A bill driven by Planet Fitness' request to change a provision in New Hampshire's tax law was vetoed by Governor Maggie Hassan on Monday.
Planet Fitness, which has filed for an initial public offering (IPO), has threatened to move its Newington-based headquarters out of state if the law is not changed.
"Like many others, I am disturbed by the process that brought this bill to my desk," Hassan said in a statement. "It was passed at the last moment, with no public hearing before the vote."
Hassan said she remained open to similar legislation as part of negotiations with lawmakers to end the state's impasse over the state's budget. Hassan vetoed an $11.3 billion state spending plan in June over reductions in the state's two largest business taxes. The impasse is expected to linger into the fall, according to the Union Leader.
Planet Fitness said it is "disappointed" in the veto but is "hopeful" Hassan and state lawmakers can work together to resolve the state's budget that incorporates the substance of House Bill 550 in the coming weeks.
"As a company founded in New Hampshire more than 23 years ago, we would like to stay in New Hampshire, which is why we are committed to this issue and urge both sides to continue to make changes to this law a priority for business and job growth in the state," Planet Fitness Director of Public Relations McCall Gosselin said in a statement. "That said, as our state leaders work to pass a comprehensive budget, we are working with our advisors and board of directors to explore all options regarding the company's future in the state."
Hassan, in her statement, expressed concerns about how the tax cut would affect New Hampshire's current budget and future budgets without addressing how the state would pay for it. Hassan said she hopes legislative leaders will return to the table and negotiate in good faith a compromise for the state budgets.
"In the meantime, however, we cannot continue to enact business tax reductions without transparently and honestly paying for them in budget," Hassan said. "For this reason, I have vetoed HB 550."
Planet Fitness lobbied lawmakers to change the step-up provision in the state's business profits tax beginning in May, four weeks before filing for its IPO with the Securities and Exchange Commission.
Planet Fitness CEO Chris Rondeau and former New Hampshire Governor Craig Benson, a former Planet Fitness board member and current franchisee, supported an amendment to change the existing law in front of the Senate Finance Committee on May 28.
Under current law, a New Hampshire company is required to pay the state's 8.5 percent business profits tax on its increase in value. Democratic Senator Dan Feltes has said the change proposed in House Bill 550 would cost New Hampshire $8 million in revenue.
The bill made its way through the legislative process in June. The Senate approved the bill on a party-line 14-10 vote on June 4, a negotiating committee approved the bill without Democratic support on June 17 and the House sent the bill to Hassan's desk with a 202-145 vote.
The language in the vetoed bill would have given New Hampshire businesses two options on when to pay the business profits tax in the event of a sale or exchange. A company could declare its increase in value in its tax returns, pay the tax and be allowed a future deduction based on the company's increase in value. If the company decided not to declare its increase in value on tax returns, the future deductions would not apply.
The chance of overriding Hassan's veto may be slim since all of the votes passed strictly on party lines and the Republicans do not have a two-thirds majority in either the House or the Senate.
Planet Fitness, which ranked No. 7 on Club Industry's Top 100 Clubs list in 2014, reported $279.8 million in total revenue for 2014. It operated 976 clubs as of March 31 and has 154 employees at its Newington headquarters, according to its IPO registration statement.
Planet Fitness' IPO date, number of shares to be offered and the price per share have yet to be determined.