Businesses are raining cash on the state budget

,

With two months left in the fiscal year, state business tax collections are $217.2 million above budget. For context, business tax revenues came in $649.9 million over budget during the entire previous decade. 

So surplus business tax collections during the last 10 months have equaled 33% of the total surplus in business tax revenues collected from 2012-2021. 

To put it another way, business taxes have generated about three years’ worth of above-budget revenue in just 10 months. 

To get an idea of just how big that $217.2 million figure is, consider that business tax revenues for the first six months of FY 2012 totaled $231.7 million. 

The state’s collected almost as much in surplus business tax revenues during the 2022 fiscal year (so far) as it collected in total business tax revenues in the first half of 2012.

Total revenues from all state taxes for the current fiscal year are $382.2 million above budget. 

That’s a tremendous amount of surplus revenue for New Hampshire. Predictably, lawmakers have been busy allocating it to various priorities. (We’ll have more on this soon.) 

The good news is that they’ve been treating it as one-time revenue, and therefore not rolling it into permanent spending. The bad news is that they’re not dedicating any significant portion of it to state pensions, which would be the most fiscally responsible thing to do and would save the state money in the long run, as we outline here. 

/by

Time is running out for statewide housing reform this year

, ,

New Hampshire’s critical housing shortage has emerged as the No. 1 impediment to state economic growth, and the legislative session could end with no substantial progress on the issue. 

In Concord, there is broad agreement that housing is a serious problem. There is little agreement on solutions.

Paralyzed by a widespread reluctance to place legal constraints on local governments, legislators have killed or watered down bills drafted to address the primary cause of the shortage: local planning and zoning ordinances. 

Senate Bill 400, intended to be the major housing reform bill of the year, never offered the sort of sweeping changes that would fix the local regulatory problem. But the most significant changes it did offer were removed last week by the House Municipal and County Government Committee. 

The committee even added language designed to exempt suburban and rural communities from the state’s current mandate to allow housing for lower-income families. 

This follows the Legislature’s rejection of previous bills to prohibit excessive minimum lot sizes and allow small multi-family housing (up to four units) in places served by municipal water and sewer. 

Deference to local governments has not been the only obstacle. The House Municipal and County Government Committee removed from SB 400 a state program to reward communities that allow more housing. 

In the bill’s proposed New Hampshire Housing Champion Certification program, municipalities that adopt ordinances to promote new housing development would be eligible for increased state infrastructure funding. 

An absence of a substantial legislative fix would leave Gov. Chris Sununu’s proposed InvestNH Housing Fund as the only statewide plan. The governor has been a strong and passionate leader on the housing issue. Working within his authority to manage COVID relief money, he’s proposed spending $100 million in federal American Rescue Plan Act (ARPA) funds to create incentives for new housing development. 

That effort was stalled in the Executive Council after objections from affordable housing advocates that the money wasn’t reserved for below-market developments. 

This obsession with steering the housing market toward lower-priced units via government intervention is yet another factor that has contributed to the state’s critical shortage. 

Developers need to make a return on their investment. When government insists that a portion of a development be sold or rented at below-market rates, that discourages new construction. In New Hampshire, town boards even use “workforce housing” quotas to kill projects they don’t want, as they know that these quotas can make projects unprofitable. 

The governor’s plan would allocate $60 million to developers to encourage multi-family housing projects, $30 million to municipalities to encourage the issuance of new housing permits, $5 million to municipalities to study improvements to local planning and zoning ordinances, and $5 million for the demolition of vacant or dilapidated buildings. 

The money to municipalities is directed at overcoming real obstacles by changing the incentives local boards have. Right now there is very little incentive to approve new projects, largely because of vocal opposition fueled by misinformation about the impacts of new housing on local communities. These municipal-directed dollars would offer incentives to move town boards in the right direction.

The seed money for new development would not work the same way. Developers already have every incentive in the world to build, especially in the current market. Developer financing is not a major obstacle to new housing development. Municipal ordinances are. 

The $60 million could cover some lost profits of developments with below-market-rate units. But once that subsidy goes away, those rents will rise to market rate. In any case, subsidizing new development is not necessary, as financing for housing is readily available in the private sector. 

