RALEIGH – North Carolina’s state government is too big and costs too much.
Not exactly news, I grant you, at least not for readers of this space. But this truth is critical enough to state bluntly. Sometimes we make political conversations too convoluted. We don’t truly say what we mean, and the result is that important debates don’t begin.
That doesn’t mean that there are not difficult topics to examine or problems that defy easy solutions. What it means is that we should seek to break complicated issues down to their constituent elements. About North Carolina’s string of budget deficits and tax increases – the latter costing us about $1 billion more annually since 2001 – the most important of those elements is the fact that state government is trying to do too many things, and in particular is wrongly trying to do things it has no authority or capability to do.
Remember the six simple machines? You probably learned about them in elementary school. These basic tools – the lever, the screw, the wheel, the inclined plane, the pulley, and the wedge – are the building blocks of the compound machines that help us perform the everyday work of our lives. It occurred to me that this metaphor applies to the work of public policy, as well.
The John Locke Foundation has just released its fifth briefing book for candidates, entitled Agenda 2004. There are two pages of text, tables, and graphs on virtually every issue that we’ll be talking about in North Carolina this year. In the interest of breaking things down into basic parts, however, I’m going to summarize some of the recommendations in Agenda 2004 in a series of columns with the general of theme of “six simple tools.”
So, to begin with, here are six simple tools for cutting state government:
Stop mixing up government and business. These are two necessary, but distinct, social institutions. As individuals, we are obviously involved in both – as voters, workers, and consumers, for example. But let’s keep each in its proper place. That means no more special tax breaks or cash giveaways to politically connected corporations. Ending business subsidies will save about $143 million in annual appropriations and root out another $213 million from the tax code (which can be applied to an across-the-board tax cut for everyone).
Use benchamarks. North Carolina’s Medicid program, for example, is generous and expensive compared to those of our neighbors. Bringing the state’s costs in line with the regional average over time will save about $183 million the first year and nearly half a billion dollars when fully implemented.
Set firm priorities. Fund what’s most important first. In the public schools, for example, more resources should be targeted to attracting and retaining good teachers. Instead of just jacking up taxes more to pay for that, redirect expenditures on positions and programs other than teachers. A reasonable proposal would save about $171 million in this area alone.
Seek balance in higher-education funding. A lengthier discussion of the problems in our current approach to financing the UNC system can be found here. Again, it just seems reasonable to expect students to pay for at least 30 percent of the cost of their education and for research grants to actually cover most of their overhead costs. These kinds of proposals for UNC savings would total $237 million annually.
Reorganize state government. Reduce the number of major agencies from the current 26 to 13, while eliminating other redundancies and extraneous jobs. It would save about $54 million a year.
Stop digging fiscal holes. A major reason for recent deficits has been the issuance of state bonds for universities and other projects that were sold to the voters as not requiring tax increases. The sales pitch was false. Let’s suspend these projects for a while, while reducing the debt burden further by privatizing assets such as the state-owned ports and NC Railroad Company and applying the proceeds to capital needs. Estimated savings would be about $241 million.
These simple tools could reduce state spending and tax distortions by more than $1.2 billion annually. That’s a start.
Hood is president of the John Locke Foundation and publisher of Carolina Journal.