Join us for a New Hampshire Primary party hosted by the Josiah Bartlett Center and The Dispatch

When: 6 p.m., Wednesday, Jan. 17th, 6 p.m.

Where: Grappone Conference Center, 70 Constitution Ave., Concord

What: Enjoy cocktails, camaraderie & conversation with Steve Hayes, Jonah Goldberg & Sarah Isgur of The Dispatch and Josiah Bartlett Center President and WFEA radio host Drew Cline

Details: 6-7 p.m.: Cocktail reception with our Dispatch & Josiah Bartlett Center hosts; 7-8 p.m.: A fun conversation & Q&A with Steve, Jonah, Sarah & Drew

On the menu: Heavy hors d’oeuvres, a cash bar & raffle prizes!

Only $20 per person!

 

RSVP by clicking The Dispatch logo below

 

The Josiah Bartlett Center has warned for the last few years that local government inaction on housing might prompt legislators to restrict local zoning authority. But legislators might have an even stronger incentive to act than the growing public frustration with local land use regulations: Falling revenue.

A combination of high interest rates and an extreme shortage of homes on the market has pushed housing affordability to a two-decade low in the state. Though interest rates clearly play a role, the New Hampshire Association of Realtors points out that supply remains the primary culprit. “It’s a lack of inventory that continues to push pricing to record heights,” the association wrote last month.

Home prices have fallen a bit in New Hampshire since hitting a record in October. But that’s not because the market has improved. Rather, interest rates are keeping some potential buyers on the sidelines, causing a decline in the number of aggressive bidding wars. When interest rates ease, buyers will return to a market still plagued by a severe inventory shortage.

No one knows how long interest rates will remain high. If the squeeze of high rates and low inventory continues to push buyers out of the market, New Hampshire could see a prolonged home sales slump. And that will be felt in Concord. In fact, it already has been.

For the first five months of the 2024 fiscal year, real estate transfer tax revenues are down 20%, or $23 million. That’s the largest decline of any state tax this year. 

We know what some are probably thinking right now. “But what about Interest & Dividends tax revenue?” Eliminating that tax, as state law does by the end of next year, will have a larger impact on the state budget. 

But the I&D tax phaseout is part of a strategy to make New Hampshire more economically competitive. The anticipated tradeoff is that making the state more attractive to investors, retirees and entrepreneurs will generate greater economic activity, and thus greater economic growth, in the long term. 

There is no such tradeoff with falling home sales. A $50 million annual decline in real estate transfer tax revenue caused by falling home sales is simply lost revenue. 

Worse, it reflects shrinking economic activity in an important industry, which will have ripple effects in the broader economy. Lawmakers have made clear that they want state policy to stimulate economic growth. Local policies that hurt economic growth, such as overly restrictive land use regulations, are increasingly being scrutinized by legislators. 

Though state lawmakers and local boards are unable to affect interest rates, they can do something about the housing supply. They can lift regulatory burdens that block or restrict new home construction. 

So far, legislators have been reluctant to preempt local regulations. Yet with  polls showing that most Granite Staters want government to address the state’s housing shortage, pressure is increasing on legislators to act. Falling state revenue by itself probably wouldn’t trigger state action. Combined with rising political pressure to act, though, it becomes another incentive for legislators to do something. 

So local boards (and voters at town meeting) have another warning sign. The longer local governments wait to clear the way for more home construction, the more likely it becomes that legislators will do it themselves. 

Most of New England has some work to do to keep up with New Hampshire’s status as the nation’s freest state.

In the latest edition of the Cato Institute’s Freedom in the 50 States report, while New Hampshire finishes first in overall freedom (an index of personal and economic freedom), the other five New England states each finish in the bottom half among all 50 states.

Overall freedom:

  • New Hampshire: #1
  • Massachusetts: #26
  • Connecticut: #33
  • Rhode Island: #36
  • Vermont: #42
  • Maine: #43

When breaking down the rankings, all New England states do well on personal freedom (Connecticut being the lowest ranked at No. 16), but New Hampshire rises above the rest on economic freedom.

Economic freedom:

  • New Hampshire: #1
  • Massachusetts: #32
  • Connecticut: #33
  • Rhode Island: #37
  • Vermont: #43
  • Maine: #45

The two components of the economic freedom index are fiscal and regulatory freedom, on which New Hampshire also scores much higher than its regional neighbors.