Local ordinances are the problem, and so far, legislators have proven reluctant to approve statewide solutions that limit local authority. Creating better incentives for local governments to approve more housing would be a good option. Unless legislators change course in the next three weeks, the governor’s proposal will be the last statewide solution available this year.

/by

The dangerous impulse to make people do business with your friends

, ,

Using pressure tactics or government regulations, progressives have sought to banish from the market business activity they dislike. Some Republicans have responded in kind.

In New Hampshire, House Bill 1469 showcases a Republican effort to cement culture war preferences in law. It offers a case study in regulatory overreach.

The bill creates a list of “prohibited acts for banks, credit unions, and businesses.” The list is long, vague and broad. And despite the title, the bill regulates every New Hampshire business, not just the financial industry.

HB 1469 labels as “discrimination” many non-financial reasons for not doing business with someone. 

Among the prohibitions: No financial institution may “discriminate against, impose as a precondition, advocate for or cause adverse treatment of, any person, business, or organization in their business practices” based on “ideological, philosophical, or political views and opinions” or other enumerated non-financial criteria.

The non-financial criteria include “social media posts; Internet browsing history, dietary habits, medical status, participation or membership in any clubs, associations, or unions, etc.; political affiliation; or place of employment or source of legal income.”

The bill would write similar language into the state’s Consumer Protection Act. The Attorney General’s Office testified that this  would “regulate all businesses” in the state, something sponsors did not appear to intend.

Thus every decision not to transact business would be open to potential civil rights litigation on the grounds that it might have been tainted by a non-financial consideration. 

In going after “woke” global corporations, HB 1469 would treat small New Hampshire businesses the way the Colorado Civil Rights Commission treated a Christian cake baker — as pawns in a broader culture war. 

Such a sweeping regulation of private business activity could be seen as justified if Granite Staters had access to only one bank. But they can choose from hundreds of financial institutions. 

New Hampshire has 16 state-chartered banks, eight state-chartered credit unions and 34 state-chartered trust companies. That’s in addition to 783 federally chartered banks, including many that are online-only and process applications in minutes. 

If one or 10 or 50 banks decide not to do business with center-right customers in a center-right country, competitors would immediately take up that business. Fear that conservatives will lose all banking privileges is overblown.

There is no shortage of financial institutions willing to take Americans’ money. And there is no shortage of entrepreneurs who would be happy to get rich by lending money to gun owners, meat eaters and other practitioners of great American pastimes. 

But there is a shortage of states where legislators resist the temptation to let people resolve their differences peacefully in a free and open marketplace. New Hampshire is one of the few places where leaving people alone is a cultural value. Kill that here, and the consequences will be a lot worse than some bank deciding to lose money by shrinking its customer base. 

Some Republicans think they need a law to protect them from businesses run by Democrats. But the market already does that via competition. Expanding business regulations so broadly will only give left-wing activists another tool with which to control businesses once their allies return to power, which is inevitable.

When that happens, conservatives will want to be able to argue against such proposals on free-market grounds. Regulating the political motives of every business transaction will do more than topple Republicans from that moral high ground. It will amount to abandoning the hill and destroying it. 

The state banking commissioner testified that the department has received no complaints of political discrimination in banking. Given that, a less burdensome alternative is obvious, if lawmakers feel that they have to “do something.” Task the department with collecting consumer complaints about discriminatory practices and reporting those complaints annually to the Legislature. 

If financial institutions begin to systematically turn away right-of-center customers and business partners, this will show up in the data. If those customers are unable to find other institutions willing to take their business, then lawmakers could consider an appropriate legislative remedy. 

In the meantime, legislators might want to consider the wisdom of a recently departed Granite Stater who cautioned that “there are just two rules of governance in a free society. Mind your own business. Keep your hands to yourself.”

/by

Virtual luncheon with Tax Foundation President Scott Hodge April 13 at noon

Join us Wednesday at noon for an online chat with Tax Foundation President Scott Hodge. Learn just how progressive the federal tax code is, the impact of the Biden administration’s tax and spending proposals, and how states are using their tax codes to make their economies more competitive. 

Scott Hodge has been president of the Tax Foundation in Washington, D.C., since 2000, and is recognized as one of Washington’s leading experts on tax policy, the federal budget, and government spending. 

