"Real liberty is neither found in despotism or the extremes of democracy, but in moderate governments.
Alexander Hamilton

Tuesday, May 26, 2015

"NH Has Slipped from Mediocrity Into the Terrible Ten"

Charlie Arlinghaus
May 20, 2015
As originally published in the New Hampshire Union Leader
Recent college graduates and others trying to decide whether to commit to New Hampshire long term have every reason to leave and few to stay. I hope that by now it is universally accepted that New Hampshire’s prospects are, at best, mediocre. What seems increasingly likely is that those of us hoping for mediocrity are pie-eyed optimists. Things are bad and the state is losing pace. States don’t become backwaters actively. The rest of the world just passes by lackluster states while they go along pretending everything is fine. We’re pretending, doing little or nothing, and life is passing us by.
In the last week, the Pew Charitable Trust released data pointing out that recovery from the last recession is complete but robust in some states and pathetic in others. Guess which category we fall into?
Pew’s research service on state government policy Stateline found that “while all states have added jobs since their economies hit their nadir during the recession, some have added far fewer than others.” Pew went on to highlight ten states with anemic growth of 5% or less. In this group, which might well be dubbed the pathetic 10, is New Hampshire.
Consider a recent college graduate thinking about where to start his or her career. New Hampshire is a pleasant spot and has much to offer. But what is has little of and little hope for is job growth. Why on Earth would you start your career by shackling yourself to one of the pathetic 10 — the worst states in the country in which to hope to find a job?
The national average was growth of about 8%. But more likely, if you are just starting out, you want to go to one of the Top 15 states who all boast growth rates of at least 10%. Michigan’s growth rate of 11% is more than double New Hampshire’s of just 5%.
Did you ever think we’d reach the day when Detroit was the land of opportunity compared to the decaying former economic power of New Hampshire?
Actually, I grew up in Detroit. It’s nice to follow the remarkable progress they’ve been making in recent years — jettisoning me might have been the spark they needed.
States across the country are doing things to attract jobs, to make themselves more competitive, to make their economies more dynamic. While they act and act often, New Hampshire is content to rest on its laurels.
A very long time ago (in economic terms) we were a robust, thriving economy. People moved here in droves. Jobs expanded here so fast that at times the labor force couldn’t keep up. Unemployment was below full employment and jobs went unfilled ( a problem North Dakota now has because of the oil boom).
The experience colored us and changed the way too many people think. Too many policymakers had that vision burned into their retinas and have been very slow to catch up. These are not the 1980s and our economy is not attracting thousands of economic opportunity migrants every year. We resemble Maine more than we resemble the land of milk and honey.
We are not the envy of our neighbors — as the Federal Reserve wrote about us 15 years ago. Instead we are one of the pathetic 10 and the so-called New Hampshire Advantage is a mythological creature of the past not the present.
The two worst measures that doom us are taxes and energy. When industrial users of electricity would have to pay more than twice the national average price for the privilege of being here, don’t expect them to show up.
On corporate taxes, we are better in some areas than others but we’re 48th in the Tax Foundation’s Corporate Tax Index. Very high corporate taxes coupled with ridiculous energy rates weed out an awful lots of jobs.
While we stagnate, other states are making an effort to improve their position. States all around us are lowering corporate tax rates in an attempt to get out of the bottom 10. In contrast, even a pathetic little cut in our business taxes is controversial here.
Gone is the time when we needed to preserve a New Hampshire dynamism. Now we have to try to figure out how to create one. Mediocrity is something we can hope to achieve in the future. In the meantime we are stuck in the pathetic 10.


Josh Bartlett said...

I guess I would ask if folks understood the consequences of having some of the highest electric rates in the country. This has chased out many businesses and jobs.

I would also ask if they see this as a result of stopping Seabrook's expansion and throwing away the hundreds of millions of dollars on an unfinished power plant.

This needs to serve as a reminder that a business can't survive without an opportunity to make a profit. They must pass along all their costs.
This serves as a lesson that a town, county, state, or country to pay their bills, either in higher taxes or inflation.

If people don't mind paying extra, then that is okay, but please think of the consequences - perhaps those that don't show up for many years.

Joe Cormier/jcormier2@myfairpoint.net said...

"Gone is the time when we needed to preserve a New Hampshire dynamism. Now we have to try to figure out how to create one. "

The southern tier of NH bloomed in the 70's and 80's with the,then, high tech companies that are now, gone. Nashua, Windham, etc., were bedroom communities for high tech company employees, that moved to NH for quality of life, and relatively inexpensive housing.

