The bright side of a recession

Governor John Lynch discusses the silver lining of New Hampshire economic dark cloud with Foster's Daily Democrat.

Gov. John Lynch told editors and managers at Foster's Daily Democrat Monday, "I think there is a silver lining. I think we need to use this economic recession that we're in as an opportunity to streamline state government and make it more efficient."

The nature of government is such that it encourages the expansion of public services — whether they are needed or not and whether or not the people are asking for them. Government in the United States has become the antithesis of sound business practices. However, there are times when government is forced to take several steps back and impose efficiencies.

Lynch's recent confrontation with the state's employees unions resulted in something good for the people of New Hampshire. Some 250 positions were eliminated, contributing to the successful ability save the state about $25 million in labor costs, as mandated by the Legislature.

Joseph W. McQuaid: Dumbest state rep. or dumbest state?

Union Leader Publisher Joe McQuaid weighs in on the case of a pro-sales tax Massachusetts lawmaker caught loading up on cheap New Hampshire booze.

Herald columnist Howie Carr has nominated the pol for his coveted "DSR'' (Dumbest State Representative) award. True, the man was foolish to sport his official state license plates on his shopping trip. But the man isn't dumb to be taking advantage of New Hampshire's tax-free shopping.

Thousands of out-of-staters do the same thing every day, every year. They have been doing it for as long as New Hampshire has had the good sense not to fall for the phony claims that we MUST have our own broadbased tax or our state will face immediate and utter devastation.

At NH Watchdog, we refuse to criticize our neighboring states when they help the New Hampshire economy. Instead, we salute their membership in the New Hampshire Economic Recovery Coalition.

Mass. Politician joins NH Economic Recovery Coalition

See, this is the dedication to the Granite State economy we've come to expect from our neighbors.

A Westport lawmaker who voted to hike the state sales and alcohol taxes was spotted brazenly piling booze in his car - adorned with his State House license plate - in the parking lot of a tax-free New Hampshire liquor store, the Herald has learned.

Michael J. Rodrigues’ blue Ford Crown Victoria, emblazoned with his “House 29” Massachusetts license plate, was parked outside a Granite State liquor store on Interstate-95 South over the weekend, according to a witness who provided pictures to the Herald.

Way to go Representative Rodrigues! And hats off the the Boston Herald for alerting us to the hard work lawmakers in other states are doing to ensure New Hampshire's economic recovery.

Hattip: Union Leader

A Threat to the New Hampshire Economic Development Coaltion

We've spent a lot of time covering efforts by our neighboring states to boost the New Hampshire economy by continually raising their tax rates. They've certainly done more to create jobs in the Granite State than our own spendthrift Legislature.

Now comes word from the Portsmouth Herald that a group of citizens in Maine is trying to lower its tax rate through the petition process.

The voices of these men and women have convinced us that a petition drive currently under way to repeal a new tax reform law has merit. The law, passed in the waning days of the legislative session last in June, reduces the state income tax on all but the wealthiest Mainers, by instituting a flat tax of 6.5 percent. Currently, income taxes top out at 8.5 percent.

Petitioners must get 55,087 verified signatures to the secretary of state by Sept. 11. If they are successful, the law will be put in abeyance and voters will decide whether to repeal it next June.

The Herald editorial page comes out in favor of the effort, which is fine for Maine taxpayers. But what about us? How will New Hampshire be able to keep raising its taxes, fees, and budgets if our neighboring states start lowering theirs?

Lucky strike: A sales tax hike to the south

Over the past few months, we've documented the extrodinary lengths that Maine, Vermont, and Massachusetts lawmakers have taken to boost the New Hampshire economy. The Union Leader wishes our own Legislature were doing as much:

On Saturday, the Massachusetts sales tax rose by 25 percent, from 5 percent to 6.25 percent. (Gotta keep that welfare state funded!) That same day, a lot of New Hampshire businesses along the southern border reported an increase in traffic from the Bay State.

Ah, the New Hampshire Advantage. Alas, this latest boost to the Advantage came entirely from dumb luck.

Granite Staters have managed to elect a government that is chipping away at the New Hampshire Advantage year after year. The majority in Concord thinks high taxes in general are just fine. This year alone the people were hit with 41 tax and fee increases! (more)

We've dubbed our tax-raising neighbors the New Hampshire Economic Recovery Coalition. Unfortunately, their efforts will be wasted as our own elected officials find more taxes to raise on our side of the border.

Maine lawmakers boost NH economy

Maine is continuing its efforts as part of the New Hampshire Economic Recovery Coalition.

Maine small business owners, already feeling the competitive pinch from their counterparts across the Piscataqua River, are joining area legislators in trying to repeal a tax reform law that they say is unfairly burdensome.

The tax reform measure, passed by the Legislature earlier this year, reduced the state income tax while adding a 5 percent sales tax to nearly 100 services not currently taxed, such as auto repair, tailoring, gym memberships and dry cleaning. It also increases the meals and lodging tax. (more)

NH Economic Recovery Plan goes into effect

Massachusetts raised its sales tax from 5% to 6.25% over the weekend. The Portsmouth Herald reports that New Hampshire businesses are already feeling the impact:

Parking lots for the larger stores off Route 1 in Seabrook were just about 50/50 between Mass. and N.H. plates on Saturday. Many of the shoppers, like Jameson, were border town residents who regularly drive north to save money. (more)

We would once again like to thank Massachusetts for its lead role in the New Hampshire Economic Recovery Coalition.

