A federal government agency worked in the winter of 2019 to prevent New England from accessing adequate supplies of natural gas, emails recently obtained by the Cato Institute show. 

Government is supposed to work on behalf of citizens, not special interests. But the U.S. Maritime Administration (MARAD), a subdivision of the U.S. Department of Transportation, has been working in coordination with the U.S. shipbuilding industry to prevent New England from importing domestic natural gas when supplies run short in the winter. 

Why? To protect U.S. shipbuilders from foreign competition.

The Jones Act, a century-old federal law, requires that ships transporting goods between two U.S. ports use ships built in America, crewed by Americans and owned by American companies. That’s a problem for New England because no liquid natural gas tankers are in compliance with the Jones Act. 

With no LNG tankers capable of legally bringing natural gas from Texas or Pennsylvania to Boston, New England governors have spent years pressing for waivers from this protectionist law. After the extremely cold winter of 2017-18, that effort was redoubled. But it was crushed with the help of MARAD, a move that put the entire region at risk of blackouts during periods of peak demand.

Through years’ worth of Freedom of Information Act (FOIA) requests, Cato Institute researchers recently exposed how MARAD lobbied to block the importation of domestic natural gas into New England even when the region’s supply constraints put lives at risk.

Cato scholar Colin Grabow laid out the sordid, outrageous story, which we summarize with permission here.

The background: In early 2016 the United States began large‐ scale exports of LNG following the opening of an export facility in Sabine Pass, Louisiana. As export levels increased, observers began to point out the Jones Act’s role in preventing this LNG from reaching U.S. consumers. In March 2018, for example, the Texas Railroad Commissioner sent an open letter to Congress noting the Northeast’s importation of gas from Russia instead of Texas because of the Jones Act. In August of that year, a group of New England governors floated the possibility of Jones Act modifications to help meet regional energy needs while that December Massachusetts released a comprehensive energy plan that repeatedly cited the Jones Act as an obstacle to obtaining domestic LNG.

In 2019, as New England elected officials pressed Washington for a Jones Act waiver, a senior MARAD official began lobbying others in the U.S. government, including the secretaries of energy and transportation, to oppose a waiver. MARAD also tried to stop Massachusetts’ waiver request, in part by giving the state false information about the status of its waiver request and one from Puerto Rico. 

This is not speculation. Cato got the emails, which show MARAD officials collaborating with shipping industry leaders on messaging in the agency’s effort to block Jones Act Waivers for New England.

These emails come from January of 2019, just a year after New England came within two days of rolling blackouts because of a shortage of natural gas, according to ISO New England, the region’s power grid operator. The winter of 2017-18 was so cold that Massachusetts power generators burned through twice as much oil in two weeks as they did in all of 2016.

The CEO of ISO New England testified to the U.S. Senate Committee on Energy and Natural Resources in January of 2018 that New England’s access to natural gas was dangerously constrained.

“Bitter cold temperatures drove an increase in demand for natural gas, Gordon Van Welie said in his testimony. “However,  we’ve known for several years that when it gets cold New England does not have sufficient natural gas supply infrastructure to meet demand for both home heating and power generation. Constrained pipelines resulted in substantially higher natural gas prices which led to much older and less efficient oil- and coal-fired power plants running ‘in merit.'” 

It was no secret in Washington that New England was one long cold snap away from rolling blackouts. 

Yet MARAD officials, in coordination with U.S. shipbuilding interests, succeeded in squashing the region’s effort to get an exemption from the Jones Act. This amounted to a federal agency putting the financial interests of one industry ahead of the health and safety of an entire region of the country.

With ISO New England and the Federal Energy Regulatory Commission again warning about the possibility of rolling blackouts if we experience another prolonged cold snap, there are renewed calls for a Jones Act waiver for New England. U.S. Rep. Chris Pappas has said he favors a waiver. (He said this on my radio show last week.)

Will New Englanders win this time? That depends not just on the political influence of shipbuilders and their unions, but on the influence of a federal agency that has aligned with them and against consumers. Needless to say, that’s not how government is supposed to work. It’s how government too often works under the corrupting influence of protectionist laws. 

The warning from New England’s electric grid operator, ISO New England, has become an annual refrain: Insufficient access to a dependable supply of fuel puts the entire region at risk of rolling blackouts this winter.

This year, there’s a new hint of urgency in the warnings, which have come from multiple sources.

“Without adequate gas, the region may not be able to meet the demand for home heating and electricity — and, when reliability suffers, the clean energy transition suffers,” ISO New England said in a statement last month.

That statement came ahead of the Federal Energy Regulatory Commission’s New England Winter Gas-Electric Forum held in Vermont on September 14. 

