Q&A with: Economic Development Director Stuart Arnett

Stuart Arnett has been director of the Division of Economic Development in the state’s Department of Resources and Economic Development since 1999. Earlier this year, he resigned to join Gregory S. Franklin Associates, a Lebanon-based consulting firm doing economic analysis and strategic planning. At the request of DRED Commissioner George Bald, however, Arnett recently agreed to stay on until Oct. 1 to work on the upcoming New Hampshire Telecommunications Summit, scheduled to be held Sept. 8 at the Fireside Inn in West Lebanon.

Q. Why have you decided to leave DRED?

A. In May of this year I hit 7-1/2 years on this job. Coincidentally, I held my job before that for 7-1/2 years too, which was development director for the city of Claremont. So it was 15 years of continuous government service. I had known for a year that I was getting to where I was looking for something new to do. I seem to have a seven-year itch, so it was about that time.

Q. What is the telecommunications initiative that you’re working on?

A. It goes back to legislation that was passed about six years ago, coming out of the era when people in rural areas were saying, “There’s nothing up here” — the digital divide. At that time, the Public Utilities Commission and Governor Shaheen were hosting a series of roundtable discussions, and from that the recommendation came that the state ought to be doing something actively to promote what we do have for infrastructure and then work with industry to accelerate the deployment of what we don’t have, both in location and access.

Q. Was the problem that we were plugged in in the southern part of the state but not in the more rural areas?

A. Certainly there was a strong sense six years ago that there was a real gap. So we’ve been working with the industry, and they’ve had a lot of success certainly in expanding the supply.

When we started, few of the smaller-tier cities had much in the way of selection. Now all of them do. All of them have multiple providers.

But something the commissioner and the governor want to work on is the supply in the most rural areas, and not just in the commercial centers, but the last mile — the home-based business, the barn-based business, the basement-based business that may be eight, 10 or 12 miles out of town.

But the demand issue is still there. This is a productivity tool, and how do we get anybody to use it better, not just to use it for a little bit of e-mail and maybe a little bit of a static Web site? How do we get it for order-taking and cash transfers and video training and things like that, which are not something that necessarily a small-to-mid-size company would know how to get to?

Q. Why is it important that they do those things on the Internet?

A. This is not an Internet initiative, this is an economic development initiative. And the theory being, I think correctly, that this is a productivity tool and we want our companies to use it as well or better than anybody else.

Q. In spite of our reputation for small government and low taxes, does New Hampshire nonetheless have too many fees, regulations and red tape hindering economic development?

A. I don’t know any business that would disagree with you there. But New Hampshire is seen almost universally as the most business-friendly state by companies we work with that are multi-state.

Just recently there was a public opening the governor attended for a developer who has just gone into a very exciting project, which is the old Troy Mills building. That is a very challenging building, and his public statement was that he’s done real estate in 27 states and he finds this the easiest one to work in.

Q. What’s the difficult part of selling New Hampshire?

A. The thing that makes it tough is that New Hampshire has, in the sports analogy, relied on having a great defense. New Hampshire has always said, “Do minimal harm. Keep taxes low, government small, regulations simple.” What’s been happening in the last 10 years is that the competition is not only getting better at offense, what they’re offering is not just give-away incentives, but things like early-stage investment in high-technology companies, incubators in industrial sites that are for early-stage, high-growth companies, incentives for companies to upgrade their workforce.

I would say one of the things that’s been more satisfying in the last two years is seeing some of that change, where we’ve taken a couple of small steps into doing more on the proactive side.

By legislation we set up two programs — a jobs program for the two poorest counties (Sullivan and Coos) that actually gives employers some money back if they create a new jobs for up to five years, and we now have a Community Reinvestment Opportunity Program, or CROP zone. Again, it’s not a big thing, but it allows a community to say, “We want to target this mill building or this industrial lot, and if somebody creates employment there, they get a small reduction in their BET or BPT tax.”

In this past session, we passed a reduction of the fee for insurance companies from 2 percent over time to 1 percent. To the credit of the Legislature that’s a little bit risky, because they’re looking at, “Well, maybe we’re going to lose money on this,” and that’s something the Legislature doesn’t like to do. But I think they also are starting to realize we’ve got to say not just what are we not going to do to these companies, but what we have for them to be competitive with Connecticut, Ireland, Texas — whoever else is trying to get to the same companies.

Q. Given the increasing demands on state government, do you expect New Hampshire will eventually adopt a general sales or income tax?

A. I hope not. It is a real economic advantage when people do their costing — and costs do drive a lot of investment decisions.

We’re still the low-cost state in New England, but New England is a high-cost region. So you throw health insurance in and electric costs and education costs, and clearly we’re not going to be a national and international competitor on low costs. But we certainly should be low cost for New England.

And I think the low-tax thing says something else to employers. It says government’s under control, that there is a value to low taxes as a principle, not simply a recruitment tool.

Q. What advice would you give to the next head of the Division of Economic Development?

A. One is to be very attentive to your clients’ needs. Fortunately, the person will be working with some very good people, both in the shop and also in the field, so use the team. And enjoy it. It’s a wonderful state and a wonderful product.

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