Fiscal freedom:

  • New Hampshire: #2
  • Massachusetts: #18
  • Connecticut: #20
  • Rhode Island: #22
  • Maine: #41
  • Vermont: #46

Regulatory freedom:

  • New Hampshire: #17
  • Massachusetts: #39
  • Connecticut: #40
  • Rhode Island: #42
  • Vermont: #43
  • Maine: #45

Needless to say, all of New England, New Hampshire included, could use some regulatory reform. (These rankings accounted for laws enacted as of December 31, 2022, meaning New Hampshire’s universal license recognition law didn’t make the cut.)

In the Fraser Institute’s Economic Freedom of North America 2023, New Hampshire is first in economic freedom among all North American jurisdictions, while Connecticut is the next “freest” at No. 25 among just the 50 U.S. states. After that, it’s Massachusetts (28th), Maine (41st), Rhode Island (42nd), and Vermont (48th).

How free your state is directly affects many important outcomes. One is the movement of people.

“Fiscal, regulatory, and personal freedom are all independently, positively, statistically significantly correlated with net in-migration,” write William Ruger and Jason Sorens, authors of Freedom in the 50 States.

It’s no surprise, then, that New Hampshire is winning the migration game. According to data collected by Kenneth Johnson at the UNH Carsey School of Public Policy, the Granite State experienced a net migration gain of 18,300 in 2021 and 2022. Forty-four percent of those migrants came from Massachusetts, 8% came from Maine and Vermont combined, and 14% came from elsewhere in the Northeast.

New Hampshire was one of only two New England states to see its population increase every year from 2018–2022, growing to nearly 1.4 million today—a 6% increase since 2010—while a state like Vermont sits at about 647,000 people. (The other was Maine, which saw a migration surge during the COVID-19 pandemic.)

Net in-migration isn’t something New Hampshire can take for granted. More people died in the Granite State than were born in 2021 and 2022, and New Hampshire consistently has one of the lowest birth rates in the country, meaning the state’s recent population growth has been entirely due to those moving into the state.

And what explains the Granite State’s net migration gain? “One channel by which economic freedom affects in-migration is by increasing economic growth,” Ruger and Sorens write. “We found a robust relationship between economic freedom in one year and income growth in the next.”

The bottom line is that freedom isn’t just valuable in its own right (which it is). Freedom, fundamentally, leads to greater economic opportunity and prosperity. More freedom generally means more of the other two as well.

New Hampshire’s median household income of $83,449 is $15,000 higher than Vermont’s and $20,000 higher than Maine’s.

While the rest of New England champions increased government spending for social programs and public welfare, higher tax rates, more regulation, and top-down control over education and the economy, they get in return lower levels of economic opportunity, growth, and prosperity than New Hampshire does.

Shopping in tax-free New Hampshire this Thanksgiving weekend would save New Englanders between $31–$40, based on projected spending during Black Friday and Cyber Monday.

According to an annual survey conducted by Deloitte Consulting LLP, consumers plan to spend an average of $567 over the course of Black Friday and Cyber Monday this year. 

That’s a 13% jump from last year’s average. 

The sales tax rate for each New England state (both statewide and local, if applicable) is:

  • New Hampshire: 0%
  • Maine: 5.50%
  • Massachusetts: 6.25%
  • Connecticut: 6.35%
  • Vermont: 6.359%*
  • Rhode Island: 7%

*Vermont is the only New England state that has local sales taxes, which average 0.359% (maximum of 1%). The combined sales tax rate in Vermont, on average, is 6.359%. 

At those rates, the sales tax bill on $567 spent this weekend would be:

  • New Hampshire at 0% = $0 
  • Maine at 5.50% = $31.19
  • Massachusetts at 6.25% = $35.44
  • Connecticut at 6.35% = $36
  • Vermont at 6.359% = $36.06
  • Rhode Island at 7% = $39.69

Spending Black Friday in neighboring Maine turns a $567 bill into a $598 bill. Shopping in Massachusetts turns it into $602, while shopping in Connecticut or Vermont would bring the total bill to $603.

Rhode Island tops the New England Christmas shopping naughty list this year with a total price tag of about $607.