“We’re going into this winter basically crossing our fingers and hoping,” FERC commissioner James Danly said there, according to The Boston Globe. 

Charles Dickerson, president of the Northeast Power Coordinating Council, said at the forum that moving to a greater reliance on renewable energy was a widely shared goal. But the transition from coal and gas to renewables was not technologically feasible immediately. Therefore, using gas as a bridge fuel remained necessary, he said. 

That, however, is a problem because of pipeline constraints.

“Because there’s a retirement of coal in the region, the technology that we’re most reliant upon, and that we’re going to have to be reliant upon, to make it plain, is a gas type technology, natural gas,” Dickerson said. “The problem in New England is in the winter time there’re only but so many gas pipes feeding natural gas into the New England area, and those gas pipes can be constrained.”

The Globe offered a similar summary of the situation New England faces each winter:

“The challenge is daunting, as New England has limited ways to bring in natural gas — pipeline, ship, truck, or barge. In addition to being the dominant fuel for home heating, natural gas is used to generate more than half of the electricity in New England. And in winter, when demand is high, gas goes to heating buildings first before generating electricity.”

This week, ISO New England’s warnings made news again.

“New England power producers are preparing for potential strain on the grid this winter as a surge in natural-gas demand abroad threatens to reduce supplies they need to generate electricity,” The Wall Street Journal reported.

As ISO New England explains the situation on its website:

“During the last few years, inadequate infrastructure to transport natural gas has at times affected the ability of natural-gas-fired plants to get the fuel they need to perform. This energy-security risk has become a pressing concern in New England, considering the major role natural-gas-fired generation plays in keeping the lights on and setting prices for wholesale electricity.”

The warnings have been consistent for years: New England wants to make wind and solar a larger portion of the energy mix (which it has been doing). But in the meantime, we remain at risk of rolling winter blackouts if spikes in energy demand exceed our dangerously tight supply of natural gas. 

It’s a simple point, made simply, year after year after year. 

And year after year after year, it is ignored. 

Activists tell us we don’t need new pipelines or liquid natural gas terminals because renewables can provide baseload power now. 

But they can’t. Not at scale. Not yet. 

The intermittent nature of wind and solar power requires it to be backed up by more reliable sources of power. That means we’ll still need natural gas or nuclear power to cover our energy needs. 

It also means wind and solar are more expensive than commonly assumed, as additional backup generation has to be built to cover the times when they aren’t producing enough power. 

“Achieving baseload configurations—at least within the constraints that currently define baseload energy—burdens renewable power with a major ‘scale-up’ problem, i.e. the need to overbuild generation capacity to store electricity in sufficient quantity to serve year-round load demand,” a University of North Carolina study found. “The extent of this overbuilding is noteworthy, producing capital costs 6-10X those of the reference natural gas plant for serving the same demand.”

Environmental activists and some politicians say that New England’s high energy prices are caused by our over reliance on natural gas. But our reliance on gas is not the cause of high prices. The shortage of gas is. We could generate 100% of our energy with gas and still have low prices as long as we had a ready, steady supply of gas. 

But we don’t have that. 

Reducing the region’s reliance on gas (and oil) — through conservation efforts and the expansion of other sources of power — are worthwhile goals. 

But the bottom line is that we will rely on natural gas for a long time, and until we find a way to increase the available supply, we will remain at risk of rolling blackouts. 

It’s fall fair season, which in New England is known as the most wonderful time of the year. 

Why do people love fall fairs so much?

Because they’re not really fairs. They’re markets. 

And markets make people happy.

The thrill of a fall fair is enhanced by the crisp, autumn air, the foliage, the drive through the countryside to get there, and the sense of excitement that comes with anticipating sweet treats, games, rides, and the bustle of a happy crowd.

But those are all the whipped cream on top of the steaming mug of cider.

The real attraction is the experience of participating in a miniature (and temporary) marketplace.

For all the buzz and excitement, a fall fair is really a self-contained venue for the selling of goods and services. (That the goods and services are peddled by traveling carnies is just a bonus.)

Whether you go in pursuit of funnel cakes and caramel apples or rides, games and other amusements, once you enter the fair you’re basically shopping. 

You run around deciding whether to buy a treat, a souvenir or an experience. You weigh your options, decide what purchases are worth the price, and try to maximize the time and money you have at your disposal. 

There’s no way around it. You’re shopping. 

But it’s shopping with extra stimulation added. (See paragraph five.) 

A big reason we enjoy it so much is that the vendors have learned over the years exactly how to make us happy. 

And after all, that’s the primary objective of any market. 

Ultimately, a market can be defined as strangers inventing ways to profit by making others happy. 

