Legislators might allow Granite Staters to make more money from their homes this year

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Granite Staters could gain a little more freedom this year to make extra money from home.

The COVID-19 pandemic has reshaped the American workforce, probably permanently. A Pew poll in February found that 59% of people who say their jobs can be done mostly from home are working from home all or most of the time, with another 18% working from home some of the time. 

What’s more, 61% of them say they are working from home by choice. 

A study published by Stanford University in March concluded that “about half of the US workforce currently works remotely at least one day each week.”

Millions of Americans are choosing to convert their living rooms, dens, bedrooms, play rooms, basements, etc. into home offices. 

But for those who don’t type on laptop computers all day, working from home is trickier. Regulations often prevent homes from being monetized in more traditional ways. 

Two bills in the Legislature would relax some restrictions that make it harder for people to generate extra income from their homes. 

RSA 143-A:12 allows Granite Staters to operate a “homestead food operation” from their kitchens. (It excludes foods the require refrigeration.)

To prevent these kitchen businesses from scaling up to full commercial operations, allowable sales are capped at $20,000. 

House Bill 314 would increase that cap to $35,000, letting people make a living, or at least a really strong side-income, from homestead food preparation. The bill would increase a homestead food operator’s maximum allowed weekly sales from $384.60 to $673.

For those who wish to monetize the rest of their home, Senate Bill 249 would prohibit municipalities from banning short-term rentals. 

According to a new analysis by the state Office of Planning & Development, 27 New Hampshire jurisdictions regulate short-term rentals in some way. These range from Franconia’s registration requirement to Bedford’s ban. 

SB 249 would allow short-term rentals statewide while authorizing municipalities to “generally regulate parking, noise, safety, health, sanitation” and apply “other related municipal ordinances” to short-term rentals. 

Municipalities could require registration, and they could revoke that registration if a property is associated with more than one ordinance violation. 

There is some concern that short-term rentals could raise rents and home prices. Studies have found that these rentals are associated with a short-term bump in prices.

But over the long run, short-term rentals have been found to stimulate housing construction.

A study released last fall looked at the effect of Airbnb rentals on housing construction over a decade. It found that a 1% increase in Airbnb listings led to a 0.769% increase in permit applications. 

The authors found that short-term rentals stimulate the construction of new housing units, leading to increased property tax revenue, and that “restricting STRs can have a significant, negative impact on local economic activity.”

It’s not surprising that people will try to build more housing if they can use it to generate extra income. 

These practical considerations aside, regulations on the use of property (particularly for generating income) have grown so strict that they’ve caused a significant erosion of private property rights. 

Historian Edmund S. Morgan wrote that “widespread ownership of property is perhaps the most important single fact about Americans of the Revolutionary period. . . . Standing on his own land with spade in hand and flintlock not far off, the American could look at his richest neighbor and laugh.”

Today, a Granite Stater standing on his own land looks at his neighbor and worries, as the neighbor can call the town planning department and report him for a dozen potential ordinance violations.

Instead of balancing competing private property interests, state and local regulations have long trended against property owners. Regaining that balance will take decades. It can start with small changes that grant a little more discretion to property owners while maintaining rules that allow neighbors to assert their own property rights. 

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Requiring U.S. steel in N.H. public projects would hurt taxpayers and workers

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With inflation at a 40-year high and March approaching the highest one-month gas price increase on record, this would be a strange moment for legislators to purposefully inflate public works costs for taxpayers. But that could happen, started by a Senate vote this week. 

Senate Bill 438 would raise costs on New Hampshire taxpayers for the sole purpose of protecting jobs in Pennsylvania, Michigan, Ohio, Illinois, Indiana and New York. It has 14 co-sponsors, 58% of the Senate. 

The bill would require all state-administered public works projects of $1 million or more to use American-made steel. Similar bills are being pushed by the steel industry in state legislatures around the country. It is a classic example of protectionism masquerading as patriotism.

