Some Facts About New Hampshire’s Infrastructure:

New Hampshire has approximately 17,000 miles of state and town roads, turnpikes and interstate highways. There are 3,795 bridges in the state. As of 2010, the New Hampshire Department of Transportation plowed more than 800 lane miles of roads and put down 180,000 tons of salt for snow and ice control annually.

The state was given a “C” grade by the American Society of Civil Engineers for the condition of its roads and bridges. New Hampshire was rated among the worst in the country for the poor condition of its bridges by Transportation For America. On average, bridges are older in New Hampshire than those in the rest of the country.  There are hundreds of bridges on the so-called “red list,” which means that the bridges have major structural problems and need to be repaired or replaced.

The state also has a poor record when it comes to public transportation. New Hampshire has no comprehensive rail system and is rated 42nd in terms of investment in public transportation according to the State Department of Transportation.

The majority of New Hampshire’s infrastructure funding comes from vehicle registration fees and gas taxes. The state takes out fewer bond loans than other states and considers its funding a “pay as you go” system.  The gas tax, the lowest in New England, has not been raised since 1991. The 2011 Legislature did away with a motor vehicle fee increase.  That change has meant more $30 million a year in cuts to DOT.

The $800 million expansion of I-93 from Salem to Manchester began in 2006, but has been delayed several times because of a lack of funding. Supporters of the expansion say it will update one of the country’s most congested highways and bring needed tourism revenue to the more isolated and less economically robust northern part of the state. Traffic on I-93 has increased 600 percent since the highway was built in the 1960s and approximately 80,000 cars now drive on it each day.

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One of the hallmarks of New Hampshire government is its insistence on maintaining low personal and business tax burdens.  To that end, there’s no broad-based standard income, sales or estate tax.  Inventory, capital gains, and professional services are also tax-free.

Unlike other New England states, however, New Hampshire maintains two major business taxes.  The first to be instituted was the Business Profits Tax (BPT).  But since the bulk of the state’s businesses range from the small-to-very-small, larger firms complained they were shouldering the bulk of the tax burden. So 1993, the Legislature instituted the Business Enterprise Tax (BET).  As Jennifer Weiner writes in “How Does New Hampshire Do It?,” a report released by the Boston Federal Reserve, the BET taxes “wages and salaries, interests and dividends paid by businesses.”  In other words, it is, technically, an income tax, but the burden’s placed on businesses, rather than individuals.  At 0.75 percent, the BET is also a lower rate than a standard state income tax.

The other major piece of New Hampshire’s revenue pie is property tax.  Residents pay both a state and town property tax.  In 2010, Kiplinger’s reports the State Education Income Tax was “$2.35…per $1,000 of total equalized valuation.”  Town rates, meanwhile, can vary widely across the state.  If you don’t combine New Hampshire’s two business taxes, property tax makes up the largest slice of revenue, at 16 percent.

Another notable aspect of New Hampshire’s tax system, as Weiner notes in the Boston Fed report, is that it’s highly diversified.  No one tax makes up 20 percent of money coming in.  Other major state taxes include Meals and Rooms, Tobacco, Liquor Sales and Distribution, Real Estate Transfer, Interest and Dividends, Insurance Premium, Communications, and Utility Property Taxes.

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Tourism is New Hampshire’s second-largest industry–if you combine the state’s smart manufacturing and high technology sectors (SMHT).  It’s also a clear point of intersection between government and industry, with the state maintaining a number of parks, campgrounds, and historical sites, and nearby businesses in turn catering to visitors’ needs.  Given this close relationship, the state provides funding to market New Hampshire to potential tourists.  Some of the heaviest marketing efforts are concentrated in Boston, Philadelphia and New York City.  Canadian tourists, especially Quebeçois, also make up a sizable number of New Hampshire’s visitors.   

From the business perspective, “tourism” is a broad term.  It encompasses hotels, resorts, restaurants, retail, and arts and entertainment, among other things.  So while statewide reports may indicate overall restaurant or retail sales are up or down, the story might be very different in New Hampshire’s main tourism communities.  For these places, weather, gas prices, currency exchange rates, and whether they draw visitors for outdoor activities, site-seeing, or shopping could all be factors.

