Charlie Arlinghaus

April 22, 2015

As originally published in the New Hampshire Union Leader

The political process often obscures truth and inhibits agreement. Too often each of us believes he or she knows what’s important but that the things you think are important are trivial and your insistence upon them is a sign of perfidy or cognitive dysfunction. On very rare occasions there is substantial agreement on a problem. This is good only because it allows us to attack someone else’s solution as near-sighted or disingenuous. It is inconceivable that an opponent might have a well intentioned idea that we simply think is a lower priority or might not work as well.

Increasingly politicians are realizing that there is no longer such thing as the grand mythological New Hampshire Advantage. Instead we live in the midst of economic stagnation that rarely hints at the former economic dynamism of our state. To their credit, most politicians fret every once in a while over this depressing economic reality. Most of them aren’t quite sure what to do but are pretty sure that what the other guy wants is wrong.

If you have the bad habit of reading this space with anything approaching regularity you know that I am continually harping on the remarkable growth of the 1980s and 1990s compared to the pathetic stagnation of the last fifteen years. The data are consistent across measurement categories but consider this one dramatic snapshot: Over the same number of months, the recovery of the 1980s created 118,000 jobs compared to 21,000 in the current recovery. This is not, as the poet says, your father’s Oldsmobile. Our economy used to hum and now it coughs.

Everyone tends to be critical of everyone else’s idea but at least people of all stripes and spots are now admitting that the status quo isn’t good enough. That, however, is where the agreement ends.

In general, I believe that anything that lowers the cost of doing business makes New Hampshire a more attractive state. That has traditionally been the way we do business. Some states (New York might be an example) amass large treasure chests and hand out loans and special tax statuses. This has not been New Hampshire’s way for two reasons. First, we can’t compete with the giant states in amassing war chests. New York has more tax burden to forgive and more coins in their fiscal couch than we tend to raise.

Second, we have had a historical preference for not picking winners and losers — which the government of any state tends to do poorly. If we have a program, we create criteria and allow any business which meets the criteria to apply. A notable current exception is the attempt to create programs and policies that apply only to one development in Dixville Notch. But that’s an exception based on romantic nostalgia that causes some to consider a proposal they would reject on principle were it located anywhere else.

Otherwise, job creation strategy falls into two camps. One group rejects that notion that businesses care about the cost of doing business and proposes instead to spend more government money. Their theory is that government “investment” is the key to stimulate our moribund economy. It would be wrong to say that all government spending has no effect but taking more in tax dollars and then doling them out does seem to presume that legislators have some superior knowledge base — a supposition somewhat short on evidence.

Others worry every time I suggest reducing our highest corporate tax rate. To them a quite modest cut isn’t enough to offset the beneficial results of increased government largesse. They’re quite right that the reduction is too small to have a dramatic effect but we’ll never lower the rate at all if we don’t start a little bit at a time.

One potential source of common ground is electricity. Some worry about high electric rates a little, others a lot. In January 2015, New Hampshire’s electric rates for all users were 65% higher than the national average. Much worse, for industrial users New Hampshire was 94% higher.

There is no worse signal we can send companies that use a lot of electricity like the high tech industry or manufacturers. With rates that ridiculous, if you tried to move your company to New Hampshire your board of directors can and should fire you for dereliction of duty.

At this point, electricity seems like more than a passing fad. Maybe we can agree 94% higher than the national average isn’t quite the right place to be.

5 replies
  1. William Fortune
    William Fortune says:

    I say that the “tax” rate on electricity is about 80 %. Many agree, but many “leaders” and “people-in-the-know” don’t or can’t understand why we have such high costs. Others say they will pay whatever is charged and others say that they don’t know what to do about it.
    The cost of burning wood to make electricity is about double, subsidizing peoples jobs, forcing the Utility companies to charge rate payers more. Wood burning produces carbon credits and those credits are sold to other producers. Then the money that the State receives goes to the general fund and not back to the rate payers. The bureaucrats and the politicians can get away with this because most people blame the Utility companies; it’s call blame the messenger.
    Most people tell me to contact this or that government agency to “get a grant”. After contacting about a dozen agencies I’m back to where I started.
    So the bottom line is that we need to defund about 1/2 of the government employees so we can reduce taxes so people will have money to invest in new business and new businesses can compete in the world economy.

    Reply
  2. Jim McConnell
    Jim McConnell says:

    Our biggest problem is that we’re competing with states that have no business profits tax. Texas, Wyoming, Nevada and South Dakota have no corporate or personal income tax. Very few corporations will consider New Hampshire if it means they have to give up 1/12th of their profits.

    Reply
  3. William Fortune
    William Fortune says:

    So, Jim McConnell, what are you going to do about it ??? The politicians don’t understand about the 80% tax on electricity; we need to have a “study” done; I can’t find anyone that will help with this.
    How do we get the word out to people about the fact that the consumer pays all the taxes on companies. ????

    Reply
  4. Jim McConnell
    Jim McConnell says:

    The only solution is to return to the small government which makes low taxes possible. The southeastern corner of the state prospers in part because it offers commuters to Massachusetts a lower personal tax than they would pay there. Massachusetts prospers because of the high tech horsepower surrounding MIT and Harvard. Economically, the rest of New Hampshire is beginning to resemble Appalachia.

    Unless New Hampshire becomes a tax haven again, as we were in the early 1990s, we don’t have much hope. At the time, Stephen Moore wrote an article pointing out that New Hampshire’s terrific economic results made it look like the state would be more at home in Texas than New England.

    One of the things we can do to reduce the cost of electricity is support an expansion of the existing Algonquin Pipeline, which will supply natural gas to Spectra’s existing power plants. At the same time we can oppose the Kinder Morgan Pipeline (NE Energy Direct) which will export natural gas through the Maritimes. The Industrial Energy Consumers of America have filed suit to stop it recognizing that exports on the scale envisioned will increase the cost of natural gas, making them less competitive with the Chinese. Needless to say, an increase in the cost of natural gas would also increase electricity prices in the New England grid, as 52% of the fuel used in our generating plants is natural gas.

    Incidentally, I’m a NH State Representative.

    Reply
  5. William Fortune
    William Fortune says:

    Incidentally, State Rep. Jim McConnell you don’t understand “the cost of electricity”. The cost of producing electricity is about 4 cents and that includes taxes collected ( “paid”) by the producer.
    Yes, a larger gas line would help. On the other hand less expensive electricity will only cause the State to increase taxes, because as the idea goes, “the STATE can’t afford to lose money” and the STATE made about $20,000,000 last year through taxes under the scams known as the Renewable Energy Portfolio and the Regional Greenhouse Gas Initiative. It’s a scam because the rate payers paid about double for electricity produced by the “not-so-Green” wood burners and the money collected from out-of-state producers went to the NH General Fund, and not back to the rate payers.

    I request that you receive, read and comprehend my and Charlie’s proposals regarding reducing the “size of Gov.. and that you get others to enter into discussions regarding those issues.
    Bill Fortune, Industrial Consultants Inc, for NHcleanenergy.com

    Reply

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