Labor of Love

Before they were cut loose to swarm Capitol Hill, participants brushed up on the issues at a briefing led by Melchi. While many of the organization’s objectives carried over from previous years — including the preservation of the LIFO (last-in, first-out) method of accounting, repeal of the estate tax and institution of a nationwide online sales tax — some goals were new and pressing, including the recent U.S. Department of Labor (DOL) overtime rule.

“DOL updated the annual salary threshold [last month],” Melchi said. “Currently, the minimum amount you can pay a salaried employee is $24,000; the DOL proposed to take that to $50,000. They came all the way down to $47,000 last week.”

The overtime rule, if left in place, would have detrimental effects on many small-business owners, Melchi said. “The change to the overtime rule is set to take effect Dec. 1 and would include automatic increases each year. For our industry, if you think about our manufacturer partners and the training they provide and the events you attend, guess what? They’re traveling, and that counts as [being] on the clock, so that cost has just risen. That’s a problem, and it’s going to limit opportunities for a lot of people.”

The rule was so controversial that it received more than 100,000 comments during the rulemaking process.

“We commented that $24,000 was too low, but this was a big jump,” Melchi said. “This is going to impact a ton of people. This is a big deal. I think, on Dec. 1, when this goes into effect, it’s going to have more of an impact than anything we’ve seen from the DOL in some time. And even if it doesn’t impact your company, it likely impacts an organization you belong to.”

HARDI CEO Talbot Gee said finding a compromise to the overtime rule is a priority. “We need to get those lessened, relieved, extended or something because we’re not even sure exactly how serious those negative ramifications are going to be.”

Geothermal Tax Credit

Lauren Schapker, government affairs director, National Ground Water Association, spoke during the briefing to help promote the 30 percent federal tax credit for residential geothermal heating and cooling installations, which is set to expire at the end of the year.

“It first went into place in 2005,” Schapker said. “It was originally supposed to expire in 2008, but with the Great Recession and the housing market collapse, we were able to secure an eight-year extension through Dec. 31 of this year. We were all in agreement we need to extend this tax credit for five years. Then, in late December [2015], we thought we got into the final omnibus spending package, but it turns out only solar got in, and the rest of us were left out. We are trying to see the silver lining in that. We’ve heard it was a mistake — we’ve heard from key leaders who said they forgot to write it in.”

Another attempt to renew the tax credit this year failed, putting those in the geothermal industry back at square one. “But now in the House we have an important piece of legislation, and that is the HR 5167: Technologies for Energy Security Act. It was introduced May 23 by a Republican Ways and Means Committee member.”

Melchi said HARDI and other industry organizations will have to work extra hard to try to get some certainty on the tax credit. “A full five-year extension would be fantastic, and some Republicans might tell you we don’t like investing and we want the market to decide, but I say, how many years have other energy sources been getting tax breaks in this town? So this is a benefit all around and something that we should be allowed to explore, and it’s really not a high cost of doing business.”

Regional Standards Fix

Another major issue members brought up to legislators during the fly-in was the end of the regional standards sell-through period, which may result in stranded inventory for some distributors and wholesalers in the South and Southwest.

“On July 1 of this year, you’re no longer allowed to install 13-SEER units in the South, and if you have 13-SEER equipment in your inventory, you are out of luck,” Melchi said. “You have to send it somewhere else or scrap it, and we don’t think that’s the best way to go about it. So the House passed a bill that would change it to the date of manufacture.”

The bill, which now has to pass the Senate, would help eliminate any dishonesty, like fudging an installation date on a sales bill in order to be “compliant” with the sell-through date.

“There are going to be a lot of June 30 installations that are not really done on June 30,” Melchi said. “But we can’t fudge the date of manufacture. It provides another layer of compliance. Manufacturers took on a huge expense to make sure their labels are consumer-friendly.”