The effect would be a politician-imposed transfer of wealth from New Hampshire taxpayers to the $100 billion American steel industry. 

The bill’s fiscal note states that the cost is indeterminable “due to wide-ranging price fluctuations for these goods, supply-chain shortages, and US imposed tariffs.” 

But it’s well-established that the effect of such protectionist laws is to increase prices. 

“Buy America rules prohibit customers from buying less expensive steel from overseas suppliers for use in public works projects,” the Congressional Research Service concluded in 2015. 

Compliance costs for “buy America” laws also raise end prices, the Congressional Research Service pointed out.

“Other direct costs associated with Buy America are mainly related to administering and enforcing its requirements, costs that are mostly absorbed by state and local government project sponsors. These costs include the effort required by contractors to document the national origin of iron, steel, and manufactured products and agency administration of the certification process. Extra work may also be required of contractors to put together two bids for a given project, one incorporating domestic products and one with foreign products. Waiver requests, another cost, may be prepared by the state or local government project sponsor alone or in cooperation with the contractor.”

Then there are the project delays, which also increase costs.

“Buy America may make it more time-consuming to complete transportation projects, ultimately causing higher project costs. Delays can arise from domestic supply problems and the waiver application process.”

Federal “buy America” requirements for rail cars led to municipal rail systems providing commuters with inferior cars at inflated prices.

It’s also well-established that industry protectionism costs more jobs than it saves and hurts domestic industries in the long run.

A 2017 study by Australian economists found that buy America requirements protected 57,000 U.S. manufacturing jobs while reducing overall U.S. employment by 363,000. According to that study, ending federal Buy America provisions would increase employment in New Hampshire by more than 800 jobs. 

Studies have detailed how protections for specific industries at the national level just transfer wealth from consumers to politically favored industries, sometimes costing consumers millions of dollars per job saved. 

They do so in the name of protecting manufacturing jobs from foreign competition, when in fact manufacturing job losses are primarily the result of productivity gains. 

That is particularly true for the steel industry. In 1980, it took 10.1 man hours to produce a ton of steel. By 2017, it took just 1.5 man hours.

U.S. steel industry productivity since the 1960s has been driven by two primary factors: technological gains and competition. Contrary to protectionist dogma, competition helps U.S. industries by making them more productive and more competitive. 

The U.S. steel industry is no exception, having been helped by imports.

The bill anticipates increased costs. It allows a waiver for the following conditions:

(1)  Application of the project would be inconsistent with the public interest;

(2)  The product is not produced or fabricated in the United States and that it would be in the public interest to provide a waiver;

(3)  The item for which a waiver is being requested is not produced and fabricated in the United States in sufficient and reasonably available quantities and of satisfactory quality; or

(4)  Alternate bidding procedures were used and the lowest overall total bid based on using domestic fabricated structural steel was at least 25 percent more than the lowest overall total bid based on using foreign steel.

Exception No. 4 indicates clearly that costs are expected to rise. It would write into law the presumption that cost increases of up to 24.99% are acceptable to legislators. That’s remarkable. 

If that weren’t enough, SB 438 could lower employment in New Hampshire for the purpose of increasing it in Pennsylvania. 

The effect of the law would be to raise the price of raw materials for public works projects. If those costs are large, contractors could seek to recoup them by hiring fewer employees. The result would lower employment in New Hampshire. 

American industries grow strong through competition, not coddling. If American steel is competitive, New Hampshire contractors will use it. If it isn’t, then forcing them to use it only raises costs and lowers quality. 

If other countries subsidize their industries, that should be addressed at the federal level. Preventing New Hampshire public works projects from using Canadian steel won’t have any effect on China’s state industrial policies. It will just make it harder for New Hampshire projects to be completed on time and at the best possible price. 

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A gas tax holiday is just a holiday from reality

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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.  

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The dumb fight over an 0.1% business tax cut

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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.