Scott has written and edited three books on the federal budget and streamlining the government and has authored hundreds of studies on tax policy and government spending. His work has been published in The Wall Street Journal, The Washington Post, USA TODAY, the New York Post and The Washington Times, among many others.

This virtual luncheon will be presented via Zoom and is free, but registration is required. Register online here.

/by

Josiah Bartlett Center for Public Policy becomes Woodrow Wilson Center for State Planning

CONCORD — The Josiah Bartlett Center for Public Policy today announces its transformation into the Woodrow Wilson Center for State Planning.

After a quarter century offering market-based policy solutions that promoted opportunity, prosperity and liberty for all Granite Staters, the Bartlett Center board concluded that the people don’t really want to be left alone, they just want to rule others with an iron fist forever.

“Turns out the little guy doesn’t really want freedom,” said Drew Cline, the center’s president. “He wants to crush his enemies, drive heretics into the sea, and plunder the rich. So, like everyone else, we’ve decided to exploit those primitive instincts to obtain power and wealth for ourselves and our friends.”

The new Woodrow Wilson Center for State Planning will focus on manipulating the people’s tribal impulses to create resentment of the wealthy, using that resentment to obtain power for a small cabal of intellectuals, then rearranging all of society into a people’s utopian collective ruled by the smartest people. 

The center’s new mission statement is “To rule wisely and benevolently. But mostly wisely. According to us.”

Its new motto is “Shut up! We’re in charge!”

The Woodrow Wilson Center for State Planning will be divided into four divisions to research policies that will force the greatest progress on the people in the shortest amount of time. They are:

  • The Genghis Khan Institute for Cultural Domination
  • The Karl Marx Institute for Manipulating Class Resentment
  • The Hugo Chavez Academy for Industrial Management
  • The Bernie Sanders Society for the Creation of Eccentric Utopian Schemes

“Granite States have always prized freedom and prosperity over dictatorial control by their intellectual betters,” Cline said. “Fools! When they witness the firepower of this fully armed and operational think tank, they’ll realize their mistake and welcome the rule of their benevolent overlords. And if that doesn’t work, we’ll nationalize The Beach Plum and win their loyalty with free fried fish.*”

* Limit one haddock bite and fry per family per week. All families must work one shift per week to qualify.

 

** If you fell for this, maybe you really do need to be ruled by an intellectual superior.

/by

Should N.H. pay people to move here?

,

New Hampshire attracts residents with its high quality of life and exceptional level of economic opportunity. Though located in remote northern New England, the state has posted population and economic growth rates superior to its Canada-bordering neighbors, both of whom are in serious danger of slipping into population decline this decade.

The biggest constraint on New Hampshire’s population growth is not a natural deficit in the state’s attractiveness, but a government-imposed housing shortage. 

So it’s interesting that legislators are considering a bill to spend $750,000 worth of taxpayer money to pay people to live here. 

House Bill 1524 would create a state National Service Alumni Attraction and Retention Fund. 

The money would finance “grants to New Hampshire-based employers and institutions of higher education for the purpose of providing financial assistance, workforce development, and education to AmeriCorps alumni and returned Peace Corps volunteers” interested in pursuing post-graduate education or work in the state.

The plan differs from an existing program in Vermont in scope, but not concept.

Vermont in 2018 created a remote worker relocation program that offered $10,000 to anyone who would commit to moving to Vermont and working remotely. It was followed by another program to pay people $7,500 to live and work in economically distressed parts of the state. 

Vermont’s treasurer reviewed the remote worker program in 2019 and concluded that it was impossible to determine whether people moved for the money or claimed the money for moves they’d previously planned. 

When a consultant used questionable multipliers to conclude last year that the programs paid for themselves, the treasurer publicly criticized the findings. 

In any case, the programs enrolled just 307 people, which comes to 0.047% of Vermont’s population of 645,570. From 2018-2019, a total of 14,915 people moved to Vermont voluntarily (who knows why?), and another 16.337 moved out. 

Maine is getting into the cash bait game too. The Senate just passed a bill intended to keep Mainers from leaving the state by forgiving up to $40,000 in student loan debt for first-time home buyers. The taxpayer cost would be $10 million. 

