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Sunday, August 10, 2014

More details needed in economic plan

Telegraph Editorial

Like so many middle-class Americans struggling to make ends meet, New Hampshire is struggling to understand why the economic recovery – such as it is – seems to be leaving the state behind and what can be done about it.

Gov. Maggie Hassan put large state spending plans on hold last week after July state revenues dropped 25 percent compared to last year. There were some unique reasons for the downturn – such as last year’s surge in cigarette sales to beat the impending tax increase – but there were more systemic problems as well, like slumping revenues from business taxes. And that is a very troubling sign. ...

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Like so many middle-class Americans struggling to make ends meet, New Hampshire is struggling to understand why the economic recovery – such as it is – seems to be leaving the state behind and what can be done about it.

Gov. Maggie Hassan put large state spending plans on hold last week after July state revenues dropped 25 percent compared to last year. There were some unique reasons for the downturn – such as last year’s surge in cigarette sales to beat the impending tax increase – but there were more systemic problems as well, like slumping revenues from business taxes. And that is a very troubling sign.

With the 2015 revenue outlook not looking all that sunny either, Hassan on Thursday ordered state agencies to submit budget plans with no spending increase in 2016 and only a 3 percent increase in 2017.

For years, New Hampshire took smug pride in its self-proclaimed economic “advantage” that encouraged business creation and relocation and often put the state at the vanguard of previous recoveries. New Hampshire historically benefited from the reputation – rooted in some reality – that it offered an educated, motivated workforce, low taxes, reasonable regulation and a modest cost of living.

Not any more. By many accounts, New Hampshire now ranks in the middle of the pack, at best, in several areas.

CNBC ranks the state 27th in overall business climate, with particularly bad performances with regard to the cost of living, strength of economy and infrastructure.

Forbes ranks the state 31st – and puts business costs and regulatory environment as among the very worst in the country.

So it’s no wonder that economic revitalization is emerging as the issue of the New Hampshire gubernatorial race. While Hassan can point to several bipartisan legislative achievements during her first term, without a credible plan for growth, her re-election effort will be severely undermined.

Republican challenger Walter Havenstein last week unveiled his proposal to create 25,000 new jobs, and his leading primary challenger, Andrew Hemingway, advocates a complete reworking of the state’s business tax structure.

Perhaps the ambitiousness of Hemingway’s offer is one reason that Havenstein’s plan came across as less than inspiring. The former CEO of BAE in Nashua wants to do a job-impact assessment for proposed legislation, cut the business profits tax, reduce regulation, stabilize the Unemployment Trust Fund and lower energy costs.

These are good concepts, but the devil is in the details and that’s what there needs to be more of. What regulations would Havenstein eliminate? He can’t say. How would he lower energy costs? By increasing supply, but he can’t say how.

Havenstein also needs to expand how doing a “job impact assessment” would apply to proposed laws and regulations, and how that would help create jobs. He maintains his proposal would be a “powerful signal to companies large and small that New Hampshire is open for business,” but voters deserve a more detailed explanation. The link to job growth appears tenuous at best.

Havenstein still has a month before the Republican primary to flesh out his plan. He will no doubt be pressed to explain it during upcoming debates. That should give Republican voters the opportunity to gain a clearer understanding of the differences between the respective Havenstein and Hemingway visions for New Hampshire’s economic future.