1. 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

2. 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. 3 Levels of Spending

4. 4 Changing Distribution of Spending

5. 55 Low Spending? Size of State Government (Spending) Source: www.statehealthfacts.org

6. 66 Fewer Problems?

7. 77 Additional Spending Measures? NH Spends slightly more than the national average, per person in poverty

8. 88 Low Tax Burdens

9. 99 Tax burdens flat when expressed as a function of our productivity Since the late seventies, state and local tax burdens have declined slightly (through 2009)

10. 10 The Budget

11. 11 Forecasting Revenue Growth Going Forwards 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. 12 Growth in business tax receipts have fueled growth

13. 13 What has changed?

14. 14 GDP Growth Stalls

15. 15 Tailwinds To Headwinds

16. 16 What’s Next? 16

17. 17 What Should We Invest In? Human Capital Economic Creativity Business Base Costs of Business? Infrastructure? Quality of Life?

18. 18 Innovation and Costs Human Capital –Adults with a BA or Better –Per Pupil Spending –2011 8 th grade NAEP Math Score –2011 8 th 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 capita –Road conditions (roughness)

19. 19 Translate into Public Policy With Whom Are We Competing?

20. 20 Data on Composite Scores

21. 21 Human Capital

22. 22 Economic Creativity

23. 23 Business Base

24. 24 Costs

25. 25 Infrastructure

26. 26 New Hampshire’s “Creative Class”

27. 27 Housing Relative to Income Less Affordable

28. 28 Affordable Housing: NH Compared to Benchmarks Worse

29. 29 The Costs of Doing Business: Energy

30. 30 Arts and Dining GDP by State

31. 31 Survey data needs to be carefully assessed Surveys tell a very different story on regulatory status depending on what is measured and what is weighted more heavily –Forbes survey ranks NH 48 th 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. 32 Small Business Friendliness Survey

33. 33 Best States for Business

34. 34 State Bond Ratings

35. 35 Tax Foundation Business Tax Climate

36. 36 State Business Tax Climate

37. 37 Tax Foundation Overall Tax Climate

38. 38 “…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.” New Hampshire Center for Public Policy Studies Want to learn more? Online: nhpolicy.org Facebook: facebook.com/nhpolicy Twitter: @nhpublicpolicy Our blog: policyblognh.org (603) 226-2500 Board of Directors Sheila T. Francoeur, Chair David Alukonis Michael Buckley William H. Dunlap Eric Herr Richard Ober James Putnam Stephen J. Reno Stuart V. Smith, Jr. Donna Sytek Brian F. Walsh Martin L. Gross, Chair Emeritus John D. Crosier, Sr., Todd I. Selig Kimon S. Zachos Directors Emeritus