1 “…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.” Tailwinds to Headwinds Democratic Business Caucus April 9, 2013 Board of Directors Sheila T. Francoeur, Chair David Alukonis William H. Dunlap Eric Herr Dianne Mercier Richard Ober James Putnam Stephen J. Reno Stuart V. Smith, Jr. Donna Sytek Brian F. Walsh Mike Whitney Martin L. Gross, Chair Emeritus Todd I. Selig Kimon S. Zachos Directors Emeritus
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Tailwinds to Headwinds Democratic Business Caucus April 9, 2013
Tailwinds to Headwinds Democratic Business Caucus April 9, 2013. Board of Directors Sheila T. Francoeur, Chair David Alukonis William H. Dunlap Eric Herr Dianne Mercier Richard Ober James Putnam Stephen J. Reno Stuart V. Smith, Jr. Donna Sytek Brian F. Walsh Mike Whitney - PowerPoint PPT Presentation
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1
“…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.”
Tailwinds to Headwinds
Democratic Business Caucus
April 9, 2013
Board of DirectorsSheila T. Francoeur, Chair
David Alukonis
William H. Dunlap
Eric Herr
Dianne Mercier
Richard Ober
James Putnam
Stephen J. Reno
Stuart V. Smith, Jr.
Donna Sytek
Brian F. Walsh
Mike Whitney
Martin L. Gross, Chair Emeritus
Todd I. Selig
Kimon S. Zachos
Directors Emeritus
2
Summary
• NH is a low tax, high income state with about average levels of spending when you control for major drivers of state spending (e.g. poverty).
• NH has been the benefactor of significant demographic tailwinds.
• What’s next?
3
Levels of Spending
Total Fund Spending in New Hampshire 1982 and 2012
$5,244,850,965
$791,476,281
$0
$1,000,000,000
$2,000,000,000
$3,000,000,000
$4,000,000,000
$5,000,000,000
$6,000,000,000
1982 2012
6.5% Per year
Per Capita Inflation Adjusted Total Fund Spending
$2,049
$3,984
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
1982 2012
State Spending Drivers
1.2%
5.8%
6.3%
2.9%
6.5%
0%
1%
2%
3%
4%
5%
6%
7%
Population Title XIX MedicaidCaseloads
State PrisonInmates
Inflation Total Fund Spending
Annu
aliz
ed In
crea
se 1
982
to 2
012
4
Changing Distribution of Spending
Total Funds 1982
General Government,
$115,906,615, 15%
Administratin of Justice and
Public Protection,
$60,692,695, 8%
Resource Protection and Development, $25,562,267,
3%Transportation, $152,238,886,
19%
Health and Social Services, $245,740,743,
31%
Education, $191,335,075,
24%
Total Funds 2012 General Government,
$469,417,441, 9%
Administratin of Justice and
Public Protection,
$598,270,251, 11%
Resource Protection and Development, $306,866,699,
6%Transportation, $571,009,903,
11%
Health and Social Services, $1,923,582,741,
37%
Education, $1,375,703,930,
26%
55
Low Spending? Size of State Government (Spending)
Total State Expenditures per Capita, SFY2007
New Hampshire, $3,459.69
United States, $4,773.04
$0.00
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
$12,000.00
$14,000.00
$16,000.00
$18,000.00
Alaska
Wyo
ming
Hawaii
Alabam
a
Louis
iana
Mas
sach
uset
ts
Wisc
onsin
Arkan
sas
Orego
n
North
Dak
ota
New Je
rsey
Miss
issipp
iIo
wa
Mon
tana
Was
hingt
on
Nebra
ska
South
Car
olina
North
Car
olina
Kansa
s
Tenne
ssee
South
Dak
ota
Idah
o
Illino
is
Miss
ouri
Colora
do
Nevad
a
Source: www.statehealthfacts.org
66
Fewer Problems?
Percent of Population in Poverty (2007-2008)
0%
5%
10%
15%
20%
25%
30%
Miss
issipp
i
New M
exico
Arizon
a
Alabam
a
South
Car
olina
Arkan
sas
Florida
Mich
igan
Miss
ouri
Rhode
Islan
d
Nevad
a
Main
e
Nebra
ska
Was
hingt
on
Wisc
onsin
Verm
ont
Minn
esot
a
New H
amps
hire
77
Additional Spending Measures?
