Concord Monitor – Opinion: NH should support SB 553

Concord Monitor – Opinion: NH should support SB 553

Steve Duprey is the owner and president of The Duprey Companies.

As a New Hampshire resident, I know that a big reason why this is such an exceptional place to live, work, own a business and raise a family is the way our institutions and charities work together to strengthen the economy and to maintain.

There is a largely unknown but significant and important opportunity to support our local economy and our citizens that is currently pending in the Legislature. It would give a huge boost to the ability of our local banks to lend money locally. It’s Senate Bill 553.

In 1991, the Legislature created the so-called Public Deposit Investment Pool, also known as PDIP. This is an optional investment mechanism for tax dollars received by cities, towns and the state to pool funds together with the stated goal of safety, liquidity and competitive returns. This was done because many of our leading banks had gone bankrupt or were in danger of going bankrupt. At that time, banking regulation was somewhat primitive at best.

I was not aware until recently that the Granite State taxpayer funds held in PDIP are not held locally, nor are these funds secured or collateralized. Not a single dollar remains in New Hampshire, according to testimony received by the Pool’s manager hearing on SB 553. Instead, they are invested in institutions across the country and around the world, such as Skandinaviska Enskilda Banken AB, Austria, New Zealand Banking Group and Norway’s DNB ASA.

Importantly, however, banks routinely offer collateral of public funds in addition to being insured by the FDIC. SB 553 seeks to address this uneven playing field by requiring that taxpayer funds held by PDIP be secured, collateralized, and held within New Hampshire.

I know firsthand the positive impact local investments can have on our communities. We have seen how, in partnership with New Hampshire banks, the loan funds develop properties, create businesses, build homes and expand businesses through capital investments, resulting in adding jobs for Granite Staters. When these funds are held in New Hampshire banks, these banks can in turn lend locally.

While I have experienced the impact that supporting a local bank has on our local economy, the NH Bankers Association commissioned an economic study by renowned economist Brian Gottlob of Polecon Research to quantify the impact. It specifically analyzed the direct impact on New Hampshire’s economy if funds within PDIP remained local in banks rather than leaving the state as is the case now.

The results were remarkable. Based on the fund balance when the study was conducted last summer at $530 million, the study projected a $200 million increase in our state’s growth domestic product, approximately 2,200 additional jobs, and conservatively estimates an increase of 182 million dollars in access to capital, especially for small businesses. companies with fewer than 50 employees. It also cites higher tax revenues for the state and cities and towns and grows the personal wealth of Granite Staters.

It shows that total returns, including economic growth and increased tax revenues from public funds deposited in New Hampshire banks, exceed returns from public funds invested in out-of-state organizations and financial instruments through the NHPDIP. The fund has grown significantly since then. This economic study also takes into account another factor: public fund managers must consider not only the highest return, but also the type of investment that will deliver the greatest total return to our communities. That includes adding jobs to our local small businesses, which generates more tax revenue for cities, towns and the state, and grows jobs for our friends and neighbors.

Some lawmakers have expressed concern that this legislation amounts to nothing more than government interference by picking winners and losers, and that by mandating that PDIP’s tax dollars be held in New Hampshire and safeguarded, which essentially amounts to making that choice. Because PDIP is created by the state and the funds are invested outside the state, the state has already picked a winner through its policies and practices. Instead, the state should choose to pick a winner that will benefit Granite Staters by keeping tax dollars local and growing our economy.

Or, if this is an argument about economic freedoms, as one lawmaker suggested to me, the NH banks that receive such deposits should not have the additional burden of having to collateralize and insure their deposits. That characteristic emerged during the banking crisis, when many of our banks had failed and banking supervision was at a much lower level. Fair is fair and the current law is not.

Allocating money to local infrastructure projects, construction initiatives and community development not only stimulates economic growth but also creates meaningful employment opportunities. These investments play a critical role in improving our state’s infrastructure, improving housing options and improving our overall quality of life.

As an added benefit, I would like to note that in a recent issue of Business NH magazine last year, local banks in New Hampshire donated more than $10 million to local and national charities and community organizations that support our most vulnerable citizens. I could not find where even any of the international or non-state institutions that currently hold these funds have contributed to New Hampshire.

I understand the need to explore different investment options to maximize returns, as my friend the Durham city manager recently argued in the Monitor, but I urge lawmakers to consider the long-term benefits of prioritizing local investments and to support SB 553. By doing this, we can ensure that New Hampshire remains a prosperous and resilient state, with a thriving economy that directly benefits its residents.

I appreciate our legislators’ commitment to making informed decisions for the good of our state. By keeping New Hampshire tax dollars within our borders, we can continue to build a strong and sustainable future for generations to come.