Opinion: NH should support SB 553

The Senate convenes at the State House in Concord in 2018.

The Senate convenes at the State House in Concord in 2018. Monitor file


Published: 05-07-2024 6:00 AM

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

As a New Hampshire native of many generations, I know a large reason this is such an exceptional place to live, work, own a business and raise a family is the way our institutions and charitable organizations work together to strengthen and maintain the economy.

There is a largely unknown but important and significant opportunity to support our local economy and our citizens that is pending in the Legislature right now. It would add a tremendous boost to the ability of our local banks to lend locally. It is Senate Bill 553.

In 1991, the Legislature created what’s known as the Public Deposit Investment Pool, otherwise known as PDIP. This is an optional investment mechanism for taxpayer funds received by cities, towns and the state to pool funds together with the stated goal of safety, liquidity, and a competitive return. This was done as many of our leading banks had failed or were in danger of failing. In that era, bank regulation was, at best, somewhat primitive.

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

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

I know firsthand the positive impact that local investment can have on our communities. We have seen how, in partnering with banks in New Hampshire, the funds borrowed develop properties, create businesses, build homes and expand businesses through capital investments, which results in adding jobs for Granite Staters. When these funds are kept in New Hampshire banks, that in turn allows those banks to 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 conducted by reputable economist Brian Gottlob, Polecon Research to quantify the impact. It specifically analyzed the direct impact to New Hampshire’s economy if the funds within PDIP stayed locally in banks instead of leaving the state, like it does today.

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

It shows that the overall returns, which include economic growth and increased tax revenues from public funds deposited in banks in New Hampshire, exceed the yield on public funds invested through the NHPDIP in out-of-state organizations and financial instruments. The fund has grown considerably since then. This economic study also considers another factor: managers of public funds should not only consider the highest rate of return, but the type of investment that generates the greatest overall returns for 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 legislators have voiced concerns that this legislation is nothing more than government meddling by picking winners and losers, and that by directing taxpayer funds held by PDIP be kept in New Hampshire and secured, that is essentially making that choice. Because PDIP was created by the state and the funds are being invested out of state, by its policies and practices the state has already selected a winner. Instead, the state should opt to choose a winner where Granite Staters benefit by keeping taxpayer funds local and growing our economy.

Or, if this is an argument about economic freedoms as one legislator suggested to me, the NH banks that receive such deposits should not have the added burden of having to collateralize and insure their deposits. That feature was created back in the banking crisis when many of our banks had failed and bank oversight was at a far lower level. Fair is fair and the current law is not.

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

As an additional benefit, I would note that in a recent issue of Business NH magazine local banks in New Hampshire last year donated over $10 million to local and state charities and civic organizations that support our most vulnerable citizens. I was unable to find where even one of the international or out-of-state institutions that currently hold these funds contributed back to New Hampshire.

I understand the need to explore various investment opportunities to maximize returns as my friend the town manager of Durham argued recently in the Monitor, but I urge legislators to consider the long-term benefits of prioritizing local investments and support SB 553. By doing so, 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’ dedication to making informed decisions for the good of our state. By keeping New Hampshire taxpayer dollars invested within our borders, we can continue to build a strong and sustainable future for generations to come.