WASHINGTON — Heating, Air-conditioning & Refrigeration Distributors International (HARDI) took the concerns of the HVACR industry straight to Washington via its annual HARDI Congressional Fly-In May 23-24.
A record 115 HARDI distributors, manufacturers, manufacturer’s representatives and wholesalers spent two days meeting with their respective elected representatives, discussing tax reform; online sales tax avoidance; preservation of the last-in, first-out accounting methods; ending the estate tax; and more.
The gathering affords attendees the opportunity to build relationships with elected officials and their peers while learning the ins and outs of the industry’s current regulatory challenges.
Following their meetings on Capitol Hill, HARDI members returned for a debriefing where they shared Congress’ responses and their experiences with one another.
“This [event] has absolutely grown over time,” said Michael Meier, vice president and COO, Meier Supply Co., Conklin, New York. “This was my sixth year, and Jon Melchi has done a great job bringing people together and preparing us for our meetings, especially for those who may be here for the first time. We walk into these congressional meetings feeling confident. I think it is absolutely making an impact on the Hill, because when I come back, people say to me, ‘Oh, you are with HARDI. You guys are making an impact here, so don’t stop doing what you are doing.’ Sometimes you wonder if you’re making an impact, and then you hear stuff like that and you think, ‘You know what? This is good.’”
Getting Prepared
Attendees kicked off the event at the W. Washington Hotel great room for an orientation and legislation issue briefing.
Stephanie Vance, author, a former lobbyist and Congressional aide, grassroots consultant and Advocacy Associates founder, enthusiastically prepared attendees for the long day ahead.
“So, there are four components to this advocacy stuff that you’ll want to play out in your meetings,” said Vance. “No. 1 is making ‘the ask’ because otherwise, you’ll get the ‘I love air conditioning and heating. When I’m hot, I want air, and when I’m cold, I want heat — you do a great job.’ Then, you leave the office, and they don’t know what’s going on with you because you didn’t make an ‘ask.’”
Vance further suggested attendees study up on their legislators’ committee assignments, policy interests and political perspectives, as well.
Jon Melchi, vice president, government and external affairs, HARDI, continued the afternoon with a legislative briefing on topics that HARDI is, and has been, addressing, including the Regulatory Accountability Act of 2017, Career and Technical Education for the 21st Century Act, the Working Families Flexibility Act of 2017 and more.
“Think of one regulation that is or may negatively impact your business or that you don’t think is being properly addressed — be sure to give them an example,” said Melchi to the room full of attendees. “If you’ve ever wanted to talk about these issues, now is the time to talk about them.”
Attendees also had the opportunity to hear from Paul Teller, special assistant to the president, office of legislative affairs, on what the new administration has been working on.
“I want to talk about sales tax avoidance and the issue it is having in our industry,” said Meier during the first-day reception. “Sales tax avoidance allows other competitors outside of our state to sell into our markets online, which leaves us at a competitive disadvantage.”
Matthew McGary, president, ABR Wholesalers Inc., Rochester, New York, said he’s most concerned with the estate tax.
“Being a family-owned business, it is important that we monitor the estate tax,” he said.
Getting To Work
Day two of the Fly-In began with a breakfast at the Capitol Hill Club. During the event, Sen. Robert Corker, R-Tennessee; U.S. Rep. Cathy McMorris Rodgers, R-Washington; and U.S. Rep. Roger Williams, R-Texas, spoke and were honored with HARDI Small Business Champion Awards, recognizing their efforts to promote and protect the interests of small businesses.
The remainder of the day was reserved for congressional meetings, where attendees got the chance to share their grievances with those in Congress and their staff members.
“For the first time since I’ve been coming here, we met with some congressional staffers who were open to hearing about issues like LIFO and the estate tax,” said Oscar Lopez, vice president of sales, J.B. Industries, Aurora, Illinois. “In years past, many of those we spoke with were resistant to change, so perhaps there is hope in Washington.”
Richard Cook, president, Johnstone Supply, Houston, a veteran of the HARDI Fly-In, had an array of different meetings, most of which he left feeling positive about.