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Remote work makes commuter rail even less viable

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A commuter rail line from New Hampshire to Boston would need increasing taxpayer subsidies to serve a shrinking number of riders, recent data on transit ridership and commuting patterns suggest. 

Health concerns are not the only reason commuter rail ridership remains a fraction of its pre-pandemic levels. Work and commuting patterns have changed, leaving public transit systems — especially commuter rail — with massive, long-term revenue shortfalls and shrinking pools of potential riders.

The New Hampshire Department of Transportation’s proposed “Capitol Corridor” commuter rail project would extend the Massachusetts Bay Transportation Authority’s Boston-Lowell line to Manchester (and possibly to Concord). It would undertake this expansion, at a cost well north of a quarter of a billion dollars, just as remote work begins to reshape commuting patterns.

Remote work and vanishing commuters

“The desire for hybrid work models, defined by part-time telework, remains strong,” a City of Boston survey of commuters found last year. 

Only 7% of Boston commuters said they never want to work remotely in the future. More than half, 54%, said they preferred to telecommute a few days a week. Sixteen percent said they wanted to telecommute every day. 

Boston employers also expect that work arrangements will not return to the pre-pandemic norm. 

A MassCompetes survey of Massachusetts employers last year found that 75% are considering hybrid work models after the pandemic, 61% reduced capacity, 59% hybrid practices, 55% hybrid physical space, and 48% staggered schedules. (Respondents could choose multiple options.)

Regarding public transit use, 51% of employers said they expect their employees’ dependence on mass transit to decline after the pandemic, 30% said they expect it to stay the same, and only 3% said they expect it to increase. 

A March 10 Upwork survey of 23,000 Americans found that 2.4% said they had already moved because of remote work since 2020, and 9.3% said they planned to do so. Those percentages translate to 4.9 million and 18.9 million people. 

“People are moving outside commutable distances: 28% of people said they are moving more than 4 hours away,” the survey found. “Another 13% said they are moving between two and four hours away.”

And this is just the tip of the trend, the data suggest.

“The effects of remote work on geography are just beginning to unfold: The number of people who have relocated is likely just the start of a larger reshuffle, since our data suggests that there are strong reasons to suspect longer-term moves will rise,” the Upwork study concluded.

Commuter rail suffers huge ridership declines

Transit officials nationwide report that they, too, see a future with fewer riders. 

As we reported in January, the DOT expects lower Capitol Corridor ridership after COVID than it had projected in 2014. Nationally, commuter rail operators expect emptier trains.

“The nation’s biggest commuter railroads are preparing for potentially permanent shifts in daily ridership, declines that in some cases could threaten their long-term viability,” The Wall Street Journal reported on March 6. 

“The changes are based on expectations that many office workers will continue to work from home at least part-time for years after the Covid-19 pandemic subsides.”

The American Public Transportation Association reports that weekday ridership counts for commuter rail are down to between 25%-55% of pre-pandemic levels.

“The MBTA commuter rail system is averaging about 45,000 weekday passenger trips versus roughly 120,000 before Covid-19, and officials don’t expect a full rebound even after companies bring most workers back to offices,” the Journal reported.

“We’re going to have to figure out a way to operate with lower fare revenue, and it remains to be seen how much lower it’s going to be,” MBTA General Manager Steve Poftak told the paper.

Lower fare revenue means larger taxpayer subsidies for an organization already dependent on taxes. 

Tying N.H. taxpayers to MBTA’s financial woes

The transit ridership collapse has put the MBTA into a dire financial situation. In December, the authority projected that its expenses would exceed its revenue until 2027, and even then fare revenues would remain below pre-pandemic levels. 

Fare revenues in 2027 will range between 68% and 93% of 2019’s numbers, the MBTA projected. 

On March 10, the MBTA projected a budget gap of between $201 million and $458 million next year, growing to between $341 million and $550 million by 2027, without one-time revenues such as federal bailouts. 