But in New Hampshire, that bill stays put at $567.

The lack of a sales tax is one reason New Hampshire finished first in overall freedom (including No. 1 in economic freedom) in the Cato Institute’s Freedom in the 50 States report, as well as first in economic freedom among all North American jurisdictions in the Fraser Institute’s Economic Freedom of North America 2023

Meanwhile, the five other New England states finished in the bottom half of both rankings. 

New Hampshire shoppers are the real Black Friday winners: In addition to saving up to $40 in sales taxes versus their neighbors, the tax-free shopping environment has stimulated the development of outlet malls and other low-price shopping attractions that help to keep prices low throughout the year.

 

We’re No. 1!

Again!

Fresh from its No. 1 ranking in the Fraser Institute’s Economic Freedom in North America report, New Hampshire tops the 7th edition of the Cato Institute’s Freedom in the 50 States report.

“New Hampshire is once again the freest state in the Union and in 2022 set the record for the highest freedom score ever recorded in the 21st century. Governor Chris Sununu and the New Hampshire legislature have much to be proud of. In 2000, on the full index, Nevada was number one, just ahead of New Hampshire.”

The Cato report ranks states on 230 variables in the broad categories of economic freedom, personal freedom and fiscal policy.

New Hampshire excels in taxation and government spending. “The state government taxes less than any other state but Alaska,” the report concludes. The state scores well on rankings of government debt, government consumption and government employment.

Although New Hampshire fares well in many categories, our regulatory burden “is a blemish on such an otherwise free state,” the authors write.

Not surprisingly, “the Granite State’s primary sin is exclusionary zoning.” On local land use regulations, “New Hampshire is among the most regulated states.”

The report also dings New Hampshire for not having a right-to-work law or universal school choice, and for imposing a renewable portfolio standard that raises the cost of energy.

Florida, which ranks second in both the Cato and Fraser Institute reports, has improved its position dramatically in the last two decades. The Sunshine state has both a right-to-work law and universal school choice.

New Hampshire has stood atop the Cato rankings since 2011, and the state’s latest score is the highest in the history of the report, which began in 2000. Among the reasons for our high ranking this year was our relatively less burdensome approach to the COVID-19 pandemic. New Hampshire ranked 9th on COVID policies, which is a testament to how badly most states reacted to the pandemic.

But at a Freedom in the 50 States event in Manchester on Thursday, Gov. Chris Sununu and report authors Will Ruger and Jason Sorens all warned against New Hampshire resting on its laurels. The state and local governments still impose many unnecessary constraints on both personal and economic freedom. As long as those restrictions remain, they will continue to be a drag on the economy and give other states opportunities to dethrone New Hampshire from its position as America’s freest state, they said.

 

New Hampshire is the most economically free state in North America and in the United States, once again edging Florida to top every Canadian province, U.S. state and Mexican state as ranked by the Fraser Institute, Canada’s free-market think tank. 

The Fraser Institute’s 2023 Economic Freedom in North America report, released in partnership with the Josiah Bartlett Center for Public Policy, measures government spending, taxation and labor market restrictions using data from 2021, the most recent year of available comparable data.

New Hampshire surpassed Florida as having the highest level of economic freedom in the U.S., having scored 7.96 out of 10 in this year’s report. Rounding out the top five freest states are Florida (2nd), Tennessee (3rd), Texas (4th) and South Dakota (5th). Puerto Rico came in last with 2.85. The least free states were New York (50th), California and Vermont (tied for 48th), Oregon (47th) and Hawaii (46th).

The Granite State also topped the list of all states in North America, scoring 8.14 out of 10, followed by Florida (8.07), South Carolina (8.06), and then Idaho and Indiana, tied for fourth (8.05). Alberta is the highest-ranking Canadian province, tied for 31st place with a score of 7.90. 

“New Hampshire is proof for all of North America that economic freedom creates maximum opportunity and prosperity,” Josiah Bartlett Center President Andrew Cline said. “The formula is proven, and anyone can follow it. Even Vermont, if it wants to.” 

“The freest economies operate with comparatively less government interference, relying more on personal choice and markets to decide what’s produced, how it’s produced and how much is produced; as government imposes restrictions on these choices, there’s less economic freedom and less opportunity for prosperity,” said Fred McMahon, the Dr. Michael A. Walker Research Chair in Economic Freedom at the Fraser Institute and report co-author.

