RALEIGH – I used to spend a lot more time down at the North Carolina General Assembly than I do now. In part, this is because of changes in my role at Carolina Journal and the John Locke Foundation. But I’ll admit to another explanation: by the late 1990s, after nearly a decade of watching legislative sessions, I began to tire of the sanctimonious self-importance and enthusiastic back-slapping that always accompanied adjournment. This was a great legislative session for the people of North Carolina! We passed a good budget, for education! We created jobs! We fixed problems!
When you hear this over and over, and yet many of the state’s fundamental, long-term problems remained largely unaddressed, you get tired of the self-congratulatory mood. I certainly did. I’m not saying that state lawmakers don’t do some good things, or that they aren’t, for the most part, trying to do good things. I am saying that the structure within which they work and the political and personal incentives they face every day conspire to frustrate even the best of intentions.
Lawmakers and pundits are at it again in 2006 – waxing eloquent about the session’s many great accomplishments. Balderdash. What really happened, on a variety of important issues, is that state leaders enacted half-measures, or quarter-measures, or simply delayed difficult decisions past the November elections. Here is a sampling of the critical work that remains for 2007 and beyond, though it need not have:
• Fiscal responsibility. The 2006-07 budget for which Gov. Mike Easley and the General Assembly have been taking enthusiastic credit is a set-up for future turmoil. Its 10 percent spending increase may not be replicated in 2007-08, but it does rachet up the fiscal obligations of the state and set expectations for spending lobbies that in all likelihood cannot be satisfied at the tax rates currently scheduled. The use of one-time money to finance ongoing expenses, roughly $400 million in 2006-07, was troubling but not egregious in magnitude in this fiscal year. Unfortunately, the hole will widen substantially next year.
• Ethics and lobbying reform. You know that when legislators start talking about how to fix a new piece of legislation within hours of enacting it, something is amiss. As political insiders read the new, hastily drafted bill that passed last week, they’ll start devising strategies to use loopholes in the gift-ban and fundraising provisions to protect their interests and traditional ways of doing business. Some reform advocates say the 2006 bill was a good start, a framework to build on next year. I hope they are right, but I fear they may be mistaken. After two years of constant political pressure to enact reforms, I suspect that legislative leaders believe they have done enough to placate critics and the public, and will feel little pressure to work on the issue yet again in 2007. If so, 2006 will prove to be a missed opportunity to get the rules right and clear.
• The tax code. The year began with a public debate about reforming North Carolina’s outmoded, unfair, and uncompetitive tax code. During the legislative session, however, political leaders made the system worse, not better. They enacted a new sales-tax credit, approved a silly car-rental tax expansion for Charlotte, expanded state tax subsidies for the film industry, and renewed, albeit with minor modifications, the Bill Lee Act system of targeted tax credits. Rather than allowing “temporary” increases in income and sales-tax rate to expire as schedule, they reimposed them for a third time, albeit at somewhat lower levels. Oddly, these tax increases were widely called “tax cuts.” Since a serious tax-reform effort will involve dozens of changes in tax law, some increasing and some decreasing tax liabilities for particular groups of taxpayers, the 2006 experience does not auger well for the ability of lawmakers, analysts, and the news media to communicate accurately and fully the contours of any future tax-reform debate.
I could go on. In several other key areas – reforming legislative rules, protecting property rights, fixing the state’s flawed student-testing program, respecting private freedom of contract – the General Assembly either failed to follow through on promising early steps, enacted half-measures that set up future conflicts, or actually took the state in the wrong direction. Sorry, but I’m not going to join the crowd and sing the praises of the 2006 legislative session. Shorter than most, it was still too long – long on unfulfilled promise and soaring, boring rhetoric.
The elections beckon.
Hood is president of the John Locke Foundation.