Some gambling regulations relaxed, facilitating expansion, in 2022

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While the state was accumulating a record budget surplus this year, legislators were busy finding ways to raise more money from people who don’t mind handing cash to the state. Those would be gamblers.

How to raise more money from people who like to bet? Give them more opportunities to bet.

Until last week, charitable gaming venues were allowed to operate only from 11 a.m. to 1 a.m. Senate Bill 318, sponsored by Sen. Harold French, expanded that to 20 hours a day, and Gov Chris Sununu signed the bill last week. It took effect immediately.

Now, poker rooms can run from 8 a.m. to 4 a.m. 

None of the 18 poker rooms in the state has switched to the new hours yet. But almost all of them stay open until 1 every night of the week. (Some close earlier on weekdays.) So it’s a safe bet that they’ll continue operating for as long as the law allows, provided they can find staff to work the extra hours.

During the Senate hearing on the bill, no one testified in opposition. Among the few questions was one from Sen. Cindy Rosenwald, D-Nashua, who asked why, if the state is OK allowing operations for 20 hours a day, it bothers to set any limits at all?

That’s the right question. Under the new law, poker rooms are forced by the state to close for just four hours a day. Why? What’s the public health or safety benefit in closing them for about the same time it takes to watch half of the Ocean’s 11 movies?

Heavy regulations on gambling businesses are designed to protect the public from whatever spillover crime there might be and from the ravages of addiction. If those externalities are easily manageable, or are less costly than believed, then the case for such heavy regulation diminishes. 

Legislators seem to have decided that the pros (revenue) far outweigh the cons. But there remain understandable residual cultural reservations about the effects of gambling on the population, and this creates a reluctance to throw the doors wide open.

So the state moves mostly in the direction of maximizing revenues while holding onto a shred of the appearance of concern about ill effects. 

The same dynamic played out in the Keno debate this year. 

Keno brings in a lot more money ($47.9 million last year vs. 7.1 million for charitable gaming and simulcast horse racing). Keno has always been limited to places that have liquor licenses, but House Bill 335, sponsored by Rep. Tim Lang, expands Keno to any vendor that has a license to sell lottery tickets (provided the community has approved Keno sales).

The bill passed the Legislature and has yet to see action from the governor. 

These moves to expand gambling options are good evidence that the number of legislators deeply concerned about the potential ill effects of gambling is shrinking.

Two groups that favor gambling expansion are growing. One consists of those who want additional revenue. The other consists of those who think adults should be free to wager on games of chance if they want to.

A fun test of the strength of these factions could come next year. All someone would have to do is introduce a bill to let poker rooms operate 24/7.

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Bartlett president Drew Cline to host morning news/talk show on WFEA

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CONCORD — Josiah Bartlett Center President Drew Cline has been tapped to host a new morning news/talk show on Manchester radio station WFEA, the flagship news/talk station of Manchester Radio Group.

“WFEA Morning Update,” airing from 6-9 a.m. weekdays, will launch on Monday, June 20th, filling a huge void in New Hampshire’s talk-radio market by offering the only politically right-of-center show airing in the state during the crucial morning drive-time slot.

“It has been too long since New Hampshire has had a strong, thought-proving morning talk show,” said Lucy Lange, Vice President and General Manager of Manchester Radio Group. “We look forward to bringing an insightful, local, conservative talk show to greater Manchester and the surrounding areas, including the state capital.”

With this change, WFEA is doubling the size of its local news effort to further serve the community.

Drew Cline has been president of the Josiah Bartlett Center for Public Policy, New Hampshire’s free-market think tank, since 2017. Before that, he was the long-time editorial page editor of the New Hampshire Union Leader, a freelance columnist for The News & Observer in Raleigh, N.C., and a reporter and editor for the John Locke Foundation in Raleigh.

A USA Today contributor, he has written for more than 100 newspapers and magazines, including The Wall Street Journal, The Atlantic, National Review, The Washington Post, Politico, The Boston Globe, The Weekly Standard, and The American Spectator. He has served as chairman of the state Board of Education since 2017.

Cline has also co-hosted for years an alternative rock show on WBNH-LP FM in Bedford, for which he won a Granite Mike Air Personality of the Year Merit Award from the New Hampshire Association of Broadcasters in 2017.

“I’m happy to be joining the great team at WFEA,” Cline said. “They’re committed to creating a top-quality news show while letting us have some fun with the format. The WFEA Morning Update will be unlike any other show in New Hampshire, so tune in and give it a try.”