The report includes an all-government ranking, which adds federal government policy to the index and includes the 50 U.S. states and the territory of Puerto Rico, 32 Mexican states, and 10 Canadian provinces.

Taking into account both federal and state policies, U.S. economic freedom declined from 2003 to 2011, began to recover, and then declined again after 2017. The last two years have seen the lowest levels of measured economic freedom in the U.S. in the last two decades. And while the U.S. remains more economically free than Canada, the gap is relatively small.

“The evidence is clear—lower levels of economic freedom are associated with less prosperity, slower economic growth, less investment, and fewer jobs and opportunities,” said Dean Stansel, economist and research associate professor at Southern Methodist University and co-author of the report.

The Economic Freedom of North America report, also co-authored by José Torra, the head of research at the Mexico City-based Caminos de la Libertad, and Ángel Carrión-Tavárez,  director of research and policy at the Instituto de Libertad Económica in Puerto Rico, is an offshoot of the Fraser Institute’s Economic Freedom of the World index, the result of more than a quarter-century of work by more than 60 scholars, including three Nobel laureates.

See the full report at www.fraserinstitute.org/economic-freedom.

New Hampshire’s cores in key components of economic freedom (from 1 to 10 where a higher value indicates a higher level of economic freedom):

  • Government spending: 8.25
  • Taxes: 7.68
  • Labor Market Freedom: 7.60

About the Economic Freedom Index

Economic Freedom of North America measures the degree to which the policies and institutions of countries support economic freedom. This year’s publication ranks 93 provincial/state governments in Canada, the United States and Mexico. The report also updates data in earlier reports in instances where data has been revised.

For more information on the Economic Freedom Network, datasets and previous Economic Freedom of North America reports, visit www.fraserinstitute.org. And you can “Like” the Economic Freedom Network on Facebook at www.facebook.com/EconomicFreedomNetwork.

Download the entire report here: EFNA-2023-US.

 

Just five days after we published our review of what happens when states ban or levy high taxes on tobacco products, reporting out of California confirms what we already knew: Bans and high taxes fuel black markets.

California banned the sale of menthol cigarettes in 2021. And needless to say, it hasn’t gone according to plan. From the Orange County Register

When policymakers made the decision to prohibit menthol cigarettes, their aim was to reduce the supply of these products in the market. However, an underground market was ready to ensure a steady supply and continued use of these products.

How does the author, retired police officer and La Mirada, Calif., Mayor Pro Tem Andrew Sarega, know this happened? Researchers started dumpster diving. 

By analyzing the contents of trash in California, researchers began discovering the emergence of a menthol cigarette brand “Sheriff.” In fact, they figured out that “Sheriff” is the fifth-most popular discarded brand in the state. 

This inexplicable prominence, coupled with the cartel’s association with it in Mexico, strongly points towards their involvement in disseminating these illicit menthol cigarettes across California.

Moreover, California’s ban on menthol products has led to the emergence of other new cigarette products being sold across the state. 

Also, shortly after the ban took effect, other new cigarette products entered the market. These cigarettes looked just like traditional menthol products, with blue and green packaging, but somewhere on the pack is a designation that they are “non-menthol.” This was clearly meant to confuse menthol cigarette smokers to continue lighting up, and it appears to be working, with the study showing roughly 7% of discarded packs were these menthol “work-around” products.

The bottom line, as the reporting demonstrates, is that when the state uses the force of government to ban a multi-million-dollar product, that doesn’t eliminate the demand for the product. And as long as that exists, another actor—criminal networks—will work to supply it. 

In addition to the Mexican cartels, the Golden State has seen another actor emerge to fill the void and benefit from California’s prohibition. Illicit flavored vaping/e-cigarette products from China have also poured into California as a result. 

The survey unearthed another staggering statistic—98% of discarded vapes featured flavors, despite the FDA’s lack of approval for flavored e-cigarettes. Highly flavored brands like Elf Bar, Flum, and Funky Republic, mostly originating from China, should not even be on the market and are banned at the federal, state, and often local level. Yet these illegal products remain readily available across California.