Now some New Hampshire legislators want to use taxpayer money to recruit national service volunteers to live or study in the state.

It’s not clear why these particular individuals would be more worthy of taxpayer-funded recruitment than, say, angel investors, construction workers, clergy, nurses or any other non-profit volunteers. But it’s certain that a program created to lure one group favored by politicians will be expanded to include other groups favored by other politicians.

And that gets to the heart of the problem. Any such program would open the state coffers for giveaways to whichever groups can gain the attention and admiration of politicians. A new program to bestow state favors on politically popular groups would create additional perverse incentives for politicians.

Politicians would have a strong incentive to add politically popular subgroups to the list of people eligible for taxpayer subsidies. Individuals, no matter how worthy, who can’t gain the favor of legislators would wind up subsidizing the groups who have. 

Taxpayer money is a finite resource to be used with restraint and discretion for public purposes only. The gifting of tax money to people who have performed a service favored by politicians runs against the spirit, if not the letter, of the state constitution. 

Part I, Article 31 states that the Legislature shall assemble for two reasons only, to redress public grievances and to make “such laws as the public good may require.” New Hampshire would have to be in a dire state of cultural decay for the public good to require taxpayer-funded recruitment of national service volunteers.

Part I, Article 36, limits the granting of public pensions under the principle that “economy” is “a most essential virtue in all states” and therefore “no pension shall be granted, but in consideration of actual services; and such pensions ought to be granted with great caution, by the Legislature, and never for more than one year at a time.”

The grants to be funded in HB 1524 aren’t pensions precisely, but they are similar. They are taxpayer grants to individuals in recognition for services rendered to the public. However, the public is not necessarily the taxpayers of New Hampshire, but rather the people of any place where the volunteers served. 

That makes the National Service Alumni Attraction and Retention Fund a payment by New Hampshire taxpayers for services rendered to any people on Earth. Why it’s in New Hampshire taxpayers’ vital interests to make cash payments to people for services rendered anywhere is a mystery. 

Finally, as the fund is designed to recruit these specific volunteers to New Hampshire, it is about more than just rewarding this service. Its goal is to improve the state by paying those volunteers to live here temporarily. 

The use of taxpayer money to create a custom-designed state population is questionable enough. But to recruit people with no specific economic assets for a year or two of work or study is of no discernible long-term value to the state. 

Good public policy in a republic avoids creating favored classes of citizens by bestowing tax money on politically preferred groups.

/by

Policy lessons in a scoop of raw goat’s milk ice cream

,

Until last week, it was legal to for small New Hampshire farms to sell raw (unpasteurized) milk, cream, cheese, butter, yogurt and kefir directly to consumers. But anyone stopping at a local farm and hoping for raw milk ice cream was out of luck. That product was illegal. 

Legislators discovered this omission in 2019 when Little Red Hen Farm in Pittsfield was cited for selling ice cream made from raw goat’s milk. Farmer Jill Fudala said she thought she could sell the ice cream since the state let her sell all the other raw milk products. 

But it turns out that legislators had left ice cream off the list of approved raw milk products. 

Rep. James Allard, co-sponsor of House Bill 95, to allow the sale of raw milk ice cream, said at a hearing last March that no one knew why ice cream was excluded. 

The bill, signed into law by Gov. Chris Sununu last week, limits raw milk ice cream servings to six ounces. (Farms where raw milk sales are allowed without a license are limited to producing no more than 20 gallons of raw milk a day.)

The size restrictions are to limit outbreaks. Unpasteurized dairy products are more likely to contain harmful bacteria. State officials reason that prohibiting large-scale production of raw milk products reduces the risk to the public while allowing small farms to deal in small quantities.

It’s a balancing act. After pasteurization became widely available, bans on unpasteurized dairy products followed. But modern farms are cleaner than their predecessors of a century ago. As  raw milk has become a trendy consumer product, many states have responded by carving out exceptions to the bans. 

In New Hampshire’s case, the exception made an exception of ice cream. 

This seemingly insignificant story offers three real-life lessons for thinking about public policy.

