N.H.’s changing business climate

New Hampshire has long been the envy of other Northeastern states for its business-friendly climate. This climate has translated into an economy that has often outperformed the rest of New England in terms of productivity, job growth and lower unemployment.

When the current recession ends – and it will end eventually – New Hampshire companies will analyze their cost of doing business here vs. other locations around the country and around the world. Their analyses will include not only business taxes like the business profits tax and business enterprise tax, but also the credit against the BET, labor costs, energy expenses, health-care costs and the state’s regulatory environment, among other factors.

Unfortunately, these company analyses will not bode well for New Hampshire.

During the past few years, policymakers have added many initiatives that are changing the state’s business climate in perceptible ways. This has resulted in growing unease among businesspeople. Not only are businesses the largest single source of tax revenue, but business owners, managers and senior executives are the people who make hiring decisions. And not just decisions about whom to hire, but where to hire. That is, where to locate, grow and expand.

In fairness, state policymakers have supported important pro-business initiatives in recent years, such as a state research and development tax credit to encourage advanced manufacturing and high-technology companies to engage in new product development and innovation, meaningful workforce housing legislation to help employees find affordable housing close to where they work, a job-training fund to help businesses build the productivity and skills of their employees and more. They are to be commended for these positive programs.

At the same time, however, policymakers have added to the cost of doing business in the Granite State by passing legislation on a variety of fronts that, in isolation, may not seem consequential, but collectively will factor into business location decisions and job growth.

For example, two years ago the Legislature added a new health insurance mandate that requires coverage for young adults up to age 26. Given that many young adults are uninsured and often end up seeking medical treatment in hospital emergency rooms, this seems like a reasonable mandate. But it, along with other health-care mandates added in the last few years, has contributed to health-care costs that have far outpaced inflation and employers’ ability to provide coverage for their employees.

Another example: In the interest of directing the state to cleaner energy sources, state policy makers passed the Regional Greenhouse Gas Initiative, a 10-state compact intended to cap and eventually lower carbon dioxide emissions. Again, it’s difficult to argue the logic of RGGI. But, instead of deferring to the federal government for action, the Legislature passed this program. As a result, New Hampshire’s electrical energy rates, already some of the highest in the country, will go even higher.

On the regulatory front, state lawmakers are in the process of passing a law that requires employers to notify employees of a pending mass layoff or plant closing. Again, it’s difficult to argue the correctness of such a law — except that a federal law covering layoffs of this type already exists, and businesses will factor in New Hampshire’s extra regulatory burden, like this law, when they begin to rehire employees.

If we want to protect New Hampshire’s economic future, state policymakers must remember that solutions that seem appropriate in isolation are collectively adding to the cost of doing business and changing the state’s business climate. Businesses won’t grow in the Granite State if they can serve their customers effectively from a lower-cost, less-burdensome location. The fact is, businesses in today’s global marketplace have more options than ever about where to start up, expand or relocate their operations.

Jim Roche is president of the Business and Industry Association of New Hampshire.