“We had a few intimate meetings and a few that included 12 people in a hall,” he said. “Overall, it’s the right thing to do. If we’re going to live in a democracy and demand good government, these are the things we have to do to get it. You never know, what you say or do could have a drastic impact.”
The day ended with a debrief and wrap-up, where a round-table discussion, led by Vance, allowed HARDI members to review the day, the issues that were discussed and the progress that was made.
“I love doing this — I’ve been to every single one,” said Russ Geary, regional vice president, Geary Pacific Supply, Anaheim, California. “And I will continue to do so as long as I am physically able. I love storming the castle — it’s easy, and it’s fun. I remember the first time we did it. It was like, ‘Oh my God, can I do this? I am going to talk to a senator.’ But now, I see it differently. They put their shoes on just like we do.”
Legislation Items HARDI is Working On
Immediate HVAC Expensing (S. 1144): The current tax code mandates a depreciation schedule of 39 years for building owners that purchase commercial HVAC products. Moving to immediate expensing of HVAC equipment would allow building owners to invest in more energy-efficient units rather than attempt to fix older units.
HARDI’s Position: HARDI supports comprehensive tax reform that includes the immediate expensing of installed HVAC equipment as intended by Congress in the enacted 2015 PATH Act. We also support legislative efforts to create a real property exclusion for HVAC equipment, which would codify immediate HVAC equipment expensing.
Addressing Online Sales Tax Avoidance (H.R. 2193 and S. 976): A legal loophole allows some online retailers to avoid collecting sales tax due during a transaction. While consumers are still liable for paying what’s owed, few do, which offers online stores a meaningful advantage over their Main Street competitors.
HARDI’S Position: HARDI believes Congress should tackle the issue of online sales tax avoidance to allow states to more effectively collect sales tax and prevent online retailers from gaining an unfair advantage due to a system that currently enables tax avoidance.
Preservation of LIFO: Since LIFO reduces taxable income in periods of rising prices, it leaves such businesses with sufficient funds to reinvest inflationary profits in replacement inventory. Conversely, those companies that sell products that decline in price (i.e., technology) are likely to use FIFO, or lower of cost or market, in order to reduce their taxable income during an environment of declining prices.
HARDI’s Position: HARDI believes that the LIFO inventory accounting method should be preserved and maintained.
Ending the Estate Tax (H.R. 631/ S. 205): The fiscal cliff deal saw a permanent extension of the estate tax exemption level at $5 million (40 percent tax). This extension, which is indexed to inflation, is a step in the right direction, but Congress should do more.
HARDI’s Position: HARDI supports efforts to repeal the estate tax, which heavily impairs the growth of many businesses – especially small, family businesses – or forces owners to sell off their assets or companies.
REGULATORY ACCOUNTABILITY ACT OF 2017 (H.R. 5/ S. 951): The Regulatory Accountability Act is bipartisan legislation designed to make federal regulations smarter and more effective so they better support businesses, families and jobs. The current, out-of-date regulatory process hasn’t been significantly reformed in 70 years.
HARDI’s Position: HARDI believes that the regulatory system should be updated to reflect the modern economy and to better and more effectively assess the impact of regulations upon businesses and consumers.
Strengthening Career and Technical Education for the 21st Century Act (H.R. 2253): In recent years, Congress has enacted reforms to improve K-12 education and modernize the nation’s workforce development system. However, more must be done to help all Americans access the education they need to earn a lifetime of success.
HARDI’s Position: HARDI is supportive of efforts to expand training programs and job opportunities for workers in the HVACR industry and to provide them with skills that meet industry demands in the 21st century.
Working Families Flexibility Act of 2017 (H.R. 1180/ S. 801): To modernize the law and better meet the needs of the 21st-century workforce, Rep. Martha Roby, R-Alabama, and Sen. Mike Lee, R-Utah, introduced the Working Families Flexibility Act. This legislation would amend the Fair Labor Standards Act of 1938 to allow private-sector employers to offer employees the choice of paid time off in lieu of cash wages for overtime hours worked.
HARDI’s Position: HARDI supports this legislation to provide workers with more flexibility in how they would like to be compensated for additional time worked.