Now, if these are the effects at the state level, just imagine the unintended consequences of this kind of policy on a national level. 

It’s no secret that the U.S. Food and Drug Administration’s federal menthol cigarette ban would be a gift to the black market.

 

Manchester is often seen as the center of multifamily housing in the state, while smaller cities and surrounding towns are viewed as less hospitable. But Manchester’s land-use regulations are unusually hostile to one relatively popular form of multifamily housing: duplexes. 

Two-family housing is permitted on only 18% of Manchester’s buildable area, according to the New Hampshire Zoning Atlas, created by the Center for Ethics in Society at Saint Anselm College. 

That puts the Queen City smack in the middle of New Hampshire’s cities when it comes to permitting duplexes. 

Here are New Hampshire cities ranked by the percentage of buildable land on which duplexes are allowed:

Claremont: 86%

Dover: 57%

Rochester: 56%

Berlin: 45%

Nashua: 42%

Laconia: 19%

Manchester: 18%

Portsmouth: 17%

Concord: 15%

Lebanon: 14%

Somersworth: 10%

Keene: 6%

Franklin: 5%

Besides Bedford, the municipalities surrounding Manchester are much friendlier to duplexes:

Goffstown: 74%

Londonderry: 63%

Litchfield: 59%

Merrimack: 55%

Auburn: 31%

Hooksett: 21%

Manchester: 18%

Bedford: 1%

“I was a little bit surprised about how restrictive Manchester is toward duplexes, but it makes sense when you think about it,” Jason Sorens, senior research faculty at the American Institute for Economic Research and the principal investigator of the New Hampshire Zoning Atlas, said. 

“The very fact that Manchester has had a lot of blue-collar housing near the center in the past has made single-family neighborhoods, particularly in the North End, very protective of their status. And at the same time, business and commercial districts in the city sometimes (not always) allow multifamily development but restrict one- and two-unit buildings. 

“It seems to me the latter problem is easy to fix: There’s no constituency for keeping small-scale housing out of commercial districts. Mixed-use and planned unit developments should be lawful across everything that is now zoned commercial or business.”

On small lots (less than one acre), only 1.9% of Manchester’s buildable area is open for duplex development. 

“Even in the single-family districts, legalizing duplexes is a small step, because ADUs are already legal under state law,” Sorens said. “All you have to do is remove the maximum size requirement (currently 750 square feet), and duplexes are then effectively lawful.”

Manchester is slightly more hostile to triplexes than duplexes. On only 17% of Manchester’s buildable land is three-family housing allowed. 

Opposition to multifamily housing typically arises from fears that large apartment buildings will be erected next to single-family homes, changing the character of residential neighborhoods. But the Zoning Atlas shows that municipalities, including the state’s largest city, can add to the state’s housing stock just by reducing restrictions on duplexes. 

Making it easier to build duplexes and multifamilies in Manchester would make homes and apartments more affordable. The median home price in New Hampshire is up to $490,000, according to the New Hampshire Association of Realtors (NHAR).

These monthly median prices have been increasing for 43 consecutive months (since February 2020). And for the second straight month, the affordability index sat at 59—both an all-time low and a 15% drop from one year ago.

Monthly median gross rent for two-bedroom units in the state is $1,764

Duplexes and triplexes offer options for both homeowners and renters. They can be great starter homes that double as investment properties for young couples and individuals. 

To get more of them, municipalities will have to change their land-use regulations, not just to allow more duplexes and triplexes, but to reduce secondary regulations that prevent them from being built. 

“Beyond duplexes, you really have to look at how the zoned density compares to the existing density,” Sorens added. “On much of the West Side, multifamily development is allowed, but tight floor area ratios, low maximum heights, and inappropriate parking minimums have made it impossible to increase density there at all. The strict regulations haven’t gentrified these neighborhoods despite rising rents; instead, they’ve helped create a homelessness problem downtown.”

Though Manchester has allowed the construction of more large apartment buildings, its burdensome restrictions on small multifamily options keep the city’s housing supply artificially low, raise prices, and limit options for city residents. 

During the COVID-19 pandemic, many families found that they wanted a bigger variety of educational options for their children. New Hampshire’s education marketplace does not provide the right option for every child in every part of the state. But it can be better if more entrepreneurs step up to create those alternatives.