Cline will continue as president of the Josiah Bartlett Center. The WFEA Morning Update is a product of WFEA and is not a Bartlett Center initiative. As the Morning Update will be a general news/talk show, the views expressed on the show will not necessarily be representative of the Josiah Bartlett Center.

For those outside the greater Manchester market, the WFEA Morning Update can be streamed live online at https://1370wfea.com.

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In last half century, Manchester limited its own growth by limiting new housing

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In 1970, Manchester had more than enough rentals for all who needed one. Over the course of the next half century, the city created its own housing shortage. 

It’s a story repeated in many communities throughout New Hampshire. Manchester offers a case study based on Census figures.

Manchester had 36,024 total housing units in 1970, according to U.S. Census Bureau data. In 2020, the city had 49,445 housing units. That’s an increase of 37% in 50 years. 

By comparison:

  • Salem’s housing units grew from 6.795 in 1970 to 12,005 in 2020, an increase of 76%. 
  • Nashua’s housing units grew from 20,984 in 1970 to 37,933 in 2020, an increase of 80%.
  • Derry’s housing units grew from 4,279 in 1970 to 13,539 in 2020, an increase of 216%.
  • Total statewide housing units increased from 280,962 in 1970 to 638354 in 2020, an increase of more than 127%.

Those are total units, not just rentals. But you can see the rental shortage in the vacancy rate. Manchester’s rental vacancy rate fell from 5.4% in 1970 to below 1% today. 

(New Hampshire suffers from a similarly low vacancy rate, also caused by a shortage of rentals. Local planners in many communities have preferred to approve single-family homes rather than rentals.)

Because Manchester did not allow the construction of enough housing, the city’s population growth rate lagged the rates in some other municipalities. 

From 1970-2020, Manchester’s population grew by 32%. During the same period, Nashua’s population grew by 64%, Derry’s by 95%, and Salem’s by 342%. New Hampshire’s population grew by 87%. 

Because city officials chose to limit growth, Manchester’s population and economy have grown at a slower rate than the rest of the state as a whole. Artificially limiting the city’s housing supply created a drag on the city’s economic growth and cultural life.

If city leaders want to stimulate Manchester’s economy, revitalize its public schools, increase its tax base, and enhance its cultural life, goal No. 1 should be to approve a lot more housing, with an immediate emphasis on rentals. 

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States inaugurate a flat tax revolution

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The Tax Foundation’s Jared Walczak writes that a push for flat taxes is spreading through the states. This wave of tax reform can make these states more economically competitive, which is worth watching from a New Hampshire policy perspective.

Walczak writes:

In more than a century of state income taxes, only four states have ever transitioned from a graduated-rate income tax to a flat tax. Another four may adopt legislation doing so this year, and a planned transition in a fifth state can now go forward under a recent court decision. In what is already a year of significant bipartisan focus on tax relief, 2022 is also launching something of a flat tax revolution.

In 1987, the 75th anniversary of state income taxation, Colorado replaced its half century-old graduated-rate income tax with a single-rate tax. It would take another 30 years for another state to follow suit, when Utah implemented a flat tax in 2007. Next came North Carolina in 2014, as part of that state’s comprehensive reforms, and most recently, Kentucky implemented a single rate of 5 percent in 2019. They joined five other states which already had flat taxes: Illinois, Indiana, Massachusetts, Michigan, and Pennsylvania.

The first state income tax, implemented in Wisconsin in 1912, had a two-rate structure. The first flat tax was Massachusetts’ tax, which went into effect in 1917. Five states had income taxes back then, with Massachusetts and Virginia both implementing them that January. Only five years passed between the first progressive income tax and the first flat income tax, but 75 years passed between the first progressive income tax and the first time one was transitioned from graduated to single rate. It took more than a century for three to do so—and three states have adopted legislation to make that transition just this year, with a fourth cleared for the transition by a court decision and a fifth potentially in the wings.

Iowa is phasing in a 3.9 percent flat individual income tax by 2026, going from a graduated-rate tax that not long ago topped out at 8.98 percent. Mississippi will have a flat tax as of next year, with a 4 percent rate by 2026. Georgia’s income tax is now scheduled to convert to a flat rate of 5.49 percent, eventually phasing down to 4.99 percent. A court cleared the way for the implementation of Arizona’s transition to a 2.5 percent flat tax, which should happen, pending revenue availability, in 2024. And a flat tax remains an active consideration in Oklahoma as well.

See the rest here.

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Businesses are raining cash on the state budget

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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. 

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Time is running out for statewide housing reform this year

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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.

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The dangerous impulse to make people do business with your friends

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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.”

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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.

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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.

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Should N.H. pay people to move here?

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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.

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