The popcorn peddlers and midway hawkers don’t have any idea who you are. Wherever you came from, whatever you did before, wherever you go after, they don’t care. They have no idea what your politics are, or whether you’ve lived a life of crime or virtue. 

And yet they’re dead set on making you extremely, giddily happy.

Because if you leave happy, they profit, not just this fall but next fall and the fall after that and so on. 

Because they’ve become very good at making us happy, each year when they open the gate, we open our wallets. 

And when we’re all full of cider and candy apples and we’re trying not to fall asleep on the way home, we wish the whole experience would come around more than once a year — so we could repeat the joy of that hours-long series of commercial transactions more often.

If you’ve ever thought about complaining that your favorite fair has been commercialized, well, we hate to break it to you, but the whole fair is an entirely commercial enterprise from start to finish. 

And that’s exactly why you love it so much.  

By Jonathan Helton

Will New England have enough fuel this winter?

The region’s six governors have their doubts, and in July they wrote U.S. Energy Secretary Jennifer Granholm to ask for relief from a 1920 shipping law that has limited the region’s supply of fuel, particularly oil and natural gas.

The governors asked the Biden administration to “explore the conditions under which it might be appropriate to suspend the Jones Act for the delivery of LNG [liquid natural gas] for a portion or all of the winter of 2022-2023.”

They flagged the 102-year-old Jones Act because it requires that goods shipped between U.S. ports be carried on ships that are U.S. flagged, U.S. built, and mostly owned and crewed by Americans.

Since New England uses natural gas to meet nearly half of its electricity needs, this old law puts the region in a precarious position.

A shortage of natural gas pipeline capacity makes it challenging for New England to get enough fuel during periods of peak demand, such as the coldest days of winter and the hottest days of summer.

Importing domestic natural gas by tanker ship offers a possible solution. But the Jones Act gets in the way. Its requirement that New England energy companies hire domestic ships to transport fuel between American ports actually prevents New England from shipping fuel from Texas or Pennsylvania to Boston.

How?

There aren’t any American LNG tankers, despite America being the world’s largest LNG exporter, with major export terminals on the Gulf Coast.

No LNG tankers have been built in the U.S. since 1980. This is largely because U.S. shipyards do not construct competitively priced ships. In 2015, the U.S. Government Accountability Office estimated it would cost up to three times the world market price to buy an LNG tanker from a U.S. shipyard, assuming one could be built at all.

In general, most of New England’s LNG arrives via pipeline. Pipeline capacity, however, cannot be added quickly.

As New Hampshire Consumer Advocate Donald Kries wrote in August: “The interstate pipeline network does not have enough capacity to supply the region with all of the natural gas it needs to heat all the homes and businesses reliant on that fuel while supplying all of the [natural] gas generators that would need to fire up in an extended cold snap.”

The Jones Act leaves foreign imports as the best alternative. Unfortunately, imports from abroad often run counter to U.S. foreign policy. Before the war in Ukraine, for example, New England and Puerto Rico bought LNG from Russia on occasion. Similarly, Hawaii imported as much as a third of all its oil from Russia, mainly because the Jones Act made it too expensive to buy U.S. oil. But President Joe Biden’s ban on Russian fuel imports put an end to that.

Energy Secretary Granholm met with the New England governors on Sept. 15 to talk about their Jones Act waiver request, but according to Reuters, the outcome wasn’t great.

“In the event that there is an issue where additional supplies of heating fuels are needed, we would work with the states as appropriate to see what tools are needed,” a U.S. Department of Energy official told the news service.

Such obfuscation is unfortunate because a Jones Act waiver would be a win for everyone. New England residents could have a reliable supply of fuel, and probably would save on electricity costs, which already are extraordinarily high.

A Jones Act waiver also would unlock a new market for Gulf Coast LNG exports. And U.S. maritime interests should have no reason to complain, since there aren’t any LNG tankers that comply with the Jones Act anyway.

Beyond a waiver, Congress could reform the Jones Act in more substantial ways. The law has failed in its mission to ensure a healthy maritime industry in the name of national security, and an update is long overdue.

Today, only four U.S. shipyards build large oceangoing commercial ships, and only 93 such ships are Jones Act-compliant — down from 257 in 1980. Since 2020, those shipyards have produced only two large, oceangoing vessels, with one other large cargo ship set to be completed later this year — and it is not an LNG tanker.

Perhaps the best initial reform would be to repeal the law’s U.S.-built requirement, even if only for LNG tankers. This would put more LNG tankers into service for the American people, make it easier for U.S. carriers to expand their fleets and markets, provide more jobs for U.S. mariners, and help keep New England warm during the coming winter.