The cash-strapped MBTA is the N.H. DOT’s chosen partner to operate the Capitol Corridor commuter rail line. The state’s plan is to hand the operation of a New Hampshire taxpayer-funded enterprise to a Massachusetts organization hundreds of millions of dollars in the red, desperate for cash, and entirely reliant on growing levels of taxpayer subsidies for its survival. 

Fares cover only 9% of the MBTA’s fiscal year 2022 revenue, the authority’s March report showed. Non-operating revenue, which the MBTA itself calls “subsidy” revenue, accounts for 91%.

This revenue situation places tremendous pressure on the MBTA to increase both fares and taxpayer subsidies.

Could the lost revenue be made up by raising fares? Automobile commuters told the City of Boston’s commuter survey that they would be most likely to switch to transit if offered a free or reduced-price commuter rail pass. They are price-conscious. Higher fares would only drive more commuters away.

That leaves additional taxpayer subsidies as the only way to keep the MBTA operating as ridership remains below 2019 levels. 

A publicly financed commuter rail line from Manchester to Boston would funnel New Hampshire taxpayer money into the financially troubled MBTA just as teleconferencing software has begun to decimate demand for city-to-city commuting. That’s not what anyone would call a wise investment.  

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Addressing three myths that block new apartment construction

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Though rental housing is in tremendous demand statewide, its share of new building permits issued is shrinking. In 2020, single-family homes represented 59% of new building permits issued in the state, up from 50% the year before. It’s become harder to build multi-family housing in New Hampshire as opponents have become very effective at organizing to block new projects.

With too few apartments being built, the state’s rental vacancy rate has fallen to 0.6%, and average rents, already at record highs last summer, have continued to rise. Rental data tracking site Rent Cafe pegs Manchester’s average rent at $1,646 and Nashua’s at $1,829. The Union Leader reported this past weekend that “stiff rent increases are hitting New Hampshire residents.” 

For both single-family homes and rentals, the record price increases are caused by critical supply shortages. But rentals tend to face stronger local opposition when developers propose projects that would reduce the shortage.

Most of the opposition is caused by persistent myths about multi-family housing’s impact on local communities. With communities finally taking a greater interest in approving new housing projects, it will be important to counteract those myths. 

Fortunately, we have the data to do that. 

The Apartments Lower Home Values Myth

The myth that probably generates the most passionate opposition to new multi-family developments is that they will drive down nearby home values. As a rule, it’s not true.

“Single-family homes located within 1/2 mile of a newly constructed apartment building experienced higher overall price appreciation than those homes farther away,” concluded a University of Utah study last year.

Harvard University’s Joint Center for Housing Studies looked at previous research on this topic a few years ago and summarized the results this way:

  1. “Houses with apartments nearby actually enjoy a slightly higher appreciation rate than houses that don’t have apartments nearby.”
  2. “…working communities with multifamily dwellings actually have higher property values than other types of working communities.”
  3. “…proposed multifamily housing rental developments do not generally lower property values in surrounding areas.”

The Apartments Worsen Traffic Myth

“By any measure, it is clear that single-family houses generate more automobile traffic than apartments – or any other type of housing,” Harvard’s Joint Center for Housing Studies concluded in a summary of research on the topic. 

There are several reasons for this. Single-family homes have more residents per unit and more cars per unit than apartments do, and “single-family owners use their cars more often than apartment residents use theirs. On average, cars in single-family houses make 18 percent more trips during the week, 31 percent more trips on Saturday, and 41 percent more trips on Sunday than cars owned by apartment residents.”

The Apartments Raise Property Taxes Myth

This myth is based on the assumption that apartments will flood public schools with students, which will require tax increases. But apartments bring fewer children than single-family developments do. 

Data from Harvard’s Joint Center for Housing Studies shows that out of 100 single-family homes, 51 will have school-age children, but out of 100 apartments, only 31 will have school-age children. “The disparity is even greater when considering only new construction: 64 children per 100 new single-family houses vs. 29 children per 100 new apartment units. Wealthier apartment dwellers have even fewer children (12 children per 100 households for residents earning more than 120 percent of the area median income, AMI), while less wealthy residents earning less than 80 percent of AMI still have fewer children (37 per household) than single-family homes.”