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Over the past 15 years or so, New Hampshire’s manufacturing economy has been moving away from traditional mill work and toward high-tech and so-called “smart” manufacturing.  In high-tech manufacturing, workers produce technological components, like computer parts.  And in smart manufacturing, advanced technology allows fewer and more skilled workers to be more efficient as they produce traditional goods.

This new-school manufacturing economy has weathered relatively well, but New Hampshire’s transition toward tech hasn’t always been a smooth one.  More automation on production lines and decades of manufacturing decline across the country have shrunk opportunities for manufacturing work.  Twenty-five years ago, about one out of every four jobs in New Hampshire was in manufacturing.  Today, only about one in six jobs fall into that sector.

All of New Hampshire’s counties host manufacturing operations.  But according to the New Hampshire Center for Public Policy, the sector is more dominant in the southwest corner of the state, covering parts of the Merrimack Valley, Monadnock, and Dartmouth-Lake Sunapee regions.  For example, in Sullivan County, nearly a third of wages come from manufacturing; in Cheshire and Hillsborough Counties, the sector accounts for about one-fifth of residents’ earnings.

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The Past

Historically, New Hampshire, like much of New England, depended heavily on paper and grain mills to support its economy.  With the decline of mill work throughout the 20th century, the state came to lean on traditional manufacturing as an economic driver.  And although manufacturing is still an important part of New Hampshire’s economy, advances in technology and the decline of traditional fabrication work all over the country means factories employ far fewer people than in the past.  Toward the end of the 20th century, Massachusetts became a center for high-tech sectors. And in turn, New Hampshire has been able to piggy-back off its neighbor’s success, moving its economy toward electronic component manufacturing and other high-tech industries.

Despite these historic challenges, overall, compared to the rest of the country, New Hampshire’s economy is still considered robust.

But talking about New Hampshire’s economy as a whole is tricky business.  That’s in part because the state’s culturally–and often economically–distinguished by its regions.  So while tourism is central to the Lakes Region economy, it’s less prominent in the Merrimack Valley.  And although high-tech work is integral to the Seacoast and Upper Valley economies, it’s much less a factor in the North Country.  But keeping regional differences in mind, some overarching statewide trends do emerge.

The Present

At this point, a few industries act as main drivers for the state’s economy:

• Smart Manufacturing/High Technology (SMHT): SMHT is the largest and most important sector of the state’s economy.  New Hampshire’s SMHT sector is mainly known for using high-tech equipment to produce electronic components. 
• Tourism: New Hampshire has traditionally depended on its natural resources and recreational opportunities to draw in out-of-state visitors throughout the year.  The Seacoast, Lakes Region, and White Mountains are the primary tourism hotspots. 
• Health Care Fields:  The Seacoast is a major hub for biomedical research in New Hampshire.  And thanks to Dartmouth-Hitchcock Medical Center, the Upper Valley has become another center for biotech and other medical research.  The state also hosts ten major hospitals, in addition to smaller facilities, that employ a number of health care workers.

The Future

Looking to the future, economists say a number of issues could affect the state’s economy, including:

• Demographic Change: One-in-three residents is a Baby Boomer.  As they retire, they’ll move into Medicare and Medicaid, which could place a further financial strain on medical facilities that currently count on higher revenue from private insurers.
• Health Care Costs: This issue is closely tied to demographic change.  New Hampshire is second in the nation for the portion of private sector employees with health insurance.  But as these workers retire, they’ll move into entitlement programs, which could force providers to shift the cost of care to private insurance programs–and, by extension, to businesses.
• Education Funding: New Hampshire operates one of the lowest-funded–and most expensive–state university systems in the country.  Many young residents find it cheaper to simply study out-of-state.  And many of the state’s young people also choose to live elsewhere.  The decline of a homegrown, educated workforce could hurt New Hampshire’s tax base and overall economy.
• Energy Costs: The state has some of the highest per-unit energy costs in the country.  This overhead cost can be a barrier for manufacturers and other businesses that use lots of power setting up or expanding in New Hampshire.

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