"High Tech" migrated to southern NH from the Massachusetts Route 128 belt ... till Silicon Valley replaced Route 128 as Mecca, for high tech business. The Nashua Mall wasn't thought of yet, and that other Turkey Farm restaurant was still the only draw in the area. Hudson, NH was one of the communities that was home for many years, for some of us in "high tech" manufacturing, that eventually went to Mexico and China. It was great moving from Lowell, MA, where I grew-up, to Hudson, NH, but still worked in MA, with many other thousands of commuters.

What does MoBo have to offer that it didn't offer back then? My MoBo vacation home is now my retirement home. The only new things I see are new municipal buildings, and some development in the western part on MoBo near the Center Harbor line, that is rarely talked about. There's a different bridge onto Long Island. I liked the wooden one. First time I saw the present bridge, was when I got back from the Atlanta, GA area, where I lived and worked ... emphasis on work, that was available.

Is there any talk about telemedicine or broadband industry or home care or other industry that isn't dying or dead? There seems to be agreement that MoBo has vacationers and elderly, and trending along those lines. Are these liabilities or assets?

MoBo emphasis seems to be on gyms and sidewalks. But groans, that there aren't any jobs and the "kids" have to move away.

Some of us (when much younger) actually worked in the last of textile mills, that are now condos. It is curious to note that Lowell was once the Textile capital of the world. You history buffs probably know about the Waltham Experiment. Textiles died in New England. Lowell is now a UMass City. Go figure! It was Lowell Technological Institute when I got my first business degree, having been founded as Lowell Textile School in 1895.

The point is, economies and times change.

"Gone is the time when we needed to preserve a New Hampshire dynamism. Now we have to try to figure out how to create one."

Pew Fiscal 50



Anonymous said...

NH's been run by 2 Democratic Governors these last 12 years, policies do matter.

Flash from the Past said...

Elections have consequences. "Under my plan electric rates will necessarily skyrocket" one prediction Obama got right.


Rick Heath said...

Actually 16 of the last 18 years NH has had governors of the miss guided leadership of the Left (and the 2 years that would have made it a full 18 years was by an inept RINO.
Speaking of taxes (and I do that at the risk of giving the "tax and spend" Left ideas) we have seen new taxes, old taxes tweaked, fees increased or turned into taxes, etc etc. Here are just a few I think of when they say we don't have an income tax or sales tax: Business Enterprise Tax BET (make a profit or not this one hits you first)... Business Profits Tax (this one is next and is our second income tax)... Communication Services Tax (on any two way electronic communication [both side of that conversation pay])... Not that our electric bills are high enough we have the Electricity Consumption Tax... Gravel Tax... Interest and Dividend Tax (an income tax for the retired)... Inheritance Tax (tax on what you have already paid taxes on that you want to pass on to your kids)... the 2nd highest Property Taxes in the Nation (only out done by NJ)... Meals and Rooms Tax (no sales tax??)... Real Estate Transfer Tax (another SALES TAX)... Nursing Facility Quality Assessment (as if by paying this one we get better nursing homes??)... Timber Tax... Tobacco Tax... Utility Property Tax... State Education Property Tax (A Tax on top of a Tax)... And here's one for you, we have just increased the state's share of Gas Tax by over 23% (4.2 cents per gallon no matter what the price of the gas is).
The real estate transfer TAX used to be a flat fee of $1500 shared by seller and buyer. Now they have made it a tax and it is 1.5% of the sale. So a 250K home just went from 1500 to $3750.
And you wonder why the New Hampshire Advantage is gone. Get used to it. We are a third rate state in a soon to be a third world nation.

Anonymous said...

Rick, how do you propose paying for federal, state and local government if not by taxes? You failed to mention the State Property Tax which hits Moultonborough particularly hard. That tax was Republican sponsored, not by the left. I am sure if you researched many of the taxes, you will find that many of them originated under the conservative leadership of many decades ago. The inheritance tax has been repealed to the best of my knowledge. As for the gas tax increase ..... first one one in 20+ years. I think most people pay much less after the increase than they did 20 years ago. All of the roads are 20 years older. The whole spectrum of politicians are to blame not just the left. I believe the thought process in NH was/is that an economic crisis will not impact revenue as drastically if there are many relatively small taxes.

Rick Heath said...

