Opinion: Daily Journal

Unblocking NC’s Economic Arteries

RALEIGH — North Carolina’s economy is suffering from blocked arteries.

The conduits that should bring growth, jobs, and economic opportunities to North Carolinians are being obstructed, in large part by government policy. Our personal and corporate income tax rates are among the highest in the country, discouraging entrepreneurs and investors from directing their efforts and capital our way. At the local level, escalating property and sales tax rates are putting additional pressure on manufacturers, retailers, and other businesses. And the lifeblood of commerce moves slowly through our state because of inadequate and poorly maintained highways.

No less damaging for being less visible, the state’s regulatory system is interrupting the flow of new investment, too. Last year’s Clean Smokestacks Bill will have negligible effects, if any, on air quality in North Carolina. But it will keep electric rates higher than those of competitors, which are falling, and thus provide yet another disincentive for New Economy manufacturers and other large users of power to locate their new facilities here.

One idea that might alleviate the blockage, at least a little, is to speed up the process of approving environmental permits. Regulatory delays are a major reason why so many desperately needed highway projects are years behind schedule and millions over budget. The problem is at least as daunting in the industrial sector. Permitting is a costly, time-consuming, and frustrating process in the best of situations. While necessary to ensure that environmental laws protecting the commons are effectively enforced, the process can and should be streamlined to encourage the new investments and plant expansions that North Carolina will need to recover its economic momentum.

Legislation in the General Assembly this year would give the state the option of allowing companies to begin construction on new plants and facilities while the permitting process is still underway. Naturally, firms would be taking a risk in investing millions in construction before the final approval is granted to operate. They would likely do so only if the prospect of rejection was low in the first place.

But environmental groups are up in arms about the proposal (they killed a similar bill last year). These activists say that North Carolina regulators would face too much pressure to approval questionable projects if their owners had already sunk capital into them.

I don’t buy this argument. First, it assumes a level of deference that, I am told, does not accurately portray the average North Carolina regulator. Second, the argument assumes that the cost of an occasional cave-in to political pressure would be greater than the cost of allowing the current, thick-as-molasses process to stand.

Take a look around, please. Plants are downsizing, even shutting down. Entire industries are withering. With the state having lost 150,000 private-sector jobs since 2001, and continuing to lag the economic performance of the rest of our region, it’s long past time to develop a more commonsensical approach to reconciling environmental quality with economic vitality.

I have no doubt that, given an egregious case, the same folks who are now complaining about this bill would raise a stink about a regulatory cave-in by the state. A little more confidence, and a little less paranoia, is called for here.

Let’s get the economy’s blood pumping.

Hood is president of the John Locke Foundation and publisher of Carolina Journal.