Everyone would win.

If we maintain the status quo, the odds of New Englanders running short of fuel this winter remain elevated. Why court such a disaster when a solution is as easy as reforming a single bad shipping regulation?

Jonathan Helton is a research associate at the Grassroot Institute of Hawaii.

 

Two events on opposite ends of the state last week highlighted the central problem with New Hampshire’s housing market.

In Newmarket over the weekend, a group of renters held a demonstration to denounce landlords and protest high rents.

After experiencing a substantial rent increase, one couple said they had to move out of town to find a place where the rent and the quality of the apartment were better matched. 

That place, they said, is New Jersey.

Another protester said she had moved to Maine to find a more reasonable rent.

It’s true that, on average, moving from Rockingham County to Maine will lower one’s rent, as average rents are lower in Maine than in New Hampshire.

Apartmentlist.com puts the average rent for a one-bedroom apartment at $952 in Maine and $1,329 in New Hampshire.

Home prices are lower in Maine too.

The median home price in New Hampshire is about $430,000. 

In Maine, it’s about $350,000.

Maine and New Hampshire have almost identical populations. Maine has 1.34 million people, and New Hampshire has 1.35 million people.

That’s not enough of a difference to create such huge price variations for housing.

Why would prices be so much lower in Maine?

In a word: Supply.

Maine has 101,000 more housing units than New Hampshire does, according to Census Bureau data.

That’s almost exactly as many housing units as exist in Merrimack and Cheshire Counties combined. 

If New Hampshire had 101,000 more housing units, what do you think the effect would be on home prices and rents?

A few days before the Newmarket protest, residents of Keene demonstrated exactly why New Hampshire is suffering from a severe housing shortage that has driven home prices and rents to record levels.

On Wednesday, Keene’s Planning, Licenses and Development Committee recommended unanimously that the city council send back to committee a proposed zoning ordinance that would allow more housing in the city’s rural district, the Keene Sentinel reported.

The city had proposed reducing the minimum lot size in the rural zone from 5 acres to 2. 

That’s right. The City of Keene has a rural zone with a mandatory minimum lot size of five acres. Within that zone, no house may legally be built on any lot smaller than five acres.

This is exactly the kind of government regulation that reduces the housing supply and raises prices. 

Keene officials wanted to do their part to make it less expensive to build single-family homes in large sections of the city. But about 15 people showed up to oppose the ordinance, with many saying it would change the rural character of the City of Keene. 

Spooked city officials promptly moved to withdraw and rework the proposed ordinance.

Meanwhile, prices continue to rise and pressure continues to build for legislative action. Activists are pushing hard for state laws to pre-empt local zoning ordinances or regulate prices.

If local governments don’t take more decisive action to trim regulations that limit housing supply, state-imposed solutions will come. It’s only a matter of time. 

Energy shortages in California and Europe have prompted a revival of interest in Nuclear power. And who gets the credit? Environmental activists, naturally. 

Why even environmental activists are supporting nuclear power today,” National Public Radio gushed last week. 

The few environmentalists highlighted in the story deserve credit for taking such an unpopular position within the movement. NPR even acknowledges their pariah status.

“We felt like we were on an island all by ourselves,” Mothers for Nuclear activist Kristin Zaitz said. “We had people wishing that we would die, wishing we would get cancer…making weird videos about us that made me feel like, am I unsafe, is my family unsafe?”

This aired on NPR, which is progress. Also progress: NPR accurately reported nuclear power’s superior record on safety and pollution:

“In terms of deaths from accidents or pollution, nuclear is far safer than coal or natural gas – the largest sources of electricity in the U.S.

“Diablo Canyon got a boost last year when researchers from MIT and Stanford said keeping the plant open until 2035 would cut carbon emissions from California’s power sector by more than 10% and save $2.6 billion in electricity costs.”

This is welcome, yet these assessments of nuclear power’s safety and environmental record aren’t exactly news. 

You might not know that, though, if you listened to most environmental activists, who’ve spent decades wrongly portraying nuclear power as more dangerous and worse for the environment than other options. 

Environmental activists were the ones who pushed for Germany to close its perfectly good nuclear power plants, making the country more reliant on Russian oil and gas. 

They pushed for California to close the Diablo Canyon nuclear power plant, without which California probably would be suffering blackouts right now.

They pushed for the closure of Vermont Yankee, which resulted in increased carbon emissions in New England.

And they worked tirelessly to close Maine Yankee, Connecticut Yankee, Yankee Rowe, Indian Point and other nuclear power plants in the Northeast and throughout the United States.

To the delight of environmental activists, the Northeast has lost more than a handful of nuclear plants in recent years, mostly because it became uneconomical to continue running them (something environmentalists tried hard to ensure).