Above Anon, Yes I did mention the State Education Property Tax. Sorry you missed it. I don't have the time or the care to research genesis of every tax, fee, regulation etc that comes down the pike. The fact remains that the last 18 - 20 years we have been subject to the Left's will and pleasure for the most part from the Governor's corner office to the legislature as we have watched the NH Advantage fade away. I don't think you really believe your last statement, do you? "many relatively small taxes"... are OK?Taxes and fees that nickel and dime us are less offensive to the wealthy and have a much more detrimental impact on the lower income folks than I guess you understand. Would you rather see a sales tax or an income tax? That's just a question not an indictment or a suggestion that we should go there.
The near 25% gas tax is per gallon, not a percentage that brings the state's pickpocketing ability to 23.8 cents per gallon of gas or diesel without one cent of investment. That remains the same if gas was to sell for 1.50/ gal or 4.50/ gal. So you can see it doesn't follow an economic trend. In fact the percent of tax on the cost of that gallon gets higher as the price comes down.

Anonymous said...

Just a follow-up. The paper is from 2010 but it contains a lot of facts as well as some opinion.



The business profits tax (BPT), has been in place since 1970 - Governor Walter Petersen (R)

The creation of the business enterprise tax (BET) in 1993 - Governor Steve Merrill (R)

Perhaps both governors were RINOs.

Then there was the state funding of education dictated by a Republican dominated State Supreme Court because the Constitution says we will "cherish" publish education. More RINOs?

I can't help but wonder what some of the "Greatest Generation" that paid Federal Income Tax at the highest incremental rate of 94% during WW2 would say about the tax whining today.

For Reform said...

You can't get something for nothing. NH has no broad based sales or income tax and a load of pseudo taxes and fees that just can't support the needed services the State provides. Thus, a quagmire of trying to find income sources to pay for the outflow.

While I'm no advocate of an income or sales tax, it seems that the NH approach is failing together with the NH advantage.

Perhaps we need to revisit how the State raises money to see if we can restructure and simplify our tax base to create a better business environment that will attract more investment while retaining an attractive tax environment for attracting population other than retirees, which we have enough of.

Joe Cormier/jcormier2@myfairpoint.net said...

"7.0% on all two-way communications service"

How can MoBo be taxed on "two-way communications" ... that's not the MoBo way!

NH DRA 2014 NH Tax Overview



seasonal economy said...

The article compares growth in NH to Detroit. That is not a fair comparison. Detroit's drop was greater than NH during the 2008 recession, so it only makes sense that its growth be greater during a recovery. NH had growth in the 80s, and could use another boost. However, it appears people are migrating to the cities. Not much a small town local government can do about a national trend! All we can hope for is a helpful attitude towards the livelihood of those that choose to live and do business here. Here come the tourists. Is there a role for local government to help optimize the local economy during the next 12 weeks?

Terence C. Jatko said...

It's rather telling that no commenter suggests REDUCING STATE SPENDING. Anybody think that's the reason taxes are so high? Perhaps some legal penalties for financial mismanagement? (see Carroll County budget debacle) Bottom line is, no matter how bloated or useless a government program is, there are never consequences or changes, only business as usual. With a higher budget next year, of course.

Anonymous said...

Agree Terance, let's start right here in town where there's lots of bloat and over paid employees. The new TA should make it a priority to look at every department and department head and make the necessary changes if the situation warrants it.

Anonymous said...

Terrance, that goes without saying. However, reducing spending is often easier said than done when including the repercussions of the cuts. I notice you did not include any suggested reductions just a general statement. Please tell us where you reduce, how much, and what the impact is. Thanks.

Anonymous said...

Funny, no one ever asks the question of how to increase revenues.

Anonymous said...

Anonymous, 6:10, Increase revenues? are you kidding? It's called a tax. They never ask they just take.

Terence C. Jatko said...

Anon. of 30 May 5:17 - How about something simple? A five percent outright cut on all budgets. If you or I were faced with such a cut, we would adjust our lifestyles accordingly; five percent is really rather insignificant. A proposed five percent cut in government spending would produce unheard of caterwauling among the entitled classes (this includes bureaucrats who feel "entitled" to huge salaries for marginal or substandard performance). The entrenched would trot out little Johnny or Janie who just can't live without X or Y program, how could you be so heartless, etc. A classic example wold be our bloated school system. Let the personal attacks begin!

Been There said...

"How about something simple? A five percent outright cut on all budgets."

Governor Benson already tried this. And it didn't work.
So much for a successful businessman running the state.