That’s one sales tax we all can support

The Nashua Telegraph recognizes Massachusetts Governor Deval Patrick for his efforts to revive the New Hampshire economy:

The next time Gov. John Lynch sits down to write out some thank-you notes, he might want to make sure that Massachusetts Gov. Deval Patrick is at the top of the list.

After all, that’s the least he can do for the person who might have done more to stimulate the New Hampshire economy this year than the 424 members of the state Legislature combined. (more)

Patrick is a charter member of the New Hampshire Economic Recovery Coalition.

Leading the economy recovery

50 new jobs in Greenland, NH. As far as know, they did not receive stimulus funds.

The New Hampshire Economic Recovery Coalition

While New Hampshire's Legislature seems intent on wiping out the New Hampshire Advantage, raising 38 taxes and fees so far this year, the Telegram reports that the Massachusetts Legislature is doing its part to help the Granite State bounce back:

Come Aug. 1, the state's recently raised 6.25 percent sales tax will apply to alcoholic beverages, a cause for concern for sellers on the state's northern and southern borders. In the north, merchants fear the new taxes will drive business to sales tax-free New Hampshire, while stores on the southern edge of the state will lose some of the competitive advantage they have enjoyed over Connecticut and Rhode Island.

Proponents argue that applying the state's new 6.25 percent sales tax to alcohol will bring in nearly $80 million for substance abuse programs. They also note that New Hampshire charges more in excise taxes on beer than Massachusetts, so the disparity in prices caused by the sales tax will not be as high.

We are pleased that Massachusetts and Vermont continue their efforts as part of the New Hampshire Economic Recovery Coalition.

Hattip: Union Leader

Boston Herald- "N.H. eyes big payday from our tax hike"

I missed this over the weekend, but Charlie points me to a story in the Boston Herald about Massachusetts border towns bearing the brunt of their legislature's tax hikes:

Bay State border towns, bruised by a brutal recession and drastic cuts to local aid, are bracing for a shoppers’ exodus into tax-free New Hampshire if legislative efforts to raise the sales tax by 25 percent prevail in coming weeks.

“We are already feeling the disadvantage we have today,” said Methuen Mayor William M. Manzi III. “We think the increase makes it substantially worse. We’ve seen a major flight of jobs and business investment into Salem, N.H. This is not good for Methuen.”

House and Senate lawmakers have passed separate proposals with veto-proof margins to hike the sales tax from 5 percent to 6.25 percent to help balance the state budget. House budget writers estimate the hike will generate $900 million next fiscal year, including $205 million for local aid.

It's good to see Massachusetts joining Vermont in the New Hampshire Economic Recovery Coalition. What can we do to get the New Hampshire legislature on board?

Masschusetts goes after shoppers instead of lowering taxes

This weekend, we chronicled the efforts of the Vermont legislature to boost the New Hampshire economy. Now, Michael McCord writes in the Portsmouth Herald about efforts in the Bay State to collect "Use Taxes" from New Hampshire retailers:

In theory, Massachusetts shoppers are supposed to keep track of their out-of-state purchases during the year and pay a 5 percent "use tax" (as in buy something in one state and use it in their home state) when they file their state income tax returns each April. In practice, an overwhelming majority don't.

"The compliance rate is fairly small," said Robert Bliss, a spokesman for the Massachusetts Department of Revenue. He said that overall Massachusetts gets about $3 million to $4 million annually from those who volunteer to pay. Bliss said his department has no estimates on how many people might be in noncompliance or how much tax revenue the state loses and that it would be impossible to find out.

But hypothetically, if those who have complied represent as much as 5 percent of the total, then New Hampshire retailers could benefit by around $1.5 billion to $2 billion in sales — and Massachusetts loses between $75 and $100 million annually. Both of those numbers are expected to rise as the Massachusetts Legislature will likely increase the state sales tax to 6.25 percent.

I have no idea how the Massachusetts "Use Tax" has stood up for this long. It clearly interferes with interstate commerce, and amounts to an import tariff on out-of-state goods. I suppose that it's far easier to ignore the tax, as most Massachusetts shoppers do, than challenge it. That could change if Massachusetts authorities start trying to enforce the tax at the New Hampshire border.

The New Hampshire Advantage in Action

Kevin Landrigan looks at how the New Hampshire economy is fairing compared to our neighbors in the Nashua Telegraph:

The state's relatively limited revenue structure also means that while it was late going into a recession, New Hampshire is usually late coming out, too, D'Allesandro said.

New Hampshire and Alaska are the only states without either a state sales or income tax. When a recession begins to end and companies are hiring more workers, states with income taxes see a more dramatic increase in state revenues than New Hampshire does, he said.

"We are slow to go in and slower to come out,'' D'Allesandro said.

D'Allesandro's point in that state revenues are slower to recover here than other states, not our low-tax economy.