How to brighten the governor’s gloomy fiscal forecast
The governor’s budget address cast a pall over previous glowing revenue reports and offered a pessimistic view for the next biennium.
The governor revealed that one-time repatriation and mergers accounted for $100 million of the year’s revenues. The June 30 surplus was less than that: $95.8 million. Furthermore, the governor’s budget projects that business tax revenues will actually drop 4 percent in the 2020 fiscal year and another 2 percent in FY 2021. This is much different than the prosperity promised if we cut business taxes. What is going on and how can we improve our state’s outlook?
The NH Department of Business and Economic Affairs has focused on increasing tourism for half a decade. As a result, tourism revenues have swelled more
than 5 percent per year, on average. Yet the governor projects tourism growth will drop to 3 percent in 2020 and to
just 1 percent in 2021, despite BEA’s
Meanwhile, he proposes to flat-fund sharing meals and rentals tax revenue with towns at the current dollar amount. Such flat-funding will discourage towns from investing in tourism since they will not reap the benefits. Competition among towns discourages the regional collaboration needed to attract out-of-state and international tourism.
To stop this self-fulfilling prophecy, we should share more proceeds with towns, not flat-fund.
Manufacturers’ strong growth is hamstrung by workforce shortages and our tiny unemployment rate. The demographic dip in young people born in the 1980s will mean a continued shortage for years unless we act.
Apparently, the governor thinks we will fail to improve the workforce shortage. The only industry for which the governor projected a promising future is lotteries, up 10 percent between 2020 and 2021! Will our economic growth rely on legitimizing sports betting? Growth in lotteries will not create the exciting jobs that attract and retain young talent to a state. It will barely budge the budget for good schools and exciting jobs that attract talent and make our companies competitive.
Instead of investing in the future, the governor’s plan stashes another $15 million atop the Rainy Day Fund’s
existing $110 million balance. Isn’t it time we stopped stashing more money under the mattress? Instead of adding $15 million to the Rainy Day Fund, let’s start a Sunny Day Fund to provide matches for Small Business Innovation Research and similar grants. This would attract $45 million to $60 million in
investment to fund research and research labs. Startups that earn such grants are nine times more likely to succeed.
The industries arising from such investments have added over a trillion dollars to US industry and 4.3 million jobs since 1980.
My company used an SBIR grant. We employed dozens of people in good-paying jobs and brought millions in revenues into the state for decades. We attracted talent. We spent money with local suppliers, and our employees never qualified for food stamps. Instead, they spent their own dollars with local retailers.
New Hampshire needs a Sunny Day Fund, more sharing with towns and better workforce attraction to brighten our future.
Jeanne Dietsch of Peterborough represents District 9 in the New Hampshire Senate.