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Carolina Beat

Dramatic Reforms Are Possible in the New Year

Dec. 27th, 2012
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A new year brings new opportunities, and North Carolina offers the nation's best opportunities to change state government. North Carolina has the strongest Republican leadership in well over a century with veto-proof majorities in the General Assembly, a popular new governor, and Republicans in control of more than half of county commissions. Never have opportunities for free markets, personal responsibility, and limited government looked so promising.

The General Assembly is getting an early start Jan. 9 with an organizational session before it fully convenes Jan. 30.

The theme for the 2013-14 session likely will be "Economic Recovery and Job Creation." The leadership's priority list includes reforming an antiquated tax system, expanding school choice, rolling back government regulations, repealing renewable portfolio standards that drive up the cost of energy, protecting North Carolina's right-to-work status, enacting regulations to produce natural gas with hydraulic fracturing, and rebuild and protect the state's infrastructure. Everything else should be considered a distraction.

Along with the many state issues, there are some important and timely federal issues that need attention soon after legislators convene, the most significant being Obamacare and education policy.

North Carolina should say no to the Obamacare insurance exchanges, which are supposed to inform uninsured individuals about available insurance coverage. Exchanges will be expensive and the long-term costs will belong to the states, meaning higher taxes. The estimated cost of operating a state-based exchange begins at $24 million in 2014 and reaches $27 million by 2016. Washington will micromanage the exchanges, giving states less flexibility. Twenty-five states have declined to implement state-based exchanges. We should follow their lead.

North Carolina should exercise its option not to expand Medicaid as called for by Obamacare. Medicaid is rife with waste and fraud and is an ineffective way to deliver health care. Why would we expand such a program? Medicaid now overwhelms North Carolina's budget -- it's 15 percent of the General Fund and is the fastest growing part of the budget. The federal government proposes paying 90 percent of the costs in the early stages of expansion, but even so, Medicaid expansion would result in over $1 billion in additional costs to North Carolina taxpayers through 2019.

Regarding education policy, North Carolina should repeal the Common Core standards adopted in June 2010. The standards were developed by the National Governors Association and Council of Chief State School Officers and adopted by the U.S. Department of Education with no meaningful input from experienced teachers or other stakeholders. Adopting the Common Core standards in English and math will cost North Carolina taxpayers an extra $525 million over seven years. These national standards will force a one-size-fits-all standard of learning with questionable results. North Carolina would be better off resisting federal intrusion and evaluate curriculum standards carefully to ensure we are adopting the best ones available.

To get its fiscal house in order, North Carolina must address the $2.5 billion debt we owe the federal government for extended unemployment insurance benefits. A legislative study recommends reducing the maximum weekly benefits and the maximum number of weeks unemployed workers receive benefits, while increasing the taxes on about 30 percent of N.C. businesses. Under this plan, the debt should be paid off by 2015 or 2016. Without action, taxes will continue to go up, further stifling the economy and suppressing job creation, leading to even greater unemployment. The time to get this debt under control and offer certainty for employers as they plan their business models is now.

There are many opportunities for our new state leadership to promise smaller and more efficient government, freer markets, a renewed economy, robust job creation, and a "Carolina Comeback."

Becki Gray is vice president for outreach at the John Locke Foundation.