By GARRY RAYNO, InDepthNH.org
CONCORD — The recent claw back of federal grants and spending could eventually have a significant impact on the state’s economy according to a study done by the NH Fiscal Policy Institute on the effects of federal funding on the state.
Released Wednesday, the study found that the federal government awarded $14.8 billion in contracts, grants, and direct payments for work and services in New Hampshire in Federal Fiscal Year 2024. That figure is 12.3 percent of the state’s entire economy in 2024, which was $121 billion in goods and services.
Of the total federal spending, $12.5 billion was in pledged assistance, and $2.3 billion in contracts with various businesses and organizations in the state.
“Federal dollars power much of New Hampshire’s economy, from health care that keeps people well to the contracts that keep people employed,” said Phil Sletten, the institute’s research director and lead author of the study.
The $14.8 billion figure is new federal awards in Federal Fiscal Year 2024 for assistance to individuals, grants to state and local governments, and contracts with private companies and nonprofits. The figure does not include wages for the state’s federal employees, Medicare, or tax credits.
Another estimate with broader criteria set all federal spending in the state at $21.8 billion in FFY 2022, including all direct payments, contracts, tax credits, and federal wages.
That figure represents about 21 percent of the state economy and personal income that year.
New Hampshire’s economy in FFY 2022 generated approximately $106 billion.
Using the FFY $14.8 billion in awards, the single largest outlay was the Social Security Administration’s payments to individuals, with $7 billion going to retirees, or 53 percent of the total awards, $880 million to individuals with disabilities and $122 for the Supplemental Security Income assistance program.
The second largest outlay was for the US Department of Defense with private sector contracts accounting for 93.4 percent of the $2.3 billion in federal contract spending in New Hampshire, followed by the Department of Veterans Affairs with $32.1 million, or 1.4 percent of total contract spending.
Within the Defense Department, the largest contract amounts initiated in FFY 2024 were for the Navy, $826.3 million; the Air Force, $624.0 million; the Army, $464.8 million, and the Defense Logistics Agency, $141.1 million, according to the study.
The third largest federal spending for FFY 2024 was the state Health and Human Services Department at $1.94 billion including assistance grants of $1.83 billion, which includes $1.55 billion from the Center for Medicare and Medicaid Services with $1.38 billion from the center for provider payments.
The agency is the top recipient of federal funds in New Hampshire.
Federal Aid from the US Department of Education in the form of Pell Grants to qualifying students attending higher education institutions account for $408.5 million and Supplemental Nutrition Assistance Program (SNAP) benefits (also known as food stamps), totaled $145.2 million for FFY 2024.
Both public and private sector analyses identify SNAP benefits as economic stimulus because recipients spend food assistance dollars relatively quickly and in their local economies, Sletten said.
A 2021 analysis from Moody’s Analytics identified that a $1 investment in SNAP benefits returns $1.61 of economic growth within a year, the highest return on investment of any policy Moody’s analyzed, he said.
Aid to state and local governments for transportation, housing, and environmental programs focused on water quality also contributed significantly to federal aid to New Hampshire.
The federal Highway Infrastructure Grant Program totaled $88.3 million, while the Surface Transportation Block Grant program was $65.4 million.
Tenant-based rental assistance totaled $31.4 million funding and the Low Income Home Energy Assistance Program (LIHEAP) for heating and cooling costs totaled $31.0 million.
Environmental Protection Agency funding for State revolving funds for clean water and drinking water infrastructure totaled $105.7 million.
The LIHEAP program has been targeted by the Trump Administration for elimination, and the federal Medicaid program and SNAP have major cuts in their funding in the US House approved budget bill now before the US Senate, and Medicare will also see reductions under the plan to offset tax cuts, largely benefiting the upper class.
Pell Grants are also targeted for reduction as are US Department of Education grants to secondary and elementary schools in the budget plan.
Contracts and Assistance
While the largest single recipient of federal funds was DHHS at $1.94 billion, second in line was defense and aerospace contractor BAE Systems which had $1.48 billion in new contracts with the federal government in FFY 2924, almost all through the Department of Defense.
Another defense department contractor Sig Sauer, Inc. had new contracts totaling $221 million almost all for ammunition and small handguns.
Other major recipients of federal awards in the state included the departments of transportation, education and environmental services.
Housing authorities statewide and in Manchester and Nashua also received significant federal backing, and higher education institutions also were among the top 20 recipients.
Southern New Hampshire University, a private institution, received $358.7 million in funding, primarily for federal Pell Grants, with a small amount for federal work-study programs and other educational supports.
The University System of New Hampshire received funding totaling $104.million from the National Aeronautics and Space Administration, the National Oceanic and Atmospheric Administration, and the Department of Energy, the National Science Foundation and the National Institutes of Health.
Dartmouth College, an Ivy League school, received $51.6 million in federal funding from The Department of Health and Human Services and the National Science Foundation, and smaller amounts from the departments of defense, education, and energy.
“From health care to higher education to defense, federal funds help sustain essential programs while also supporting jobs and economic activity in New Hampshire,” said Sletten. “As lawmakers consider future funding decisions, understanding the scope and impact of these dollars is key to making informed choices for the state.”
Federal Employees
The study found the state is home to 19,000 federal employees according to the US Census Bureau’s 2023 report although many work in surrounding states such as Maine at the Portsmouth Naval Shipyard and various federal offices and facilities in Massachusetts and some work remotely.
The study found about 9,000 federal jobs are based in New Hampshire.
The federal government paid about $900 million to federal workers who live in New Hampshire.
Imbalance
State residents and businesses paid more to the federal government in taxes and fees than it received in federal help.
The average person paid $17,347 per person in federal taxes and fees, while the state received about $15,611 per capita in federal spending.
New Hampshire typically pays more to the federal government than it receives in return as a high income state with low poverty numbers and without an income or sales tax as most states have to offset federal taxes.
The federal budget proposal would do away with some of the tax offsets.
New Hampshire is on the low end of the percentage of gross state product that comes from federal spending.
The state receives 21 percent of gross state product in federal funding with only Massachusetts at 17 percent lower in New England.
The other four New England states have a higher percentage with Maine at 30 percent, Vermont 28 percent, Rhode Island 27 percent, and Connecticut at 22 percent.
You can read the full New Hampshire Fiscal Policy Institute study, Federal Funding and Employment in New Hampshire, at:
https://nhfpi.org/resource/federal-funding-and-employment-in-new-hampshire/.
Garry Rayno may be reached at garry.rayno@yahoo.com.