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Union Leader Reports on the New STEWARD Economic Study
04.07.09

UNION LEADER: STIMULUS: HOW NH STACKS UP

By JOHN DISTASO AND TOM FAHEY
CONCORD – New Hampshire is on the losing end of the state-by-state sweepstakes for federal stimulus money, according to the results of an independent study released yesterday.

The Granite State ranks lowest in New England and among the lowest in the nation in terms of stimulus money received on a per-capita basis, with most of the money coming to the state being used to balance the state budget, rather than create jobs, the study says.

"Two industries, health care and public education, least affected by the current recession will receive the largest source of stimulus funding in New Hampshire," concludes the report by economist Brian Gottlob of PolEcon Research of Dover.

The study was paid for by an independent watchdog group called STEWARD, an acronym for Stimulate the Economy Without Accumulating Record Debt. The organization was formed in February by Nashua businessman Fred Tausch, a former Barack Obama supporter who quickly became frustrated with the President's spending programs.

Gottlob said in an interview he reached no conclusion in his report on whether "this is good or bad. I don't have an ax to grind in this."

But Tausch said, "New Hampshire citizens will contribute enormous sums of money to pay for this law but we may be 'underwhelmed' by the results of such a huge spending measure."

Gottlob said the stimulus will create about 400 construction jobs annually over the next three years, and that tax cuts will support as many as 2,300 jobs. Other studies have put New Hampshire job creation under the plan at between 16,000 and 20,000.

Gottlob says New Hampshire is slated to receive $920 million in direct stimulus funding, plus $564 million in personal tax breaks.

He reports that the two largest sources of funds allocated to the state are $258.3 million for education and $250 million in increased Medicaid funding. This money, he reports, will "supplant or replace existing state funds, meaning it will have no job creation impact."

But Gottlob also said that if the federal money was not used for education and Medicaid, "either state or local taxes would have to be raised to maintain the services or jobs and programs would have to be cut, which would have a negative effect."

In his report, he adds that funding for education for public K-12 education and Medicaid "will not increase aggregate demand or stimulate job creation but they may prevent some job losses in state and local governments."

However, the additional more than $400 million in direct funding, $129.4 million of it for transportation, "will impact job creation in the state," Gottlob wrote. He said that to receive some transportation and environmental funding, "the state is required to maintain its current level of expenditures, which means that when the federal money comes in, it will be stimulative."

Overall, he said, "The nature of federal policy is that it is redistributive, and New Hampshire usually ends up on the shorter end of that stick. The way not to have that happen is to have more social ills and be a less wealthy state. And because this is such a big package, it is even more magnified."

In his report, Gottlob wrote, the stimulus plan "does not fundamentally change the redistributive properties of intergovernmental relations between the states and the federal government."

As a result, said Gottlob, the state ranks "far and away the lowest in New England" in per-capita stimulus funds received" and "39th or 40th" in the country.

The report estimated that the value to New Hampshire of the individual tax breaks called for in the stimulus plan between 2009 and 2011 will be about $564 million, with corporate tax breaks at $31 million in the first two years. By comparison, Gottlob reported, Granite State residents received a total of $468 million in the stimulus plan of 2008.

Stimulus meeting today

The University of New Hampshire is hosting a public meeting today in Durham regarding federal stimulus money and how to get in on the action.

Gov. John Lynch and state Office of Economic Stimulus Director Bud Fitch will both be on hand to explain how businesses, schools, municipalities and charities can benefit. The UNH forum will also be simulcast to places around the state.

 

Website: http://www.unionleader.com/article.aspx?articleId=1fdf7e8b-8519-4871-8501-4cb1f70c6c47&headline=Stimulus%3a+How+NH+stacks+up

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