ECONOMY

Regenerative Tiss...

The NH House overwhelmingly approved SB 564 that will help jump start the emerging tissue regeneration industry here.

Industrialist Dean Kamen of Manchester is leading the effort to bring this industry to the Granite State and the NH House Ways and Means Committee spoke to the importance of this bill on April 26.

On the floor, I spoke specifically how this will improve employment opportunities, encourage scientific and technologically trained people to live in New Hampshire and grow our economy. Some believe this has the potential to make NH the world leader in providing tissue regenerated from our own DNA.

In my remarks I said there are advantages to the entire state of New Hampshire by passing this bill and making us the hub of regenerative medicine.

Our employment rate is stuck at an all-time low as our population ages, hampering our state’s effort at growth and economic expansion. New job training and career opportunities from this project will jump-start job growth. Our state is poised to enjoy a major renaissance.

Job creation will bring skilled and talented people to New Hampshire, and enhance the educational and career opportunities of current residents. That brings new homeowners, renters and customers for current in-state businesses. This growth won’t be limited to Manchester, but will be felt statewide as employees and firms spread in all directions within the state. Given the high value per weight of the products of this technology, some manufacturing facilities and auxiliary services are likely to move to the farthest corners of the state for lower housing and labor costs and for the attractions of rural life.

Because of the likelihood of corporate donations and payment of property and other taxes by the new firms and employees, we expect little or no negative impact on future budgets, and we hope you will join us in assuring our state’s future prosperity.

ECONOMY

Population Growth...

The Carsey School of Public Policy recently presented to the NH House Ways and Means Committee focusing on NH’s population and the implications for our state.

They said that population growth in New Hampshire is slower than in the past, but recent data shows renewed domestic migration (people from other parts of the U.S.) gains here.

Demographic change is uneven across New Hampshire, and migration patterns are a concern because it is an important source of human capital. Migration brings families and children to a state that needs young people, migrants are well educated and they bring income and expertise to the state.

Some towns need to plan to cope with growth and expansion while other communities struggle to provide basic services to declining populations.

New Hampshire’s population is aging rapidly and diversity is growing but the state remains largely non-Hispanic white.

One may conclude there are far reaching implications for the state budget and that lawmakers need to understand these demographic changes in order to develop plans for education funding at all levels, and how that funding can serve to develop a qualified workforce to meet today’s jobs market.

NH’s economy is the fastest growing east of the Mississippi, but new employers will be reluctant to move or expand here without a large labor force, and right now our unemployment rate is one of the lowest in the United States. Businesses that want to expand or re-locate look for areas with a qualified, available workforce.

Attracting educated people who want to raise a family in New Hampshire is becoming an important economic development factor, and one that should be considered by every legislator and town planning department. Working with industry to develop a workforce for the next few years should be a top priority.

If you have more interest in these topics I recommend that you go to www.gencourt.state.nh.us click on House Committees and click on Standing Committees on the left hand side of the page. Scroll down for Ways and Means, click on the link. This will take you to a listing of reports where you’ll then click on the 2018 Joint Economic Updates; it’s at the top of the list.

ECONOMY

Update on NH Reve...

NH state revenues have tightened as growth has slowed down according to analyst Phil Sletten of the NH Fiscal Policy Institute. He said it’s still a good revenue situation and we are able to fund the priorities laid out in the state budget, however, “seeing essentially no growth in some of these revenue sources is potentially concerning for the future.”

Members of the Ways and Means Committee developed cautious projections about our revenue for the next two years in anticipation that the current economic expansion may slow down. Through the legislative process this past Spring, those revenue estimates were increased by both the Legislature and Governor. That, combined with a decrease in the business tax rate this year, gave many of us on the Ways and Means Committee doubts about the ability to fund our priorities.

The recently adopted budget by both the Legislature and Governor is dependent on continued economic expansion at a rate that we have seen in years.

I'll keep this post updated with revenue developments.

ECONOMY

Economic Growth a...

For the New Hampshire 2018-2019 budget to meet our obligations, survive the business tax cuts and prevent steep property tax increases our economy needs to grow at a whopping 7% per year for the next 10 years.