And because apartments often are taxed as commercial property, they usually generate higher property taxes than single-family homes do. 

“Thus, apartments actually pay more in taxes and have fewer school children on average than single-family houses. In other words, it may be more accurate to say that apartment residents are subsidizing the public education of the children of homeowners than the reverse,” the Harvard researchers conclude.

New Hampshire needs tens of thousands of new housing units, and multi-family housing will have to be a large part of that mix. As housing tastes change and home prices surge, rentals are increasingly in demand. Though more people want this type of housing option, local opposition based on myths often succeeds in blocking new construction. Debunking the myths has to be part of any plan to get more housing approved in New Hampshire. 

When opponents claim that apartments will increase traffic, raise property taxes, and lower home values, Granite Staters who would would like to see more housing options should be prepared to counter those myths with data.

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

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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. 

 

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Claremont’s core flaw emerges in Education Freedom Account debate

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Speaking in favor of Senate Bill 432, a bill to eliminate New Hampshire’s Education Freedom Account program, Sen. Rebecca Whitley, D-Hopkinton, argued that state education aid should not go to help lower-income students purchase educational services outside of their assigned school districts, but should directly aid their districts instead.

“We clearly have a problem with the way that education funding is distributed, public funds are distributed to our schools,” she said. “But the solution is not to send that money to private and religious schools. The answer is to send funding in a way that districts and the students with the greatest challenges receive the funding that they need. That’s where we should be focusing our efforts, not sending dollars to private and religious schools. 

“A fair school funding system must deliver more funds to those most in need, and those are our school districts with high concentrations of poverty that require additional resources to serve their students. That’s where we should be focusing on.”

Regarding the formula for distributing state aid to local school districts, Sen. Whitley is right. The state should be able to give more adequacy aid to lower-income districts than it gives to higher-income districts. 

But it can’t.

In its Claremont rulings (here and here), the state Supreme Court’s declared large disparities in state aid to school districts unconstitutional. The court held that state adequate education aid must be uniform statewide in pursuit of the state’s duty to fully fund an adequate public education.

The state is allowed to give additional aid for lower-income and special-education students on top of the base adequacy aid. But it may not, say, give property-poor districts $10,000 in adequacy aid per student while giving property-rich districts $2,000, or nothing at all.

The Claremont lawsuit was sold as a way to “level the playing field” between poorer and richer districts. But as critics pointed out at the time, Claremont would not do that, and could make those inequities worse, unless the court or the Legislature also prohibited local taxpayers from spending any local money on public schools. 

That, of course, did not happen. The court refused to rule local contributions to public education unconstitutional, and no Legislature would pass such a law. So instead of the state reducing funding disparities by giving more aid to poorer districts and less aid to richer districts, the Claremont ruling forced taxpayers statewide to subsidize all districts equally. Such equal state funding maintains preexisting disparities, and possibly makes them worse. 

Post-Claremont, the Legislature is forced to subsidize public schools in the state’s wealthiest communities even though everyone knows this sends to rich towns money that otherwise would go to poor towns.

As currently structured, New Hampshire’s Education Freedom Account program sort of gets around that. Only families with incomes at or below 300% of the federal poverty level qualify for Education Freedom Accounts. So through this program the state can give lower-income families the ability to leave their assigned public schools and find an alternative that might work better for their children.

Unfortunately, that leaves out students who struggle in their assigned schools but who don’t meet the income threshold. Educational fit is highly personal and is not dictated by income. 

A better way would be to make all options available to all students, let families choose whichever option works best for their children, and let the state vary the size of aid based on criteria such as income or a student’s individual needs. 