1. The details matter. Minor mistakes or oversights in writing rules and regulations can have real consequences. Because legislators left one dairy product out of a list, a small farm was cited by the state for doing something that aligned with the spirit, but not the letter, of the law.

2. Attempting to eliminate risk creates other risks. Banning raw milk sharply cuts the risk of bacterial infection. The tradeoff is that it puts small farms at increased risk of failure. Lawmakers opted to strike a balance by allowing limited raw milk sales at small farms and requiring labeling so consumers would know what they were buying. A co-sponsor of HB 95, Rep. William Marsh, is a medical doctor. He testified last March that allowing small-scale raw milk sales would carry some limited risk of illness, but the overall risk would be reduced because the state could then focus its inspection efforts on larger farms that carried much larger public health risks.

3. Every industry regulation attracts rent-seeking. HB 95 was a tiny change to allow tiny farms to sell tiny ice creams. And yet large dairy lobbyists tried to crush it. In April of last year, the National Milk Producers Federation (which sounds like a cartel from Star Wars) and the International Dairy Foods Association sent a letter requesting that legislators kill the bill. 

/by

A gas tax holiday is just a holiday from reality

, , , ,

Rising gas prices have prompted calls for a state gas tax holiday. Though a gas tax holiday would provide some immediate relief from high prices, the cost would have to be paid later, possibly through higher taxes or deteriorating road conditions. 

In New Hampshire, the gas tax is not a general tax. It’s a user fee. Part 2, Article 6-a of the New Hampshire Constitution requires that it be used exclusively for road construction and maintenance.

State gas tax revenues have not kept up with inflation this century. In the fiscal year ending in June of 2000, total unrestricted gas tax revenues were $116 million. That would equal $182 million in 2021 dollars. But in FY 2009, unrestricted gas tax revenues were $131.6  million before falling back to $116.5 million in FY 2021. 

While the state’s population grew by 13% since 2000, gas tax revenues have remained essentially flat in nominal terms and have fallen in real terms. 

Because the gas tax is a user fee, a holiday would stop charging people for use of the public roads for its duration. But it wouldn’t stop the wear and tear on the roads. If that funding is not made up later, the state would have to forego repairs and maintenance, replace the lost revenue with higher taxes or transfers from somewhere else, or find some way to reduce costs. 

Given current inflation, it’s not clear how the DOT would reduce costs, leaving the other two options as the most likely long-term effects of a gas tax holiday. 

Legislators have floated the revenue transfer idea. But two proposals to do that were rejected this week in the House Finance Committee. The first would have had motorists fill out a rebate form to receive checks from the state. Motorists would have had to keep their gas receipts. 

The costs of administering that scheme prompted the amendment to be replaced with a plan to send every owner of a registered motor vehicle a $25 check for each vehicle. The cost was estimated at $40 million. The money would come from the general fund, not the highway fund, so it wouldn’t be a gas tax rebate. It would simply be a check from the state to help people cover the cost of paying for fuel. 

At this week’s prices, $25 wouldn’t cover even half the cost of filling a 12-gallon gas tank.

Such one-time tax rebates are not good tax policy. They don’t have the kind of stimulating effects that tax rate cuts do. 

“The tax code should not be used like an appropriations bill to dole out benefits, effectively putting a chicken in every pot,’” as the Tax Foundation put it in a 2001 policy brief. “The primary purpose of the tax system is to raise revenue, not to micromanage the economy with subsidies. It should create a level playing field in which individual and business decisions are made to achieve the best economic outcomes.”

In this case, the general fund should not be used to dole out benefits. It should pay for necessary public services. 

If the state has a surplus of federal COVID money or other one-time revenues, it would best be used to cover state obligations that are difficult to cover with recurring revenues, such as reducing the shortfall in the state pension system. 

If the state has an ongoing surplus of recurring revenues, it should consider another tax rate cut.

As the Tax Foundation has pointed out regarding a federal gas tax holiday, it would do nothing to change the underlying causes of gas price increases and could create other problems.

Though it sounds like a nice way to give consumers some short-term relief, a gas tax holiday is not sound policy.  

