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A race for the economy
NH’s gubernatorial candidates discuss plans for the economic landscape

10/23/14



Come Nov. 4,  New Hampshire voters will be casting their ballots for the governor’s race largely based on the candidate’s economic development strategies, according to the most recent UNH Survey Center poll. Job creation and workforce development are key parts of those plans. 

The poll showed that 32 percent of state residents say that economic issues are the most important problems facing the state. Everything else pales in comparison. 
New Hampshire’s 4.4-percent unemployment rate is the eighth lowest in the nation, but the state hasn’t been leading the country out of the recession, as it has in previous recessions, according to local economists and policy studies professionals. 
“New Hampshire is growing, but the growth had been disappointing,” said Dennis Delay, economist at the New Hampshire Center for Public Policy Studies. “Usually we are the first state in New England to get all the jobs back. That did not happen in this recovery.”
While  Massachusetts has about 3 percent more jobs than it did in 2008, New Hampshire has about .5 percent fewer than pre-recession levels, according to Delay.
During her term Gov. Maggie Hassan implemented her “Innovate NH Jobs plan,” an initiative that focuses on workforce development, support for business, enhancing energy capacities and creating fiscal responsibility. She will continue to focus on the plan if  re-elected, she said. 
“We’re moving in the right direction,” Hassan said. “We also know people are still struggling and we have more work to do — that’s why we will keep working on our  innovation plan.” 
Hassan’s Republican opponent, former business CEO Walt Havenstein, is critical of slow job growth and has proposed a plan that involves cost cuts to businesses. 
“[The economy] is barely moving and has no life,” he said. “More and more of our citizens are commuting out of the state every day as a result. More and more people are leaving the state. … Frankly, it’s why I came out of retirement to run for governor. I’m very concerned by the future of our state, especially for job opportunities for young people.” 
 
Hassan’s job plan 
The Innovate NH Jobs plan’s largest focus has been on workforce development — aligning residents’ skills and abilities with the needs of businesses and making college affordable.
For the past two years, New Hampshire froze the cost of in-state tuition for public colleges and universities. In early April, Hassan created a STEM education taskforce to make recommendations on how to make students globally competitive in science and technology driven fields. 
She also encouraged collaboration between institutions of higher education and companies, including a partnership between Great Bay Community College and two aerospace composite businesses, Albany Engineered and Safran Aerospace.  In June, Hassan created the Live Free and State advisory council, with the aim of  identifying and addressing concerns raised by the high-tech business community.
“In New Hampshire we have great, innovative companies with a lot of job openings, but they say they can’t find workers — that’s why we’ve been focusing on STEM skills,” Hassan said. “If you talk to Dean Kamen of DEKA or Jeremy Hitchcock, head of DYN, they have openings, especially for engineers. If you talk to smaller companies, they have similar workforce alignment and skill needs.” 
Havenstein said that while he supports Hassan’s initiatives, they are not doing enough to boost the economy, and job creation is too slow. 
“I think those are admirable things in and of themselves, but they are insufficient, because the fact in the matter is, if she is not creating jobs, we can all talk about Live Free and State, but if we’re not creating the jobs for young people, it seems to be rhetoric and not action,” he said.
 
Addressing the tax landscape 
Even though New Hampshire’s lack of income and sales tax make the state competitive in the business market, critics are concerned that the economy is moving too slowly because the costs associated with doing business in the state are too high. 
According to the New England Economic Partnership’s most recent economic forecast, released Oct. 8,  the state’s corporate tax rate is likely to hurt the state when it comes to attracting new business. 
“Our business taxes are one of highest in country, higher than Massachusetts. ... We have high workers’ compensation rates,” said Charlie Arlinghaus, president of the Josiah Bartlett Center for Public Policy. 
Both Hassan and Havenstein support no sales or income tax, but their stances vary drastically about the state’s corporate business tax. At 8.5 percent, it is the third highest in the nation. Havenstein, who spent 30 years as the CEO for the Manchester-based global defense company, BAE systems Inc., and the technology and engineering company SAIC, said that his major priority in office would be lowering the corporate business tax to 7.4 percent. 
“We need to make sure our corporate tax rates are competitive,” Havenstein said. “When you lower the business profit tax and you make business growth and economic growth a priority, you will see more revenue over time.” 
To make up for losses in business tax revenue, Havenstein is proposing a 2.5-percent decrease in spending across the state government. He said it’s too soon to know from what departments the cuts would come. 
“It’s premature for me to point out of anything specific, because the department heads will help me do that,” Havenstein said. “All I’m suggesting is, having run very, very large organizations ... and having to manage a budget three times the size of New Hampshire’s, I know how to do that. I would not accept a wish list [for departmental budgets] that is unrealistic and un-doable.” 
Hassan is critical of that approach, stating that it would create major revenue deficits. 
“The concern I have about my opponent’s plan is, at a time when New Hampshire taxes overall are low, his plan would blow a $90 million hole in the budget,” Hassan said. “His plan would go largely to large businesses, many that are located outside of New Hampshire. I think that would pull us backwards.”
 
Lowering business costs
Other challenges to creating an attractive business landscape include the relatively high health insurance costs and high electric rates, economists said. 
“The cost of health insurance is higher than every state except Massachusetts, and, notably, our electric rates are insanely high, and if you are a manufacturer today, you would be foolish to locate in New Hampshire,” Arlinghaus said.
This year, the state law created New Hampshire Health Protection Plan. While Anthem is currently the only company on the health care marketplace, four more are slated to be available next year. That will help lower costs, Hassan said. 
“We developed a plan that would be attractive to health insurance companies and we anticipate five on the health insurance exchange. With more competition, we are looking to reduce costs,” she said. “The Health Protection Plan was one reason New Hampshire attracted additional insurance companies to the New Hampshire Market.”
Havenstein attributed the high costs to the regulation of healthcare companies, which “made it very difficult when we only had one qualified vendor to participate in the state,” he said
But he is reserving his judgement about the Health Protection Plan, he said. 
“We’ll see as other carriers come on line whether or not we expand the network again and can pick up most of the doctors and healthcare facilities,” he said. “If we don’t expand, we won’t have achieved all that much. We also need to make sure we cont. to make health care costs transparent to our health care recipients.” 
When it comes to electricity costs, New Hampshire has the sixth highest in the nation, according to the Institute for Energy research. 
During her tenure, Hassan participated in a year-long collaboration among the six New England governors to try to find solutions to the region’s high energy costs. The governors planned to present a tariff proposal, which would impose federal tariffs on electric ratepayers to finance the energy infrastructure projects, but that was put on hold. Hassan was one of the governors who expressed concern and stated she would not support a plan that increased costs to ratepayers. She is a proponent of bringing natural gas pipeline capacity to the region. 
“The private market has recently shown a great deal of interest in investing in bringing additional natural gas supplies,” Hassan said. “I’ll also focus on ways to partner with private programs to provide additional incentives to providing clean energy. We need to work on a new and reliable energy grid.”
Havensein said he would take a multi-pronged approach that would focus on hydroelectric power, expanding and increasing the capacity for natural gas and focusing on expanding the state’s propane resources. 
“My strategy is to find every reasonable way to get lower cost base power into the New Hampshire grid … and making sure we’re not doing it away that increases our ratepayers’ cost,” he said.
 
As seen in the October 23, 2014 issue of the Hippo.





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