But as long as the state distributes aid directly to school districts, it should have the discretion to do as Sen. Whitley suggests: send significantly more aid to poorer districts. The Josiah Bartlett Center has advocated this for decades (see here and here, for example.) It’s good public policy. But it’s not allowed under current Supreme Court jurisprudence. 

Perhaps Sen. Whitley and other likeminded legislators would be interested in introducing a constitutional amendment to fix that in the future. Such amendments have failed in the past, but that doesn’t diminish the need to fix this problem created by the Claremont rulings, and only a constitutional amendment will do the trick.   

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From ‘social credit scores’ to driver’s ed, legislators often assume more knowledge than they have

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“It is far easier to concentrate power than to concentrate knowledge. That’s why so much social engineering backfires….” 

— Thomas Sowell

In New Hampshire, Republicans tend to think of themselves as opposed to government regulations, especially ones that can be called “social engineering.” And yet Democrats don’t have a monopoly on such efforts. 

A recent example is House Bill 1469, which originally would have prohibited banks from using so-called “social credit scores.” An amendment improved the bill by tightening its prohibitions, but it remains a solution in search of a problem. 

The idea is that the state must protect individuals and groups from financial institutions that attempt to “discriminate” based on “ideological, philosophical, or political views and opinions.”

Yet in seeking to protect some rights, the bill violates others. 

It states that financial institutions may not “advocate for or cause adverse treatment of, any person, business, or organization in their business practices” for various political, ideological or philosophical reasons “unless such action is necessary for the physical safety of its employees.”

This wording would go well beyond prohibiting banks from turning away customers whose politics bank officials might dislike. It would constrain the ability of financial institutions to advocate or support particular charitable causes, make public statements on a range of issues, and even manage their own brand and contractors.

Such efforts to micromanage corporate business practices usually come from the political left. They create no fewer problems when they emerge from the right.

Republicans might see this overreach more clearly if it comes in a familiar form. House Bill 1538, for example, would mandate that laborers on public works projects be paid the prevailing wage. 

The assumption that legislators know enough to pick the correct wage for construction projects differs little from the assumption that legislators know enough to micromanage the business practices of financial institutions. 

A longstanding bipartisan example of legislators using power to replace others’ judgment is the state’s driver’s education mandate. This is not a classic market intervention, as setting the requirements for using public roads is appropriate government rule-making. But this law nonetheless involves legislators mistaking power for knowledge and wisdom. It doubles as a protection for a particular industry to boot.   

New Hampshire requires that minors take an approved driver’s education course before getting a driver’s license. The mandate is based on three presumptions: 1) there is tremendous value in driver’s education courses; 2) the public is too unwise to recognize this value; 3) legislators have enough expert knowledge to justify imposing this requirement on the public. 

None of these presumptions is true. 

Going back decades, so many studies on this topic found that driver’s education offers no significant safety gains for young drivers that this was long the conventional wisdom. The research is mixed, however, and some studies have found benefits. The trouble is that evaluating programs is difficult, and limitations on the quality of research have made it hard to determine a definitive answer. 

And yet the state forbids minors from getting a driver’s license without first taking an expensive course of questionable value. 

Ultimately, if a student can pass the state’s driver’s test, it shouldn’t matter who taught the student to drive. The test itself should be the ticket to a driver’s license. Yet the only legal pathway for a minor to get a license is through a professional driver’s education program.

House Bill 1208 would fix this disconnect between the research and the law by giving parents who possess a driver’s license the option of teaching their own children to drive.

It wouldn’t end private driver’s education instruction. It would just give families the option of providing it themselves rather than hiring someone else to do it. Teens would still have to pass the state driver’s exam. That seems reasonable given the cost of these programs and the lack of conclusive evidence that they make roads significantly safer. 

Not all regulations are harmful, of course, and sometimes legislators do make well-informed decisions. But as these examples illustrate, the impulse to impose a preferred outcome seldom comes with enough knowledge to conclude that the imposition is wise. 

