Another View -- Mark Connolly: NH business must get behind passenger railMARK CONNOLLY
December 04. 2014 8:14PM
ACCORDING to a preliminary report released recently by the New Hampshire Department of Transportation and New Hampshire Rail Transit Authority, expanded passenger rail in the Granite State could be the boost our economy needs. The full report is expected in December, and we should expect plenty of political jousting over the cost and benefits of passenger rail service in central New Hampshire.
For now, a question is whether the state’s business community will rise to the occasion to champion what could be a huge job creator as well as new economic engine for our state; also in play will be whether our legislative leaders in this instance can put aside ideological differences to compromise for positive economic change. The benefits of doing so could be the difference between an economy that continues to stagnate and one that improves markedly.
The statistics and metrics for passenger rail service are clear: more than 165,000 cars commute down Routes 3 and I-93 every day from Concord to the Boston area — all of this leading to congestion, pollution and lost business opportunities because of the lack of meaningful rail transportation in the Granite State.
And let’s be candid about the current economic condition of New Hampshire. We are losing a vitally important demographic group and future driver of our economy — the 25-34 year-olds — with New Hampshire experiencing one of the highest net outward migration rates of younger people in the nation. Couple this trend with a historically low job growth rate in the state during the last several years and add in the fact that 2/3 of the jobs created here since the Great Recession now pay less than New Hampshire’s median wage rate. This does not build a sustainable, growing economy, nor does it make it easy for us to continue enjoying the “New Hampshire Advantage” of relatively lower taxes—an aging population places increasing demands on state services.
Furthermore, we just are not attracting a sufficient level of entrepreneurial capital to spur job growth in New Hampshire. In fact, the current capital formation rate here now lags the region and the nation. Much of our “Advantage” is being lost because of high energy and land costs as well as an aging transportation infrastructure.
In terms of job growth and positive economic impact, the preliminary study of expanded passenger rail outlines real, tangible benefits. Rail could even be the key to recharging the state’s economic engine. Thomas Mahon, chairman of the New Hampshire Transit Authority, confirmed what many in the business community believe concerning passenger rail service, saying recently, “There is simply no economic development opportunity on the horizon that could transform New Hampshire’s economy like the expansion of passenger rail could offer.”
Here’s the bottom line: passenger rail service between Boston and central New Hampshire will result in higher land values, enhance vital transportation networks in the state, create jobs/improve wages, and reduce commuting times — all which will serve as economic multipliers across the state.
Undertaking expanded passenger rail for New Hampshire is important and doable. But it will take a working partnership between the various members of the New England Congressional delegation to secure federal funds, businesses leaders to commit to financially support such a transportation network, and state officials to look at our financial commitment in a creative way.
By being creative, I mean not direct funding by the state but instead working with the financial community to explore how the incremental business profits taxes and property taxes resulting from passenger rail can be targeted to defray bonding expenses. There will also be revenue enhancements from parking and rooms and meals taxes and ridership commitments from the business sector. Ultimately, the tax revenue generated from passenger rail should be used to pay the capital and operating costs of the system. And we should avoid raiding designated state funds set aside for financial projects, as New Hampshire policy-makers often do when facing tough choices.
Let’s not start the debate this winter by saying this is too hard or too expensive or engage in the same old posture-politics game. The business community and public sector will need to join together to show how we should and can do this. And like the Manchester airport, the economic impact of passenger rail service in central New Hampshire will extend far and wide.
For that matter, just think what the economy of the state would now look like had we not redeveloped the Manchester airport. Or think what the economy of the nation would be like today had we not developed rail service during the 19th century.
In order to grow a business or economy, one needs to invest. New Hampshire, it is time to invest in our future and ourselves. The return on this investment could be a game changer for the state’s economy.
Mark Connolly owns New Castle Investment Advisors, LLC, in Portsmouth. He is the former state director of securities regulation.