Businesses are facing a myriad of challenges during the pandemic and decisions made in Concord could make the cost of doing business even higher. It is essential that business leaders ask tough questions of their political leaders.
Budgeting in the Pandemic
The COVID-19 pandemic is wreaking havoc on the state’s budget. New Hampshire’s primary sources of tax revenue—the business profits tax, business enterprise tax, and rooms and meals tax—have been hit hard as many businesses were forced to shut down earlier this year. Even those that didn’t shut down experienced sharp declines in sales and revenue. The result is a state budget projected to be $500 million in the red. Because NH’s constitution requires a balanced budget, legislators returning to the State House in January will have to find ways to fill this gap.
The state must live within its means, which will require belt-tightening and disciplined budgeting. Businesses all over NH are cutting costs in every way possible to survive the COVID-19 economic slowdown and legislators must vow to do the same.
One thing they shouldn’t do is raise taxes, especially on business. Employers in NH already pay among the highest business tax rates in the country. If legislators enact even higher tax rates, it will slow the rate of economic recovery.
Unemployment Insurance Trust Fund
Another economic victim of the pandemic is the state’s unemployment insurance trust fund. Money in this fund, which is provided entirely by employers, is used to pay unemployment benefits. Pre-COVID-19, when unemployment in the state was historically low, the trust fund was flush with cash. Now, not so much. Not only did shutting down the economy cause unemployment rates to skyrocket, but eligibility to collect unemployment benefits was expanded to cover a variety of COVID-19-related reasons. New Hampshire’s Department of Employment Security, which administers the fund, is now estimating that it will soon be depleted.
Employer-paid unemployment insurance taxes to restore the trust fund have already increased. What we don’t need is for the legislature and governor to make an already bad situation worse. The business community needs to ask candidates if they will oppose efforts to further expand unemployment eligibility or increase weekly benefits. Either will only make it more difficult and more costly to climb out of the financial hole created by the pandemic.
Electricity Costs
Finally, the high cost of electricity in the region affects all. Decisions made in Concord can drive those high costs even higher.
This is a real issue because significantly lower energy costs are available around the country. Many businesses, especially manufacturers that drive the NH economy, are highly sensitive to the cost of electricity. All factors being equal, high energy costs here cause companies to look elsewhere around the country for business growth and expansion.
New Hampshire needs an “all of the above” approach to meet its energy needs. We need energy from the most cost-effective sources while maintaining system reliability. Yet policies that result in heavy subsidization of renewable energy contribute to the high cost of electricity. Promoting renewable energy should not come at the expense of other energy sources and on the backs of ratepayers. Be sure to ask candidates where they stand on the cost shift that occurs every time the legislature chooses to reward one form of energy production at the expense of another.
These are critical issues for employers and may be the factors that lead to a business surviving or becoming another victim to COVID-19. Don’t be shy about asking candidates where they stand. You’ll want answers before the election in November, not after.
David A. Juvet is senior vice president of public policy of the Business & Industry Association in Concord. For more information, visit biaofnh.com.
Current Issue - April 2024