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How license requirements slow the spread of hot new services such as blow dry bars

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One of the hottest beauty trends of the last few years is the blow-dry bar. These semi-salons offer rapid hair styling services for a night out or a special event. But their expansion in New Hampshire is restricted because of the state’s outdated occupational licensing laws. 

To open a shop that offers hair washing and drying, and maybe some makeup application as well, one must have a full cosmetology license.

The training requirements for those licenses are expensive, time consuming and entirely unnecessary for niche beauty services such as hair washing or makeup application. 

New Hampshire’s cosmetology license requires — by law — a minimum of 1,500 hours of training in a state-approved cosmetology school or 3,000 hours of training for at least 18 months under a licensed cosmetologist. And cosmetology school costs about $20,000.  

Those requirements are excessive. (Massachusetts requires 1,000 hours of training) They’re ludicrous for someone who just wants to apply makeup or wash hair for a living. Yet that’s the law. 

Rep. Diane Pauer, R-Brookline, wants to fix that. She’s introduced House Bill 1171, which would exempt niche beauty services from state licensing requirements. 

The bill would make it legal to offer “blow-dry styling” (which includes “shampooing, conditioning, drying, arranging, curling, straightening, or styling hair”), eyelash extension application, makeup application, and eyebrow threading without having to get an expensive state license.

These are safe, common practices that people do for themselves, their families and their friends every day. None involves chemical agents or specialty tools that require advanced training. 

The bill also would exempt makeup application and similar cosmetic beauty services from licensure when offered for demonstration (at a department store makeup counter, for example) or for theatrical, photographic, television and media appearances.

New Hampshire is one of only 10 states without such licensing exemptions. Every bordering state offers at least some of these exemptions. 

Vermont exempts makeup application for “theatrical and performing arts industries.”

Maine exempts makeup application for theater, movies, television, modeling and retail demonstration. 

Massachusetts exempts from cosmetology licensure anyone doing demonstrations of cosmetology products. It requires a separate demonstrator registration. 

Here’s an example of the absurdity of New Hampshire’s current cosmetology license requirements:

Bernie Sanders would not need a licensed cosmetologist to apply his makeup were he to perform in a Burlington, Vt., theater production of “Battleship Potemkin.” But he did need one to apply his makeup when doing a TV hit from the campaign trail in New Hampshire. 

It would be silly to claim that Bernie’s health and safety were put at risk by unlicensed Vermont makeup artists. But the health and safety claim is what has kept New Hampshire from carving out sensible exemptions for simple services such as applying powder for TV hits and makeup for actors, or hair washing services at a blow-dry bar.

Licensing regulations vary by state, sometimes by a lot, sometimes a little. New Hampshire law allows barbers and cosmetologists licensed in other states to practice here, provided that the other state’s license requirements are “substantially equivalent to or higher than” New Hampshire’s.

Pauer has a bill to change that too. HB 1560 would strip this subjective equivalency language and let practitioners licensed in other states practice here.  

New Hampshire requires 800 hours of training in an approved school, or 1,600 hours of training under a licensed barber, to obtain a barber’s license. That’s much less onerous than what is required in many other states, especially our neighbors. 

Maine, Vermont, and Massachusetts require 1,000 hours of training. Connecticut and Rhode Island require 1,500 hours. But some other states have hours requirements that might just miss being deemed “substantially equivalent” to New Hampshire’s. 

Oregon, for example, requires 746 hours of training, with 465 of those being in practical operations.

The subjective language in New Hampshire’s statute is unnecessary. Stripping it would leave the requirement that the applicant be “similarly licensed in another state,” which is sufficient. 

The changes proposed by both of these bills would remove license requirements that aren’t necessary and that can serve as a barrier to entrepreneurship (in the case of HB 1171) and the in-migration of licensed professionals (in the case of HB 1560). 

With New Hampshire’s severe labor shortage, reducing needless barriers to entering the state’s labor market is an easy call, and one that comes with a greater sense of urgency than it has in a long time. 

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