leadership from Sulloway & Hollis

From the Dome – February 22, 2012 – An Update on Legislative Priorities Affecting Your Business

I. Constituational Amendment Round Up: Amendments Coming to a Ballot Near You?

The New Hampshire Legislature is currently considering three significant constitutional amendments which could change the State for decades to come should they muster the requisite 3/5s majorities in the Legislature and the blessing of two-thirds of New Hampshire’s voters at the polls in November of 2012. Not surprisingly, these three high-profile amendments concern taxes and education funding – two electoral hot button issues which perennially dominate political campaigns and legislative sessions.

Perhaps the most high-profile of the proposed amendments is CACR 12, which is directed at education funding. This amendment is the latest in a long-series of amendments proposed in recent memory by Republican leaders at the State House and Governor John Lynch, Democrat from Hopkinton. The impetus of an educational funding amendment is to reorder the state’s obligation to provide significant taxpayer dollars to schools. The current system that sends hundreds of millions of dollars to local communities for schools exists due to a string of New Hampshire Supreme Court decisions in the 1990s that generally are known as the Claremont decisions. The high court’s school funding decisions in essence found that the State of New Hampshire had an obligation pay for public schools by spending sufficient State funds so as to deliver an “adequate” education to all of the State’s students. Critics of the Claremont decisions have long criticized the Court’s interpretation and expressed preferences for a system that would allow the State to target state aid to communities with the greatest need.

Last Wednesday, the New Hampshire Senate voted 17 to 7 to advance an amendment that has the support of both the Senate leadership and Governor Lynch. This latest iteration of an education funding amendment would target school funding to needy communities while preserving language that the State has a “responsibility” for education funding. Sixteen Republicans and one Democrat voted for the amendment, while three Republicans and four Democrats voted “no.”

A similar amendment proposed by Gov. Lynch was voted down by the House in November, because it contained language House leaders do not like about the State having a “responsibility” to fund education. House leadership would prefer that the Legislature have complete discretion to decide levels of State funding, including no aid at all if that is what the Legislature thinks is best. Stay tuned to see how the Senate amendment fares when it goes to the House.

CACR 6 – The House-passed constitutional amendment which would require three-fifths vote of the Legislature to increase any taxes or fees met with an unexpected late-night fate in the State Senate on February 15th when the Senate overwhelmingly voted to scrap the House’s tax cap amendment and replace it with a state spending cap. The Senate language requires three-fifths majority of the Legislature to increase the state budget over inflation, as opposed to restricting the Legislature from raising taxes and fees without a supermajority vote. The Senate’s action did not meet with the approval of some in House leadership. One member said that the Senate’s decision to replace the tax limitation with a spending limitation could affect the House’s deliberations on the Senate’s education funding amendment.

The last of the three constitutional amendments pending before the Legislature this year, CACR 13, is one that would outright ban an income tax in New Hampshire. The amendment states very simply: “No new tax shall be levied upon a person’s income, from whatever source it is derived.” The political fall-out if such an amendment were to land on the ballot this fall is far from clear. Some commentators have noted that adoption of this amendment would actually hurt Republican politics because Republicans would be robbed of one of their most effective electoral “clubs” – that Democrats will always seek to impose an income tax once elected. Others believe having this amendment on the ballot would drive up Republican votes and lead to heavy Democratic losses considering the historic unpopularity of an income tax. Of note, according to the latest UNH Survey Center poll, a narrow plurality of New Hampshire residents would oppose a constitutional amendment banning an income tax. 41% of residents stated they would vote against it and 39% were in favor. 20% were remarkably undecided on an issue which has polarized politics in the state for many years.

Stay tuned to see where these amendments go and which, if any, pass the State House and ultimately end up on the ballot.

II. Do We Need “Certificates of Need”?

House Bill 1617 pending before the legislature would abolish the State’s Health Facilities Planning and Review Board, popularly known as the “Certificate of Need” Board. For over 20 years, the Board has reviewed all proposals for large new hospital construction, expansions, and the purchase of pricey medical equipment such as MRI machines. The rationale for having such a board is that it controls healthcare costs by making sure the healthcare marketplace doesn’t contain needless duplication in facilities and services.