Join us Saturday, Sept. 30th, for our first Encouraging Education Entrepreneurship Conference to learn how New Hampshire can expand its education marketplace so that every family can find the option that works best for every child.

We’ll hear from education entrepreneurs (including Shiren Rattigan of Colossal Academy in Ft. Lauderdale, Coi Morrison of The Lab School of Memphis, Nate Fellman of The Harkness House in Nashua and Katy Rose of NLighten Learning in Goffstown).

And we’ll hear from education policy experts, including author Kerry McDonald, Kate Baker Demers of the Children’s Scholarship Fund New Hampshire, professors Eric Wearne and Ben Scafidi, Lisa Snell of Stand Together, Don & Ashley Soifer of the National Microschooling Center, and Michael Crawford of the VELA Education Fund.

Lunch and a light breakfast will be provided.

Register here.

Sponsored by LFS Tax Group and Soil Away

 

 

Since the turn of the 21st century, the percentage of freshmen New Hampshire legislators with a record of public service in their community has fallen significantly, a new UNH study shows. Instead of having served on a select board or the board of a local non-profit group, today’s legislators are increasingly public service rookies.

The study, “All Politics, No Longer Local? A Study of the New Hampshire House of Representatives, 2001–2021”, which I co-wrote with UNH Political Science Professor Dante Scala, shows that local ties in the New Hampshire House have declined over the last two decades.

“In brief, we conclude that while the latest generations of New Hampshire state legislators still often have significant local governing and civic experience prior to their service in the General Court, they have been less likely over the past decade to bring that type of experience with them to the legislature,” we wrote. 

We observed this decline among both men and women, as well as Democrats and Republicans.

We examined new House members’ biographies from the 2001–2002 to the 2021–2022 N.H. House (1,179 legislators in total), chronicling their experiences and backgrounds prior to joining the chamber. 

Examining each decade separately, we found that the average proportion of new legislators with local government experience in a given year across the first decade of study (2001–2011) was 50%. 

This proportion dropped significantly in the second decade. From 2013–2021, the average proportion of new legislators with this type of experience was 43%—a 14% decline.  

There was an even greater drop in civic experience. On average, 49% of new legislators in a given year had previous experience in civic groups during the first decade. This fell to 35% in the next decade—a 29% decrease.

Overall, the percentage of legislators with some form of local engagement, either in government or civic groups, shrunk between the two decades. 

“In the 2000s, the participation rate was typically above 70 percent; in the last decade, however, the rate fell into the 60s and in some cases even lower,” we wrote.

After the 2020 elections, Americans for Prosperity State Director Greg Moore observed a sharp drop in legislators with local community service experience. 

“You’ll find a lot fewer people who were school board members or city councilors or aldermen, and a lot more folks for whom this is their first entree into politics,” Moore said. 

He attributes the shift to a change in the way candidates for state office are recruited.

“The real change is that there are now groups on the right and the left that recruit candidates who align with their views for these rep. seats and then help them win primaries,” Moore said. “Earlier, local party committees did the recruiting and recruited on the basis of experience and having won local elections.”

The result is that rather than a body composed of local volunteers, you get a legislature increasingly made up of activists who adhere to their party’s platform.

“What it means is that you end up with more representatives who are inclined to vote based on principles instead of being people pleasers,” Moore explained. “With that said, primary voters seem to respond to principled candidates versus those who reflect various factions in their community. This isn’t a bad thing, it’s just different from when I first started working with the New Hampshire Legislature 20 years ago.”

Elections at all levels have become increasingly nationalized. Although New Hampshire is still known for its local brand of politics, this research suggests that even the Granite State’s quintessential volunteer legislature has succumbed to national polarization.

While the study acknowledges that the typical state representative still often carries with them an element of local ties, the marked drops in previous local government and civic experience among newly elected members of the House suggest that the makeup of the lower chamber is undergoing significant changes. 

And these structural changes have likely affected the House’s work. “If we take it that legislators’ backgrounds, at least in part, inform their political opinions and policy preferences,” we suggest in the study, “then the general decline in local governing and civic experience among new members of the New Hampshire House may have had an effect on the type of legislation coming out of the New Hampshire General Court.”

You can find the full study here