/by

The dumb fight over an 0.1% business tax cut

, ,

Republicans in the Legislature are pushing to lower New Hampshire’s Business Profits Tax by one tenth of one percentage point, from 7.6% to 7.5%. This tiny change would make New Hampshire’s rate the same as Connecticut’s. We would then be tied for the second-lowest top corporate tax rate in New England. (Rhode Island’s rate is 7%. Maine and Vermont have graduated corporate tax rates.)

But of course, there’s a fight over it.

 

New England Top Corporate Tax Rates

Maine: 8.93%

Vermont: 8.5%

Massachusetts: 8.0%

New Hampshire: 7.6%

Connecticut: 7.5%

Rhode Island: 7%

 

Democrats oppose the rate cut, saying it would cost the state $8.5 million a year. That number comes from the Legislative Budget Assistant’s (LBA) fiscal note on House Bill 1221, the bill to reduce the rate.

That’s a tiny amount in the $13.5 billion state budget. It’s also probably wrong, as the LBA doesn’t measure the impact tax reductions will have on human behavior. The office simply calculates the reduction in revenue based on the assumption that a lower rate will automatically bring in less money. 

As we’ve pointed out, the business tax rate cuts implemented since 2015 have not reduced state revenue, as the LBA had predicted. 

“In 2017, the Office of Legislative Budget Assistant projected that the additional business tax rate reductions passed in 2017 would cause an $11 million reduction in business tax revenues in FY 2019. Business tax revenues came in $151.6 million above plan that year.”

Even if the 0.1% rate cut allowed businesses to keep an additional $8.5 million a year of their own money, the state would hardly notice. It’s awash in business tax receipts it didn’t plan to have.

As we reported in January, business tax revenues surpassed budgeted amounts by $649.6 million from the 2012-2021 fiscal years. 

So far this fiscal year, business tax revenues are $91.5 million (18.5%) above plan and $121.3 million (26.2%) above the prior fiscal year. 

The other talking point used against the proposed cut is that it will benefit only, or primarily, out-of-state corporations. That’s misleading.

New Hampshire has a single, flat Business Profits Tax rate. All businesses that pay taxes pay the same 7.6% rate. That includes everyone from the mom-and-pop store to Walmart, Target and BAE Systems. 

As of this tax year, any business with gross income of at least $92,000 pays the tax. (Prior to this year, the threshold was $50,000.)

There were 170,000 registered businesses in good standing in New Hampshire in 2019, and 76.3% of them paid no BPT. That’s by design. (The number will increase this year, as the filing threshold was nearly doubled.)

Democrats claim that BPT rate cuts are for “out-of-state corporations” because businesses with headquarters outside New Hampshire pay 60% of all BPT taxes collected. What they don’t say is that those companies represent a very small portion of all BPT-filing businesses in New Hampshire. 

Out-of-state companies made up only 5.7% of BPT filers in 2019, according to the state Department of Revenue Administration’s 2021 annual report. So 94.3% of companies that made a Business Profits Tax filing were based in New Hampshire.

We asked the DRA to break down the numbers by payers instead of filers, as some filers don’t have a tax liability. These previously unpublished numbers show that New Hampshire companies make up the vast majority of BPT payers.

Out-of-state corporations made up only 10.6% of BPT payers in 2019. The remaining 89.4% of businesses that paid BPT in 2019 were New Hampshire-based businesses.

And many of them are small businesses. Proprietorships, which are defined by the state as any unincorporated business owned by an individual, paid only 3.6% of BPT revenue collected in 2019 but made up 20.1% of BPT payers. Partnerships made up another 19.6%, fiduciaries 1.7%, and corporations rounded out the rest at 48%.

Contrary to the opponents’ talking points, just shy of 90% of the businesses that would benefit from a BPT tax cut are headquartered in New Hampshire.  

New Hampshire-based businesses pay a smaller share of the total amount collected because they’re smaller companies with relatively smaller profits. But because they’re smaller, rate cutes can be more meaningful to them than to large national or multi-national businesses.

This tax cut would move New Hampshire into a tie for the second-lowest top corporate tax rate in New England. And it would do so at little to no cost. It’s kind of surprising there’s even a fight about it.