  • From 1972-1996, the Maine Yankee nuclear power plant was the largest power generator in the state. But environmental activists opposed it from the start an harassed it with an ongoing series of ballot initiative and bills to shut it down. It closed for cost reasons. 
  • From 1972-2014, the Vermont Yankee nuclear power plant generated power in Vernon, Vt. Environmentalists worked the entire time to get it closed, and they succeeded even though the plant had been operating safely and had just had its license renewed through 2032. The plant’s closure resulted in an increase in New England carbon emissions as nuclear power was replaced with natural gas. 
  • From 1960-1992, the Yankee Rowe plant operated in Rowe, Mass. It was protested by environmental activists. Its owners shut it down rather than pay for federally mandated testing that was demanded by activists.
  • From 1972-2019, the Pilgrim nuclear power plant operated in Plymouth, Mass. Activists pressed for its closure all along, and the plant owner ultimately shut it down for economic reasons in 2019. Its power generation was replaced by natural gas. Afterwards, predictably, New England carbon emissions increased. 
  • From 1968-1996, the Connecticut Yankee nuclear power plant provided low-carbon power to Connecticut. Environmentalist sought its closure. This plant was cited for safety violations, though the Nuclear Energy Institute says the site of the decommissioned plant is safe enough to turn into farmland. It was closed for cost reasons.
  • From 1962-2021, the Indian Point nuclear power plant generated power in Buchanan, N.Y. Environmental activists challenged the plant’s continued operation, and the State of New York threw up numerous legal obstacles to the plant’s license renewal, making renewal too costly for the owner to pursue. New York carbon emissions increased after Indian Point’s closure, of course. 
  • And then there’s New Hampshire’s Seabrook Station, which was supposed to open in 1974. Environmental activists successfully delayed its opening until 1990. Since it was first proposed in the 1970s, it has been protested continuously by anti-nuclear activists, who still want to shut it down. They successfully prevented the plant’s second reactor from being built. By delaying and shrinking the plant, activists managed to increase New England carbon emissions and prolong the use of oil and coal in New Hampshire.

State subsidies for renewables, which artificially suppress wholesale energy market prices, coupled inexpensive natural gas helped make nuclear power plants less economically viable.

Environmental activists gleefully contributed to nuclear power’s negative economic and regulatory environment by misleading the public and elected officials about nuclear power’s safety and environmental record, pushing to tilt the playing field in favor of renewables, and harassing plant owners with lawsuits and protests. 

It’s nice to see the small group of pro-nuclear environmental activists get credit for being right when the rest of the green movement has been shamefully, dangerously wrong about nuclear power from the start. 

But that’s only a small part of the story. The bigger story is how the environmental movement put itself on the wrong end of one of the biggest fights of its existence and wound up hurting the environment as a result.

And all the while, they sought to delegitimize the activists, policy wonks, industry experts, academics and researchers who told the truth. That’s the story that needs to be told. 

By Jason Sorens

Gov. Chris Sununu and his opponent, Sen. Tom Sherman, have proposed reforms to alleviate New Hampshire’s severe housing shortage. How do those proposals compare, and how effective would they be? A brief overview of each suggests that neither would solve New Hampshire’s housing shortage, but Gov. Sununu’s initiative would be likely to result in more housing construction.

Democratic Sen. Sherman released his housing plan for New Hampshire in July, calling it a longer-term fix than incumbent Republican Gov. Chris Sununu’s “federal band-aid,” the InvestNH Housing Fund approved in May. Of course, InvestNH is not the sum of Gov. Sununu’s housing policy, nor has he yet released a detailed plan for the coming term. Therefore, a direct comparison of the two candidates’ housing policies is imperfect at this time, but we can still assess what is good, bad, and mediocre in each set of proposals: Sherman’s housing plan and Sununu’s InvestNH Housing Fund.

Gov. Sununu’s InvestNH plan

The governor’s InvestNH program consists of $60 million in grants for owners and developers, and $40 million in grants for municipalities. In an ideal world, taxpayer dollars wouldn’t be used to subsidize a private industry at all. Yet government has created housing scarcity by strictly regulating home-building, not in the interest of health or safety, but simply with the explicit goal of preventing new people from living in the area. The obvious solution is to remove the unnecessary regulations that limit residential construction. But those regulations rest at the local level, and legislators have proven reluctant to overrule them with state laws. Using financial resources as incentives to work around or relax local regulations is a compromise that attempts to produce quick results while accepting the political reality that no statewide fix is achievable this year.