Opponents of the Board believe that market forces should control and that healthcare spending on big ticket items like expensive machinery and new facilities should not be rationed by the State. Even supporters of the Board find fault with its current composition. The ten member, all-volunteer Board is dominated by representatives of the healthcare industry including its chair who owns ambulatory surgery centers. Representatives of the consuming public are under-represented in that the Board currently has vacancies for the three “consumer” members.

Representative Cindy Rosenwald, a Democrat of Nashua, and Neal Kurk, a conservative Weare Republican, are proposing amendments to not abolish the board and to rather change the membership and expand the healthcare facilities it reviews. The Rosenwald/Kurk amendment was approved in committee and will be on its way to the floor of the House for future action.

The debate over the fate of this Board is timely because concurrently the House Republican leadership is trying to steer through a Bill that would allow a new cancer care hospital to be exempt from the Board’s stringent requirements.

Two interesting twists to the debate: First, Nick Vailas, the chair of the Board and a former Commissioner of the New Hampshire Department of Health and Human Services, was the Certificate of Need Board’s biggest critic at the hearing to abolish it. Second, as AnnMarie Timmins of the Concord Monitor recently tweeted, Representative Kurk’s perspective is also interesting considering he tends to be more of a dyed-in-the-wool free market conservative; not the kind of legislator who typically embraces regulation.

III. RGGI Redux

Readers of these alerts will recall that one of the priorities of the Republican supermajority elected in 2010 was to withdraw New Hampshire from the Regional Green House Gas Initiative (RGGI), a multi-state coalition working to reduce carbon emissions by 10% by the year 2018. The House passed a bill in 2010 to immediately withdraw New Hampshire from RGGI. The Bill could not draw a veto-proof majority in the State Senate and therefore it did not become law.

A new bill was recently considered by the House Science, Technology and Energy Committee. The new bill would still withdraw New Hampshire from the program but not until January 1, 2015. Proponents of the bill to withdraw from RGGI believe that increased costs are passed along to consumers in high electric rates. They also believe that the market in carbon credits allows certain state businesses to inordinately profit. The opponents of withdrawal from RGGI believe that there are intrinsic benefits both for the environment, due to a decrease in emissions, as well as for the economy. RGGI’s fans turned out in force at last week’s hearing to make the case that RGGI has pumped $17 million into the local economy and created 458 jobs.

IV. “Gov. Watch”

Since the last installment of “Gov. Watch” we’ve seen quite a bit of action – or rather inaction, in the race to succeed Governor Lynch. First, Mark Connolly, Democrat of New Castle and former Securities Bureau Chief, took himself out of the running for Governor. Connolly stated that he believed he could be most effective at this time in advocating for consumer protection reforms by doing so in a bipartisan manner. Several days later, former Health and Human Services Commissioner and 2010 Republican gubernatorial nominee John A. Stephen also took himself out of the race. Mr. Stephen cited business and family concerns. Mr. Stephen, three time unsuccessful candidate for major office in New Hampshire, expressed a wish to grow his lucrative consulting business and spend time with his teenage daughters.

Perhaps the biggest name who remains undecided in the “shadow race” for either party’s nomination is Manchester Mayor Ted Gatsas. Mr. Gatsas, popular two-time Mayor and former Senate President, is headed to Aruba where he will give a run some thought. Recently Senator John Gallus of Berlin provided some very public encouragement to Mayor Gatsas, his former Senate colleague, by putting a Gatsas for Governor sticker on his SUV and visiting the Mayor in Manchester. The stickers contained the phrase “√G4G12”. The subtle bumper stickers are not so subtle when one realizes that the bold blue and yellow coloration and dramatic check mark are trademarks or Mr. Gatsas’ brand. In news reports, Mayor Gatsas stated he was humbled by Senator Gallus’ encouragement.