/by

Government shapes your food and beverage options more than you might realize

, ,

In a gesture of solidarity with Ukraine, Gov. Chris Sununu has ordered all Russian booze removed from the shelves of New Hampshire’s state liquor stores. No more of Vlad’s vodka for you. 

When it comes to state-run liquor stores, the government has total control over not only the products, but the layout, location, design, staffing and all other details. What might surprise Granite Staters is just how much the government controls such matters among food and beverage options in the private market as well. 

The commercial and cultural landscape in which we operate everyday is shaped in powerful ways by government regulations. A quick look at two popular trends of recent years helps show how.

Not long ago, New Hampshire had no small craft breweries. It wasn’t because New Englanders were hostile to locally made beer. Vermont had a nationally renowned craft brew culture for decades. New Hampshire lagged behind because outdated state laws did not allow small breweries here. 

After laws were changed several times to allow smaller and smaller brewing operations, craft breweries exploded across the state. But breweries are still constrained by absurd regulations. 

For instance, breweries classified as “beverage manufacturers” rather than “brew pubs” may not operate their own restaurants. They may only contract with third-party vendors for food, including food prepared and served on-site. 

Beverage manufacturers may sell beer samples on-site. But brewery owners say state regulators require them to use separate points of sale for those samples. Because beer served for drinking on-site is a “prepared food,” it is subject to the rooms and meals tax. Beer served in cans and bottles for consumption off-site is not. So regulators have required breweries to sell these items at two different cash registers, brewers say. 

House Bill 1556, introduced by Rep. Ross Berry, R-Manchester, would end this absurdity by letting breweries sell samples at the same register where customers buy bottles and cans. 

And beverage manufacturers may operate one — and only one — off-site retail outlet. That outlet must be able to produce beer. House Bill 1039, introduced by Rep. John Hunt, R-Ringe, would remove the production requirement so the retail outlet could be a simple store. 

Food trucks are popular partners for local breweries. They attract customers without the brewery having to open its own restaurant. (And beverage manufacturers use them to comply with the law requiring third-party food vending.) But regulations make it hard for food trucks to operate in New Hampshire.

As gourmet food trucks have emerged in cities across America, the trend has faltered in New Hampshire because of the way food trucks are regulated here.

The whole point of food trucks is that they’re mobile and can go where the customers are. But food truck owners who want to roll between, say, Portsmouth, Concord, Manchester and Nashua have to pay to be licensed in each municipality. 

That means paying multiple municipalities to conduct similar health and safety inspections. Then, once in town, another set of location restrictions dictates where, when, and how food trucks are allowed to operate. 

House Bill 1595, introduced by Rep. Matt Wilhelm, D-Manchester, would improve this system by creating a single state-wide food truck license issued by the Department of Health and Human Services. 

Municipalities would still get to use zoning and other ordinances to dictate where, when, and how food trucks can operate. But health and safety inspections and licensure would move to the state level.

In response to increased food truck demand, other states have begun passing similar laws. Rhode Island, Washington and Arizona have state-level food truck licensure.

HB 1595 would add New Hampshire to the short but growing list of states that have food truck freedom. But the bill received an “Inexpedient to Legislate” (kill) recommendation from the House Commerce Committee. 

Among committee members’ stated reasons for opposing the bill is that it would take revenue from municipalities and add a small cost (for a single staffer) at the state Department of Health and Human Services. 

New Hampshire has 175 licensed food trucks, according to the Department of Health and Human Services. A state food truck license would reduce financial and paperwork burdens, resulting in more food trucks. That would help our rapidly aging state attract more young people, and help our businesses attract more employees during this severe labor shortage.

But that probably won’t happen this year because some legislators think maintaining local food truck licensing revenue is more important than stimulating entrepreneurship and improving the quality of life of Granite Staters. 

Given the choice between losing a few thousand dollars in local licensing revenue (not remotely enough to trigger tax increases), or gaining more taco trucks, we’re pretty sure the vast majority of Granite Staters would go with the taco trucks.

This summer, when you wish there were more food trucks in New Hampshire, or that you could have fresh chili on the hot dog you just bought from that push cart vendor (sorry, it has to be pre-made chili in a single-serving package), you’ll know that it’s not because people don’t want to provide you that service. It’s because regulations make it harder than necessary for them to do it. 

 

/by