Still, if the state is going to subsidize home-building, it had better be done in efficient and effective ways. Grants to municipalities to encourage them to lift regulatory restrictions on new homes might be the most easily justified way of deploying financial resources because they attack the problem at the source: the tangle of local regulations that prevent building.

The InvestNH municipal grants consist of three streams: $30 million in grants to municipal governments on a per-building permit basis, $5 million in grants to assist with regulatory evaluation and redesign, and $5 million to cover the costs of demolition of vacant or dilapidated buildings.

Towns will get $10,000 for every building permit they issue within six months of application for new rental units constructed in projects made up of five or more units. Because of the short timeline, this money is not going to incentivize changes to zoning ordinances. Projects of this size almost always require a variance from the local board of adjustment, so this money mainly works as an incentive for those boards to approve more projects, or at least cooperate to speed them along.

The $5 million will go to municipalities for consulting on their housing needs, reviewing current regulations, and rewriting regulations. The primary goal of requests must be to increase housing stock.

The $60 million for capital grants goes directly to developers and the nonprofit New Hampshire Housing Finance Authority. Only multifamily rental housing is eligible. For projects with 15 or more units, applicants must demonstrate an “affordability commitment,” holding rents below market for lower-income tenants for at least 20% of units.

The main advantage of Sununu’s plan is that the money should indeed incentivize new housing construction in a relatively short time frame. By tying the municipal grant money to the issuance of building permits, Sununu’s plan creates a strong incentive for boards to issue more building permits. The state would, in effect, pay municipalities to issue new building permits.

The bulk of the Sununu plan, $60 million for capital grants to stimulate the construction of multifamily housing, might incentivize developers to go forward with projects that contain a higher percentage of lower-priced units than would have been profitable without the grants. Ordinances that require projects to set aside a certain percentage of units for rent at below-market rates tend to discourage development and lead to less new construction. But this cash incentive might do the opposite. It will be difficult to know, however, whether these projects would have been built anyway.

Paying municipalities to consult on housing needs and review regulations might produce better land use regulations, but that outcome is not guaranteed, and this portion of the plan lacks a strong incentive to achieve the desired result.

The strength of Sununu’s plan – that it is focused on stimulating development in the short term – is also a drawback. It does very little to change the long-term dynamics of repressed supply. It also focuses solely on larger multifamily rental projects, as opposed to single-family starter homes and “missing middle” construction.

Sen. Sherman’s plan

Sen. Sherman’s plan is less detailed, but it has these features:

  1. It adds staff to regional planning commissions and the state’s Office of Planning and Development;
  2. It funds municipal review of local land-use ordinances;
  3. It reviews state-level regulatory hurdles to development;
  4. It assesses under-used state lands for development potential;
  5. It promotes model zoning ordinance elements;
  6. It subsidizes loans for water, sewer, and transit infrastructure;
  7. It creates an incentive program for municipalities to adopt more pro-housing ordinances;
  8. It increases community development tax credits;
  9. It increases the affordable housing fund;
  10. It creates a historic rehabilitation tax credit;
  11. It doubles funding for contractor job training.

Sherman touts the fact that his plan features permanent programs rather than a one-time infusion of money. This might not be quite fair to Sununu, since the InvestNH program came out of a unique opportunity to spend federal grants, and the governor has strongly supported legislation that offered some structural changes, including a “housing champion program” that would reward municipalities for changing their ordinances to allow more housing density. Still, Sherman’s plan is intended to be a comprehensive menu of permanent policy changes. The question is whether they would achieve the intended goal of stimulating the construction of more housing.

Some of Sherman’s ideas can be expected to have a greater impact than others. The strongest part of Sherman’s plan is the proposal to tie increases in state transportation and environmental funding to “the adoption of zoning or infrastructure that allows reasonable opportunities for housing.”

Gov. Sununu supported a similar housing champion program that was initially included in Senate Bill 400 this year, but that part of the bill did not pass. Depending on how such a program is designed, it could have considerable long-term impact. A well-designed program will reward municipalities for actual housing unit creation as well as regulatory changes, and will reward regulatory changes that allow for single-family and “missing middle” in addition to statute-defined “workforce housing” (buildings of five units or more).

Expanding sewer access helps the environment and allows more housing and commercial density. It’s unclear how important an obstacle it is to new construction, but it could be a factor.

Sen. Sherman’s proposal for a state job training fund for the construction trades is not likely to relieve the shortage of skilled construction labor, as the funds will surely be a drop in the bucket compared to what the private sector already spends on training, and training is rarely the decisive hurdle discouraging someone from entering a manual-labor occupation.

The CDFA tax credit, which Sen. Sherman would expand, is widely alleged to favor politically connected businesses and nonprofits and doesn’t focus on housing.