Melchi also touched on a bill that would delay implementation of the 92 percent AFUE proposed furnace efficiency rule, which would negatively impact the one-third of Americans in warmer climates who would never see a return on their investments.

“I emailed a couple folks and asked, ‘What’s the percentage of high-efficiency furnaces that you sell in Houston?’ and it was single digits,” Melchi said. “Right now, there’s a lot of talk about a split tier, where 80 percent [furnaces] could be used for smaller installations, and 92 percent above that.”

Without time to negotiate a better rule, Melchi said, the proposed standard will disproportionately affect poor people. “Asking them to hit pause so we can negotiate a solution is a good thing, a good idea. Ideally, the DOE would do the right thing all the time, but this is not reality.”

Health Care Reform

HARDI and its members also touted HR2911: Small Business Healthcare Relief Act, which would amend the Revenue Code and the Employee Retirement Income Security Act of 1974 to allow an employer with fewer than 50 employees that does not offer group health insurance coverage to establish a health reimbursement arrangement.

“It seems to fly in the face of logic that they would prevent you from providing a benefit to your employees,” Melchi said. “It falls into the realm of flexibility. Providing benefits, for many of you, has been a big differentiator for you to retain employees. This bill is a big opportunity for those of you with 50 or fewer employees to talk about challenges that you have with healthcare right now. And there are a lot of challenges.”

Asking legislators to repeal the Affordable Care Act is “probably not going to be very effective right now,” Melchi said, though it is a good opportunity to talk about parts of the program that are harming small businesses.

“There are certain fixes that could be done to try to improve it, but it was pretty clear the President wasn’t going to repeal the law,” he added. “There’s a bipartisan bill out there to make this happen for us, but wholesale repeal is just not happening.”

Advocating on the Hill

Several guest speakers shared their knowledge and views with HARDI members during the Congressional Fly-In, including U.S. Rep. Marsha Blackburn, R-Tennessee; U.S. Rep. Todd Young, R-Indiana, and recipient of this year’s HARDI Small Business Champion Award; U.S. Sen. Ron Johnson, R-Wisconsin; U.S. Rep. Tim Walberg, R-Michigan; and former U.S. Rep. Jim Gerlach (R-Pennsylvania), who was recently named CEO of the Business-Industry Political Action Committee (BIPAC).

Gerlach recognized HARDI members for their advocacy efforts on Capitol Hill and offered some advice.

“Keep that constituent-legislator relationship going; keep the legislator understanding their constituents in their district who care about these issues,” he said during the breakfast program at Capitol Hill Club. “Keep a regular dialogue going so that the legislator knows the importance of that relationship with their constituent. Use this opportunity to educate, educate, educate.”

No one can advocate for your business better than you can, HARDI CEO Talbot Gee said. “You know it better than anybody else, you live it every day, and you probably have a lot of your own assets and resources tied into the business’ success. We and other organizations in the industry do the best we can, but nobody can tell your story better than you, and these 115 members are doing a phenomenal job creating relationships on the Hill and becoming great resources to legislators who may not know all the impacts to their decisions on small business.”

Kevin Parsley, vice president and sales director for ACR Supply Co. Inc., Durham, North Carolina, has attended the event several years in a row and says it really does make a difference.

“I feel it’s really important that our legislative side and our politician friends hear the issues we’re facing and that we’re paying attention and support them and need their support on issues — their support for our companies and the families that work for our companies. It gives us a voice. The follow-up that happens here is important.”

Michael Meier, HARDI president and vice president/COO of Meier Supply Co. Inc., Conklin, New York, has attended six Congressional Fly-In events over the years and stressed its value to the industry.

“I think it’s important for small businesses to be heard,” he said. “The government is getting bigger and bigger; there are more regulations from the EPA, the DOE and the DOL; and it’s a lot more difficult for businesses — especially small businesses — to be profitable, to grow and expand. We are making sure we are heard and keeping the pressure on all the senators and congressmen so they know what’s important. We’re not going away.”