In last week’s Bulletin we wrote about HB 1341, relative to increasing pension benefits for group II members of the New Hampshire Retirement System (NHRS).  As we explained, both the original version of the bill and a proposed amendment would increase benefits for those group II members who commenced service prior to July 1, 2011, but were not vested at that date.  That is the date when many retirement reform measures were enacted by the legislature in response to significant NHRS deficits.  Following last week’s hearing, we inquired further about the reasons supporters feel this bill is justified. 

One reason is that group II members hired before July 1, 2011, but not yet vested at that time (vesting occurs after 10 years of service) feel that pension benefits “promised” to them at the time of hire were taken away.  But employee benefits change all the time – whether by federal law, state law, collective bargaining, or local practice – and those changes can go in both directions, increasing or decreasing employee benefits.  The Family Medical Leave Act (FMLA) and workers compensation provisions are examples of benefit changes that have been favorable to employees.  Additionally, while the legislature in 2011 could legally have adjusted pension benefits for ALL active NHRS members, it chose to exempt members at least 10 years into their public service careers, recognizing that while not explicitly stated in law, “vesting” in the NHRS meant something.  

A more interesting justification for HB 1341 involves the use of sick leave by certain group II members.  As stated in public testimony by one supporter, HB 1341 restores the sick leave retention incentive that existed before 2011, when payouts of accrued sick leave were included in “earnable compensation” for determining a retiree’s pension amount. (This incentive was eliminated in 2011 to help curtail pension spiking that occurred in part when end-of-career termination payouts of annual leave, sick leave, and other accrued benefits increased pensions without sufficient employee and employer contributions to the system over time to pay for them.) 

As explained in testimony and in subsequent communications, certain group II employees are now burning through all their sick leave—that is, taking sick days when they are not actually sick—because there is no incentive to accumulate it. These workers have an arrangement in which the “sick” employee gets a fellow employee to fill in for him. The replacement employee gets overtime pay at time-and-a-half, which boosts his compensation used to calculate his pension, while the “sick” employee gets straight pay for pretending to be sick. 

We had heard about this kind of arrangement between employees—“I cover for you when you call in sick, then you cover for me when I call in sick”—but thought it was anecdotal and isolated.  However, based on public testimony, this practice is evidently so rampant that it is one of the main reasons for supporting HB 1341.  When we asked if this is misuse of sick leave, the answer was that people will be “greedy” if given the opportunity. 

We are a bit stunned at this public and unabashed admission of what is evidently a widespread practice among certain group II members, and the implication that employers will need to spend much more money for overtime coverage unless the sick leave retention incentive is restored by adding end-of-career payouts back into NHRS pension calculations. Perhaps what is really needed is legislation to investigate abuse of sick leave policies. 

As we noted in last week’s Bulletin, the fiscal impact of the original bill is $143 million, while the impact of the proposed amendment is unknown.  The Executive Departments and Administration Committee will be voting on HB 1341 at an executive session next Wednesday afternoon.  We will report next week on the committee’s recommendation. Please contact members of the committee before Wednesday and urge them to oppose HB 1341.

On Wednesday, February 5, at 11:00 a.m. in LOB Room 102,  the Senate Election Law and Municipal Affairs Committee will hear testimony on SB 667, an NHMA policy bill that would increase from $5 to $10 the maximum fee that a municipality may collect under RSA 261:153, VI. For those unfamiliar with that statute, it allows a municipality, by vote of the legislative body, to establish a transportation improvement fund “to fund, wholly or in part, improvements in the local or regional transportation system, including roads, bridges, bicycle and pedestrian facilities, parking and intermodal facilities and public transportation.” Money for the fund comes from an additional motor vehicle registration fee, established by the legislative body, not to exceed $5 per vehicle, which is the cap that was set 25 years ago when this optional fee was first enacted. 

These are local dollars raised for local projects approved by the local legislative body of each municipality that assesses the fee. Even assessment of the fee itself must first be approved by the legislative body, as would any increase in the fee proposed in this bill—a text-book example of local control!   SB 667 is the perfect opportunity to help supplement the financing of diverse modes of transportation without raising property taxes. 

Last year a similar bill, HB 409, passed the House and Senate but was vetoed by the Governor, despite   overwhelming support from a variety of constituencies, including city and town officials, regional planning commissions, regional transportation associations, and the New Hampshire Department of Environmental Services. 

Officials from municipalities that assess this local option fee, or others who are interested in doing so in the future, should contact members of the Senate Election Law and Municipal Affairs Committee and plan to attend the hearing on SB 667 to explain the transportation improvements and services being funded by this fee, and why a modest increase in the maximum amount of the fee is so important!

A small crowd also turned out to oppose HB 1661, the bill that would partially repeal the so-called pollution control exemption in RSA 72:12-a. NHMA supports the bill, which would deny the exemption to fossil fuel and nuclear power plants (although we would prefer to see the exemption repealed entirely). Support also came from several environmental groups, while opposition came from the energy industry. 

As NHMA explained, however, from our perspective the issue is not about fossil fuels, nuclear energy, or environmental policy. The issue is that RSA 72:12-a is the only state-mandated property exemption that is given to for-profit businesses merely for doing what the law already requires them to do. As we explained in last week's Bulletin, companies get the exemption for installing pollution control equipment, which they would be required to do anyway under state and federal law. Thus, the exemption does not affect anyone’s behavior; it is merely a giveaway at the expense of other property taxpayers. 

As usual, opponents made little effort to justify the exemption on pollution control grounds. Instead, they argued that energy companies rely on the exemption as a business matter. Taking it away would force them to charge higher rates and make them less competitive. The discussion at one point took an apocalyptic turn, with a committee member suggesting that “the modern world would be unsustainable” if HB 1661 is passed. 

Coincidentally, exactly a week earlier, the same committee had heard bills providing for expansion of net metering, which some legislators believe would amount to an intolerable “subsidy” for solar and hydro power companies. Presumably, a subsidy for coal and nuclear power—which is indisputably what RSA 72:12-a provides—is equally offensive, right? We’ll see. 

On the theory that the exemption is necessary for these businesses, why shouldn’t every business get a property tax exemption? Supermarkets, restaurants, and movie theaters could lower their prices and improve their financial statements if they got tax breaks just for following the law. Representatives from NextEra, which owns the Seabrook nuclear power plant and is the largest beneficiary of the exemption, explained that NextEra is a good corporate citizen that pays $17 million in property taxes and employs many workers—the suggestion being that if a business does enough good things for the community, it should be exempt from taxation beyond a certain point. 

If you believe the state should stop forcing local taxpayers to subsidize multi-billion-dollar companies, please encourage members of the Science, Technology & Energy Committee to vote Ought to Pass on HB 1661.

Thursday, January 30, 2020 

SB 410-FN, relative to the state minimum hourly rate. Passed. 

SB 451-FN, establishing an administrative hearing procedure and penalty for an employer who fails to make payment of wages or who fails to secure workers’ compensation coverage. Passed. 

SB 511, relative to the formula used to determine current use tax rates. Passed. 

SB 538, establishing a commission to study property tax exemptions for charitable organizations. Inexpedient to Legislate. 

SB 543-FN, relative to group II retirement system status for certain department of corrections officials. Passed; referred to F-S. 

SB 573, relative to criminal threats to school safety. Passed. 

SB 624-FN-L, establishing a school marshals program. Inexpedient to Legislate. 

SB 635-FN-A, establishing the lakes region development authority. Passed; referred to F-S. 

SB 638-FN, establishing the New Hampshire housing and conservation planning program. Passed; referred to F-S.