Among conservatives around the country, North Carolina has become a superstar — a place where innovative ideas, sustained investment, diligence, and political acumen have combined to produce an impressive string of hard-won victories.
Within the state, however, some conservatives don’t see things that way. It’s interesting to consider why that may be.
The facts are clear. Over the past five years, conservative leaders in the General Assembly have enacted a series of tax cuts and tax reforms that will foster entrepreneurship and job creation, reduce the double-taxation of savings and investment, and save taxpayers hundreds of millions of dollars a year. North Carolina is one of the few states ever to have junked an outmoded, Keynesian-era tax system in favor of a modern, pro-growth Flat Tax.
On spending, lawmakers and Gov. Pat McCrory have resisted calls by special-interest groups to “invest” more in ineffective state programs and bureaucracies. Instead, they have maintained fiscal discipline — spending significantly more on high priorities such as upgrading public infrastructure and recruiting new teachers, to be sure, but keeping overall budget growth at or below the combined rates of inflation and population growth.
Fiscal discipline involves preparing for the future, not just indulging the political demands of the present. Instead of blowing this year’s $400 million revenue surplus on new programs, state leaders put every penny of it, and then some, into savings. They are determined not to enter a future recession with inadequate budget reserves, like their predecessors did. Recessionary budget deficits always put tremendous political pressure on governors and legislators to raise taxes. By my count, the state now has some $1.6 billion in rainy day reserves, repair and renovation reserves, Medicaid reserves, and other savings.
Conservative achievements in North Carolina extend beyond fiscal policy. In each of the past five years, lawmakers have enacted regulatory reform bills to eliminate counterproductive rules and streamline the process. They have dramatically expanded parental choice and competition in education by ending the cap on charter schools and creating Opportunity Scholarships for disadvantaged and disabled children whose needs might best be met in private schools. Conservatives have won victories on a host of other fronts as well, including transportation, energy, property rights, election reform, and abortion.
Even in cases where broader free-market reforms have yet to take root, conservatives have made real progress. During this year’s legislative session, for example, efforts to abolish or cap North Carolina’s mandate on electric utilities to purchase high-cost renewable energy fell short. But lawmakers did allow a longstanding, ridiculously generous tax credit for renewable energy projects to expire. They also failed to end North Carolina’s archaic certificate-of-need regulation that limits consumer choice and competition in medical services. But they did enact some commonsense exceptions to the law that will benefit patients in a couple of local markets.
So why are some North Carolina conservatives grumbling about their “liberal” legislators lately? I think one reason is unrealistic expectations. Having argued against abusive government subsidies and regulations in Raleigh for a quarter of a century, I am well aware of just how entrenched many of them are — and how far their beneficiaries will go to protect them. I see incremental steps as strides toward the ultimate goal. Others see them as stumbles or sidesteps.
Still, I think North Carolina’s leaders have themselves to blame for much of the disconnect. Process matters. Even good ideas sprung on citizens at the last minute, or stuffed into unrelated bills, can look precipitous or suspicious. Moreover, some of the tools lawmakers have chosen to advance their goals — such as “paying for” income tax cuts with selective expansions of the sales tax base to services — look very different to average North Carolinians than they do on paper. There’s a better, broader way for the state to move to a consumption-based tax system, as I have long maintained.
North Carolina truly deserves its national reputation as a leader of conservative reform. Within the state, however, there’s work to be done on renewing relationships and rebuilding trust.
John Locke Foundation chairman John Hood is the author of Catalyst: Jim Martin and the Rise of North Carolina Republicans.