First Published in the Business NH Magazine, August 17, 2021

The COVID-19 crisis caused massive economic hardship and disproportionately affected low-income workers who had only recently seen their purchasing power recover from the 2007-2009 recession.

The federal assistance flowing to NH will provide relief and help spur a healthier, more inclusive economic recovery than the last one. This aid is also designed to give states and communities an opportunity to provide resources to help address longstanding issues.

Swift but Uncertain Improvements

Nationally, the number of jobs has been recovering more rapidly than many analysts projected early in the pandemic, and NH’s job recovery appears to have been a bit faster. However, both were still behind their pre-pandemic peaks a year after the crisis began.

While key indicators have been promising, the economy will be different after the pandemic, which may benefit some industries and leave others behind. The pandemic will likely result in permanent changes to people’s habits and patterns, which will have economic effects that are difficult to predict. As a result, policies to support an inclusive recovery will have to be intentional and targeted to be successful.

New Federal Aid to Households

The expansion of the Child Tax Credit and delivering the refunds in periodic payments, rather than a lump sum, could cut the child poverty rate in half, according to separate analyses from Columbia University and the Urban Institute. This change, which is only in effect for 2021, may benefit 87% of all NH children, based on estimates from the Center on Budget and Policy Priorities.

Other temporary expansions, such as to the Earned Income Tax Credit, food assistance, health insurance subsidies, and unemployment benefits will make more dollars available for families to meet their needs and fuel economic recovery.

Flexibility for Local Governments

Many of the new federal resources coming to NH are for key specific purposes, such as vaccinations and testing, education and learning loss, child care, services for those with disabilities, certain internet connectivity projects and rental assistance.

However, the state government, counties and municipalities have received and will be receiving additional federal funds that are more flexible. These dollars can be deployed to address the negative health or economic effects of the pandemic, provide premium pay for certain essential workers, fill revenue shortfalls in public budgets due to the crisis or make necessary water, sewer or broadband infrastructure investments.

States cannot use these flexible funds to directly or indirectly reduce taxes, or they will lose a portion of the federal assistance.

The flexible funding going to the state totals about $959 million, or nearly 15% of the entire state budget for this fiscal year. This federal aid must be used by Dec. 31, 2024, which is a substantially longer timeline than the state’s two-year budget cycle, and provides opportunities for more sustained investments and supports.

Regional Collaboration

New Hampshire’s counties, cities and towns will receive about $458 million in these flexible funds, with $264 million of that going directly to counties. These local governments could potentially use these funds to provide economic and public health assistance, make investments in local or regional systems and services, or support infrastructure upgrades.

The funding to counties presents an opportunity for regionalized coordination and investments. While certain infrastructure spending may be restricted, water, sewer and broadband investments are specifically allowed under federal statute. Local public health systems may benefit from support, particularly as the pandemic and its effects linger.

Education and job training for the post-pandemic economy, economic development initiatives and supporting affordable housing options will all be key for local and statewide economic resilience and vibrancy.

A collaborative deployment of these funds to help individuals, businesses and the economy within a region may also pave the way for cooperation on future investments.

     – Phil Sletten, Senior Policy Analyst