The rest of Sen. Sherman’s plan would do little to stimulate new housing development. The bulk of the senator’s plan would fund studies and reviews, or give municipalities and planning commissions additional financial resources that are not tied to the issuance of new building permits or the passage of new, housing-friendly ordinances.

Whereas most of Gov. Sununu’s plan is focused on directly financing new housing construction, most of Sen. Sherman’s plan is focused on providing additional financial resources to local governments, planning commissions, and construction industry labor.

Overall, Gov. Sununu’s plan contains stronger immediate incentives for developers to propose multi-family housing, and for municipalities to issue new permits. Sen. Sherman’s plan also contains some of these incentives, but until funding details are available, it’s impossible to know how much of an impact they will have. Setting up a permanent housing champion program, as both candidates appear to support, would have the potential to change the game.

It’s worth noting that neither candidate is talking about state preemption of local regulation. Zoning preemption bills are becoming more common, and are generating more attention, in the Legislature. One nearly passed the House this year (House Bill 1177, sponsored by Rep. Ivy Vann, to legalize fourplexes wherever water and sewer are available), and several others were proposed.

With both candidates for governor backing programs to incentivize local governments to allow more housing, look for similar proposals to be introduced in the Legislature next year. But if those incentives fail to produce meaningful changes in local regulations, and the state’s severe housing shortage continues to frustrate voters, the pressure for direct preemption of local regulatory barriers will continue to build.

Dr. Jason Sorens is director of the Center for Ethics in Society at St. Anselm College.

Download a pdf copy of this analysis: Gubernatorial Candidates Housing Plans

On August 23, a handful of state laws crafted to address New Hampshire’s housing shortage take effect. Though the big reforms were left on the Legislature’s cutting room floor, these modest changes might prove helpful. 

The splashiest change, which might prompt some warrant articles next spring, applies zoning exemptions carved out for 55+ communities to workforce housing as well. 

Most of the changes are more technical fixes to ensure that municipalities don’t stick proposed developments in a legal limbo simply by delaying or refusing to act on applications. 

These changes amount to mostly modest improvements in the system that will make it slightly less antagonistic to new housing construction. But with home prices and rents remaining at record levels, pressure to pass more powerful reforms is likely to prompt more legislation next year. 

The new laws will:

  • Require the Office of Planning and Development to create and offer training to planning and zoning boards. The initial idea was to require board member training, but that was dropped in favor of making the training available at no cost to board members. 
  • Require that any fee imposed by a local land use board be published “in a location accessible to the public during normal business hours.” Any fee not published at the time an application is submitted shall be waived. 
  • Require that by July 1, 2023, any local incentive established for housing older persons “shall be deemed applicable to workforce housing development.” Many communities exempt 55+ communities from certain zoning requirements. The idea is to create exemptions that allow housing to be built only for people who don’t have school-age children. This change would apply those restrictions to workforce housing as well. 
  • Require that local land use boards issue a final written decision for all applications, and require those decisions to “include specific written findings of fact that support the decision.” Failure to offer specific, written findings of fact would be grounds for automatic reversal by the Superior Court.
  • Require zoning boards of adjustment to issue a final decision on an application within 90 days of receiving the application. 
  • Require planning boards to determine whether submitted applications are complete at the next regularly scheduled meeting, or within 30 days after receiving the application. Boards must then act on an application within 65 days of determining that it’s complete.
  • Require selectmen or city councils to certify approval of a plat if the planning board fails to act within the allotted time. Failure of selectmen or city councils to act will constitute grounds for the Superior Court to act if petitioned to do so by the applicant.
  • Allow municipalities to acquire land for use as workforce housing, but not by eminent domain.
  • Allow municipalities to lease basements, ground and second floors of public buildings for residential use, negotiate the sale or lease of property for residential use, and acquire, improve, operate, maintain or promote residential developments “aimed at increasing the available housing stock within the municipality.”

New Hampshire collected a record $430.1 million budget surplus in the 2022 fiscal year, which ended June 30th. Most of it is already gone. 

From January to June, legislators spent $261.7 million — or 60% — of the surplus.

For context, the amount of new spending in 2022 was just a bit larger than the $257.8 million stored in the state’s Rainy Day Fund (also a record).

The $430.1 million surplus is not what the state saved in the last fiscal year. It’s the amount by which state revenues exceeded budgeted spending. Lawmakers didn’t save even half of it.

Legislators passed 29 bills this year that appropriated money from the state budget surplus, according to a tally compiled by the Office of the Legislative Budget Assistant (see the list here: Appropriation Bills 6-30-22). 

The spending ranged from $60,000 over two years to fight cyanobacteria blooms to $71.1 million over two years to fund road and bridge work as well as body and dashboard cameras for law enforcement.