The consensus among economists is that we’ll see a 1.5 to 2.0% growth rate per year for the next two years. Last year after the first small cut our business tax revenue dropped by $2 million even as the economy grew.

The tax cuts will force future legislatures to make deeper spending cuts that will weaken service to citizens and businesses alike, and force municipalities, school districts and counties to cover the gaps.

The lost revenue created by the business tax cuts will result in continued downshifting of the state responsibilities to local taxpayers. While there is road improvement money for communities this year, this is one-time money only and is not expected to continue which means increased pressure on property tax payers.

Business taxes are NH’s largest source of revenue, and we should be very concerned about the cuts that are proposed in this budget. In its report to the House Ways and Means Committee the NH Department of Revenue Administration (DRA) said that 3%of the business entities that file tax returns pay about 70% of the business tax revenues received by the state each year and that over 50% of the business tax revenues each year are paid by multinational corporations. Seventy-seven percent of the business profits revenues are paid by 800 business entities and 31% of the revenues paid by just 45 companies.

Of the businesses that are either “active” or in “good standing” 70% pay no business taxes at all.

Combining the proposed tax cuts with a Federal Reserve predicted economic growth rate of 2.1% and an estimated 2% inflation rate, NH could experience an annual loss of $101 million by the year 2022.

NH already ranks 7th lowest in the nation for total business tax assessment and companies doing business in NH have continually said that job training programs and expanding the work force are the most effective way to grow current and new businesses here. While business has stated that a quality work force is a higher priority than changing the tax code, this year the legislature eliminated a federally funded jobs training program that employers would prefer.

A loss of revenue, elimination of federal funds for jobs training programs, one-time support to local communities and flat funding of higher education are the real headlines out of this budget. This means future state spending cuts and increase in local property taxes.

We’ve been through this before. When state spending was slashed in the Bill O’Brien led legislature in 2011 property taxes rose throughout NH because, among other things, the state decided it wouldn’t support pension funds for local police and teachers, so local property tax payers picked up the difference.

None of this may come to pass if we realize an unheard of 7% annual economic growth rate. On paper, the budget is balanced through 2019, but I don’t believe it’s fiscally sound. Here’s hoping that NH’s economy grows at such a staggering rate that we don’t have to worry about future revenue losses and putting property owners on the hook for the difference.

ECONOMY

NH Can Speed Up R...

Since the "2009" economic recovery" research and development by industry has grown 5.1 percent in NH, and 17.8 percent nationally. University R&D grew 6.7 percent in NH and 16.2 percent nationwide. That's according to a 60 page report that outlines how the state can speed up innovation-led development by better coordination university research with existing businesses.

According to Jan Nisbet, senior vice provost for research at the University of New Hampshire and state director for NH EPSCor (Experimental Program to Stimulate Competitive Research), which commissioned the study.

Clearly the NH results are well below the national averages.

Nisbet said she wants a statewide committee--comprising business, government, higher educational and public-sector members-- to have more discussions with groups before focusing on what specific actions to pursue.

"Our economic future hinges on this plan and what is stands for--industry,
university, government working together--and I think it does a nice job of setting the vision," according to Hypertherm executive Mike Shipulski. "This is about research and the state's economy," Shipulski said.

The reports suggested generating talented workers both by attracting and retaining people in-state and strengthening the state's innovation ecosystem, such as technology parks and incubators.

Matt Cookson, executive director at the New Hampshire High Tech Council, noted a "talent gap" with 3,000 tech job opening a month in New Hampshire.

Val Zanchuk, chairman of the Business and Industry Association of New Hampshire, announced that the BIA and New Hampshire Charitable Foundation are collaborating on a multi-year program for a "very proactive approach" on expanding the state's workforce.

ECONOMY

Building A Strong...

Just 15 years ago New Hampshire was enjoying a growth spurt that dramatically improved our business development climate. Today, we face slow growth with many employers looking for the next generation of highly trained, skilled workers. This next election is about examining how we can recapture that strong economy, manage population growth and keep our young people here.

Kate Luczko, Executive Director of Stay, Work, Play, NH acknowledges there is a challenge, but believes that there are a lot of opportunities to do big things right here in New Hampshire, and says that “by staying in New Hampshire, you are able to be a big fish in a small pond.” She is speaking to our young people and those who’ve left, but might considering returning.

