With at least $1b in federal assistance money going to N.H., retailers, landlords are beneficiaries too

Cuts to social assistance programs could impact not just N.H. residents, but also businesses

E.M. Heath Supermarket in Center Harbor doesn’t have many customers who use stamps, maybe as many as 5 percent. Yet if that program were suddenly halted – a possibility that could have arisen had the government shutdown continued beyond October – those waiting in line at the local food pantry would not be the only ones affected.

“That would devastate us,” said David Petell, president of the company that owns the supermarket. “We don’t work on high margins to begin with. We are just able to stay alive, boxed out with the big chain stores. Five percent of our business? I don’t even want to think about it.”

When the federal government cuts back or threatens to cut back on social safety net programs, the discussion usually focuses on the recipients or taxpayers. But these programs pump in at least a billion dollars into New Hampshire’s economy alone.

These programs were not just threatened by the government shutdown or the raising of the debt ceiling. Some might be cut as part of budget negotiations to end such standoffs in the future. Some are affected by the sequestration deal, the product of the previous standoff. Some might be trimmed by specific legislation.

Even part of Social Security might be on the table, according to a recent report from the Huffington Post – not so much the proverbial political third rail of cutting retiree benefits, but Social Security Disability Insurance payments. President Obama reportedly has told Democrats that he was open to reforming the SSDI program.

It is a big program. In New Hampshire, roughly $700 million in annual SSDI benefits go to 61,000 people and their families – recipients who are judged to be unable to work because of disabilities ranging from acute heart problems and missing limbs to a bad back, anxiety and depression. The program has become so prevalent that some landlords have switched to collecting money from the first of the month to the third, the day when the money is directly deposited into SSDI recipients’ accounts.

Ken Raymond, president of the New Hampshire Real Estate Investors Association, knows of some landlords, including himself, who immediately deduct the rent from some tenants’ accounts before the money can be spent on something else, with the tenant’s permission of course.

SSDI checks are used for anything from shopping at retail stores to food bills, to even an occasion meal out, so the impact of any cut to such a program is hard to gauge, particularly since it has been immune to government shutdowns and sequestration.

‘A real concern’

Food stamps are another story. SNAP’s 117,000 recipients spend their $167 million in annual benefits at local grocery stories. SNAP wasn’t affected by sequestration, but it will be cut starting Nov. 1 by about $12 million in New Hampshire, due to the end of an economic stimulus program that started in 2009.

SNAP, however, has a more specific problem. Food stamp authorization has always been part of the Farm Bill, which is still awaiting reauthorization. Before the latest standoff, the House and Senate had already had their respective positions staked out on SNAP’s total $80 billion annual budget.

The House would have cut $4 billion from the program, while the Senate would cut about $400 million.

How all this could or would affect New Hampshire grocery stores is any guess.

“It’s a real concern for us,” said John Dumais, president of the New Hampshire Grocers Association. Dumais said his first concern is for the customer, but “retailers are going to be hurting as well. There is a lot of pressure on grocery stores right now — just look at the exodus of 12 supermarkets.” (The Stop & Shop and Shaw’s supermarket chains earlier this year closed six New Hampshire stores apiece.)

But the Market Basket supermarket chain thinks that the cuts might actually help it.

“We have a good amount that utilize SNAP,” said spokesperson David McLean, who said that most Market Basket stores see a sales spike on the fifth of the month, when food stamp Electronic Benefit Transfer cards are recharged with monthly benefits.

With food stamp cuts, he reasoned, “customers will be more price-conscious. Since we have the reputation of having the lowest average food prices, they will be more likely to shop with us.”

The response of independent stores is more mixed.

Some, like Glynn Bingham of Jeannotte’s Market in Nashua, don’t take food stamps.

“I just don’t think the program is working the way it was intended to,” said Bingham, who ended his store’s participation six months ago. “It involves us partnering with the government, and I don’t want to be that partner.”

Bingham said many recipients were splurging on luxury food items that his employees couldn’t fit in their budget, or buying a sandwich for the day rather than cold cuts and bread for the week.

The consequences wouldn’t be too severe from foregoing food stamps, Bingham realized. There were chain stores nearby that accept food stamps, and besides, his store is in fairly upscale portion of town.

Lance Walling, the assistant manager at LaPerle’s IGA in Colebrook, said his store can’t afford such a luxury.

“We are the primary supermarket, and in the North Country there is not a lot of employment,” he said. “I don’t see how anybody survives without that in your budget.”

Rent subsidies

Grocers also benefit from the Women, Infants and Children nutritional supplement program for mothers and their children. The program, known as WIC, helps about a tenth of those that participate in SNAP, providing $7 million in sales to New Hampshire stores.

WIC was cut by about 5 percent during sequestration and could be cut again.

Landlords who serve tenants whose rent is subsidized through the federal Section program or who are waiting for subsidies also could be affected by the Beltway budget battles.

Almost 30 percent of the state’s residents pay rent rather than a mortgage, and about half of those make less than half the area median income, according to Elissa Margolin, director of Housing Action NH. Yet it takes an income of over $20 an hour to cover the rent for the average two-bedroom apartment, she said.

Margolin estimates that some 67,000 New Hampshire renters could use a Section 8 subsidy. However, only 16,000 units are subsidized, adding up to a total of $125 million in rent subsidies in the Granite State.

The disparity is partly due to the waiting list, which is now up to nine years, for Section 8 subsidies. The wait is partly due to sequestration, which prevented issuance of any replacement tenant vouchers, which become available when a Section 8 tenant is no longer eligible for the subsidy or dies.

The tenant-based vouchers, which primarily go to smaller landlords, account for the bulk of the Section 8 program in New Hampshire. While the tenants would be homeless without them, landlords could replace them with those paying market rates, because the vacancy rate is so low, Margolin explained.

But, “without Section 8, these tenants are more financially fragile,” she said.

Or, as Ken Raymond of the Real Estate Investors Association put it, in some lower-income areas, “who is going to rent from you except those who can’t pay your rent?”

However, a far more immediate concern would be a funding cutoff to Section 8 projects. These are generally larger properties where the subsidy goes with the unit rather than the tenant. In New Hampshire, some 5,844 units are covered by the program.

If such funding were cut, “they would take a huge hit,” said Raymond of the larger properties. “You can go to the bank that those properties would have gone into foreclosure.”

“If the payments stop, even for a small amount – 10 or 15 days – there will be immediate pressure on the properties to stay solvent,” said Bill Caselden, a partner in Great Bridge Properties in Manchester.

But Ron Dupont, president of Red Oak Apartment Homes, also in Manchester, said he doesn’t think such a drastic cut was ever going to happen.

“There is no way our politicians are going to stop these social programs,” he said. “It’s a waste of my breath to even talk about it. They will never go away.”

Another federal assistance program is the Low Income Home Energy Assistance Program, or LIHEAP. It’s a much smaller program — $22 million is distributed in New Hampshire. Some 70 percent of the spending goes to home heating oil companies, with the rest going to natural gas suppliers. (That heating oil percentage will probably go up this year, thanks to cheaper natural gas prices.)

Sequestration already knocked $1.7 million out of the LIHEAP budget last year, but the budget standoff didn’t and won’t have much of impact because of timing.

Besides, said John Rider, a principal of Dead River Company and chairman of the Oil Heat Council of New Hampshire, the amount of fuel assistance his company receives amounts to “a drop in the bucket compared to the total number of customers. It’s more an ethical than an economic dilemma. What are you going to do if they can’t pay? You can’t just let your customers freeze to death,” he said.