Spending Per Person in Poverty 2008
$0.00
$50,000.00
$100,000.00
$150,000.00
$200,000.00
$250,000.00
Alaska
Delawar
eUta
h
Mas
sach
uset
ts
New Je
rsey
Was
hingt
on
Minn
esot
a
North
Dak
ota
New H
amps
hire
Nebra
ska
Main
e
Orego
n
New Y
ork
Kansa
s
Penns
ylvan
ia
Wyo
ming
Oklaho
ma
Mon
tana
South
Dak
ota
North
Car
olina
Mich
igan
South
Car
olina
Tenne
ssee
Florida
Arizon
a
Texas
NH Spends slightly more than the national average, per person in poverty
88
Low Tax Burdens
State and Local Taxes as a Share of Personal Income 2009
New Hampshire, 8.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
New Je
rsey
Conne
cticu
t
Rhode
Islan
d
Minn
esot
a
Main
e
Mas
sach
uset
ts
Illino
is
Nebra
ska
Orego
n
Kansa
s
Mich
igan
Delawar
e
India
na
Wes
t Virg
inia
Was
hingt
on
Florida
Virgini
a
Mon
tana
Oklaho
ma
Colora
do
New M
exico
South
Car
olina
Texas
Tenne
ssee
Nevad
a
99
Tax burdens flat when expressed as a function of our productivity
State and Local Tax Burden as a Share of Gross State Product
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
NH RateUS Rate Since the late seventies,
state and local tax burdens have declined slightly (through 2009)
10
Balancing the NH General Fund & Education Trust Fund, 1979-2013
$0
$250
$500
$750
$1,000
$1,250
$1,500
$1,750
$2,000
$2,250
$2,500
$2,75019
79
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
State Fiscal Year
Mil
lio
ns
of
Do
llar
s
Non-tax GF Revenue:Medicaid EnhancementTobacco SettlementFlexible Federal Grant (2003)
The coming negotiations over the 2014-2015 state budget will be dictated, in large part, by forecasts for tax revenue growth in the next two years. These forecasts have proven tricky through the recession, with most years seeing zero or very modest increases in revenue. Predicting the state of the economy two years into the future is a tricky business. But budget writers will want to get the math right since those revenue forecasts will largely shape the spending options available in the next budget.
12
Growth in business tax receipts have fueled growth
General Fund Revenue from BPT & BET(In Millions)
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
State Fiscal Year
Tax
Rev
en
ue
($ m
illio
n)
Business Profits Tax
Business Enterprise Tax
$91.6
$143.3
$395
$325
13
What has changed?
14
GDP Growth Stalls
Percent Change in Real GDP in BEA Regions
50.9%
36.2%30.1%
40.3% 41.9%48.0%
57.8%
70.9%
41.6% 42.4%
11.8% 10.4%17.0%
1.7%
16.5% 19.9%
31.2%26.5%
17.1% 16.6%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
New Ham
pshir
e
New Engla
nd
Mide
ast
Great
Lake
s
Plains
South
east
South
west
Rocky M
ount
ain
Far W
est
US Tot
al
1990 to 2000
2000 to 2010
15
New Hampshire Productivity Growth by Decade
3.4%
30.6%
18.5%
12.5%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
1970 to 1980 1980 to 1990 1990 to 2000 2000 to 2010
Percent Change in Real GDP per Job in BEA Regions
12.5%14.5%
17.9%
12.6%
17.3%
20.9% 21.1% 20.1% 19.0% 18.2%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
New Ham
pshir
e
New Engla
nd
Mide
ast
Great
Lake
s
Plains
South
east
South
west
Rocky M
ount
ain
Far W
est
US Tot
al
2000 to 2010
Tailwinds
To Headwinds
16
What’s Next?
16
17
What Should We Invest In?
• Human Capital
• Economic Creativity
• Business Base
• Costs of Business?
• Infrastructure?
• Quality of Life?
18
Innovation and Costs
• Human Capital– Adults with a BA or Better– Per Pupil Spending– 2011 8th grade NAEP Math
Score– 2011 8th grade NAEP Science
Score• Economic Creativity
– Patents Per Capita– Venture Capital Per Capita– R and D (% of GDP)– Doctorates per Capita
• Business Base– Per Capita Income– High Tech Jobs as % of Total– Business Birth and Death Rate– Internet Usage
• Costs– Health Care Cost Per Capita– Commercial Energy Costs
Per Kilowatt– Housing Affordability– Mature Firm Tax Burden
• Infrastructure– State Debt per Capita– Percent of bridges in trouble– Transportation spending per
• Surveys tell a very different story on regulatory status depending on what is measured and what is weighted more heavily– Forbes survey ranks NH 48th lowest in terms of
regulatory structure. – Kaufmann survey ranks NH high across a series of
regulatory structures small businesses.
• Given the importance, we are looking to collect primary data on this topic.
32
Small Business Friendliness Survey
2013 Thumbtack.com Small Business Survey, in partnership with the Kauffman Foundation
StateOverall
Business Friendliness
Ease of Starting
Business
Regulatory friendliness
Employment, Labor, and
Hiring
Licensing Regulations
New Hampshire 3 2 4 6 2
Maine 40 33 11 8 15Massachusetts 30 32 32 33 31Vermont No Data No Data No Data No Data No Data