Matt Cookson, Executive Director of the NH High Tech Council says there are a lot of help wanted signs around and that well-paying jobs are going unfilled. Low taxes, raising a family and our natural resources should be marketed aggressively outside of NH to brand our state as a destination. An option he feels is for the state legislature to get behind a social media marketing plan and “put out that digital help wanted sign.”

In addition to more aggressive marketing of NH’s advantages, there is a growing call to take a comprehensive look at state government regulations so our government is a more solid and reliable partner in helping us all accomplish our goals. Clearly, this requires buy-in from all of our elected officials and most likely a thorough study of our current regulations by a non-partisan group made up of business, education, elected officials at all levels.

I’m particularly interested in a review of operating practices and regulations, because as a selectman, businessman and non-profit fundraiser I’ve seen how decisions in Concord can have unintended consequences on our lives.

ECONOMY

Business Tax Cuts...

It’s true that New Hampshire’s economy has grown, and unemployment levels are at all time lows; however those who take credit for these numbers including politicians and interest groups should do so with caution. The nation’s economy picked up significantly after the Great Recession and New Hampshire, like most states in the country benefitted.

American’s for Prosperity claim New Hampshire’s results are due directly to cutting the business taxes. Director Greg Moore makes this point in a Your Turn piece in the May 2, 2016 Union Leader. No doubt cutting business taxes has some stimulus effect, but I’m more interested in the case made by Jim Roche, President of the Business and Industry Association of NH, for focusing on workforce development and sustainable economic growth.

Roche says “when employers are considering expanding operations, high on their list of requirements is a workplace-ready, available pool of skilled workers. If New Hampshire falls behind in its commitment to workforce development, we create barriers for employment growth.” Roche made his comments in an April edition of the NHBR.

Roche and the BIA believe workforce development is essential for continuing our economic expansion and says fewer people are entering the workforce with all the skills required to perform effectively, whether it’s routine office tasks or those tasks requiring technical proficiency.

Workforce development affects manufacturing, health care, professional and financial services, high technology and more and Roche claims that “creating and sustaining and retaining a viable workforce that can support current and future business and industry needs is critical to ensuring economic prosperity for all.

Roche and Moore certainly have different views on growing the economy and maintaining full employment, however the BIA puts forward a thought out plan to support educational, results oriented programs that will get the attention of businesses and encourage expansion here. We must demonstrate to New England and the United States that we are committed to providing a workforce that business and industry covets.

ECONOMY

Economic developm...

A top priority of elected officials should be how budget decisions in Concord affect economic development.

Respected demographic analyst Peter Francese of Exeter, NH wrote in the Foster’s Daily Democrat that we have a “stagnant or declining workforce combined with a very fast growing elderly population,” and NH should “increase the skills and earning power of our state’s young adults,” which will spur economic growth “through rising personal income and household wealth.”

Francese makes the case that higher educational achievement means higher incomes and that three-quarters of NH community college graduates find full-time employment in the state. While Francese focuses on the benefits of supporting our community college system, he also reports that average debt of three-quarters of our four year graduates was $32,000, the highest in the nation. “As a society we should be very troubled by that because those young graduates will face big mortgage payments, but with no house to show for it and fewer prospects for buying one,” according to Francese.

National statistics show that NH is at the bottom of all 50 states in its support of public higher education, and Francese says, “perhaps we ought to spend more time thinking about the consequences of spending so little on helping our young people get the skills they need.”

From my experience in NH as a business leader, small business owner and an elected official, I’ve heard from both small and large high-tech companies that finding and keeping highly trained NH young people is a bigger impediment to growing a business than the current corporate tax rates.

There are unforeseen and potentially damaging consequences to changing the tax codes, and could possibly accelerate the rate at which NH young people leave our state to find affordable education, housing and livable wages.

Economic experts and politicians need to take a little more time to fully vet the consequences of changing the tax rates on corporations. Lowering corporate taxes could stimulate an economic uptick or it could “blow a hole” in the revenue stream that makes up one of the largest sources of NH revenue.

Prioritizing higher education funding is an investment in NH’s people and economic future, and during budget negotiations, we should encourage our elected officials to do what is in the economic best interest of all of us.