The next largest allocation came from House Bill 1587, which spent $42.9 million to increase retirement pay for 1,824 police officers and firefighters.

Another $21 million was put toward funding a dental benefit for Medicaid recipients, and $9.4 million went toward construction of a legislative parking garage.

Smaller items included $150,000 for a Hampton Beach pier feasibility study and $250,000 in capital improvement funds for state fairs and agricultural fairs.

The total appropriations of $261.7 million, per the Legislative Budget Assistant’s count, does not include the effects of tax law revisions approved this year.

The Office of Legislative Budget Assistant counts tax cuts as revenue reductions based on a simple static scoring of tax rate changes. We did not include these in the spending tally because (a) they aren’t spending, and (b) past calculations have been wildly off. 

For example, the LBA in 2017 projected that business tax cuts passed that year would reduce state revenues by $11 million. Instead, business tax revenues shot up, ending the year $151.6 million over budget rather than $11 million under budget.

The LBA estimated a total revenue reduction of $59.5 million through fiscal year 2024 due to tax law changes. 

Of those revenue reductions, $17.5 million through FY 2024 is projected to come from a tiny reduction in the Business Profits Tax. That’s the type of projection that has proven incorrect in the past.

The remaining $42 million, however, represents losses through FY 2024 that come from a change in the way the state requires businesses to apportion net operating losses. This projected loss is more likely to materialize because it eliminates what is effectively a double taxation of business.

If this $42 million is included, then legislators can be said to have reduced the budget surplus by $303.7 million.

That would leave only $126.4 million of the $430.1 million surplus in state coffers. 

The total could be even lower, as the LBA was unable to determine a cost for a few bills. 

This is not to condemn all of this spending as wasteful or unnecessary. Financing delayed bridge repairs, for example, can be a very good use of unexpected revenues. The spending was focused on one-time uses that won’t be written into the baseline budget going forward, which was also responsible. 

But the spending is haphazard, with money thrown to various projects that proved politically popular, rather than focused on, say, a priority list of state needs. 

With a 424-member legislative body, it might be unfair to expect a more focused approach to spending a massive one-time windfall. But the chaotic nature of governing with such a large Legislature doesn’t negate the wisdom of trying to impose a strategic focus on state spending.

In May, we recommended dedicating a large portion of the surplus to cover unfunded state pension liabilities, which would pay down an existing state obligation and save taxpayers money in the long run. That’s the kind of strategic planning that didn’t shape this $261.7 million in spending.  

However, the record $257.8 million Rainy Day Fund was the result of strategic planning, and it remains untouched. Legislators deserve credit for filling that fund and leaving it alone. As recently as 2014, the Rainy Day Fund held just $9.3 million.

The current fiscal year started in July, and although revenues were $13.9 million above budget, they were $4.2 million lower than last July.

The next Legislature needs to keep a careful watch on revenues. If another surplus materializes, it would be wise to have a priority list of state needs ready to go. If one doesn’t materialize, it might not take long to burn through what’s left of 2022’s record windfall.

If you planned to start a new enterprise and hire someone to run it, you’d probably avoid applicants who racked up disastrous safety records and massive financial deficits on their way to being investigated and placed under remedial safety orders by the feds.

The New Hampshire Department of Transportation, though, has tapped an operator with all of those problems to run its planned Manchester-Boston commuter rail line.

Despite steep declines in commuter rail ridership, the rise of remote work and the promise of driverless cars, the state is still moving forward with plans to build a commuter rail line to Boston. (The state in 2020 approved $5.4 million in federal funds to plan the line.) Those plans name the Massachusetts Bay Transit Authority (MBTA) as the operator of the service.

Sure, the MBTA has decades of experience running commuter rail. But then, the U.S. Postal Service has decades of experience delivering mail, too. 

A quick (and not comprehensive) review of the MBTA’s recent troubles should be enough to eliminate the agency as a suitable commuter rail partner for New Hampshire. A list of just some of the recent safety issues includes:

Years of poor management and questionable spending priorities have left the MBTA with inadequately trained staff, decaying infrastructure, and antiquated management systems. 

The FTA’s investigation found, to cite one example, that the authority uses a paper-based record-keeping system and has not yet transitioned to storing its records digitally. This is in 2022. 

The justification for building a costly commuter rail line from Boston into New Hampshire is evaporating rapidly, as we’ve documented here and here. 

But even if one could build a case for some scaled-down version of commuter rail, the case for letting the MBTA run it is nonexistent. 

No organization with such a dismal performance record should be given additional responsibilities, much less trusted with the lives of Granite State commuters.