To Centralize or Not to Centralize

RALEIGH – To centralize or not to centralize – that is the question.

Well, maybe it’s not the question, or an elegantly worded and dramatically powerful question, but it is an important question in public policy. Much of the U.S. Constitution sought to redress the perceived imbalance between states and the federal government. Throughout American history there have been profound disagreements about which levels of government should have which responsibilities.

Here in North Carolina, battles between advocates of centralized and decentralized power are constant and sometimes surprising. Modern-day liberals who want counties to have more choices in how to raise tax dollars also want to forbid local school systems from using corporal punishment, or counties from permitting new landfills. Conservatives often prefer to let local communities make their own rules – on, say, smoking policies or land-use regulation – except when they don’t, in such cases as abstinence-based sex education.

A preference for either state uniformity or local autonomy seems to come and go based on the specific case. This seems arbitrary and hypocritical, and sometimes is. But don’t jump to conclusions. Questions about federalism aren’t easy ones, and people of good faith and ability just disagree about the answers. Virtually everyone believes that there are important and distinguishable roles for federal, state, and local governments to play in performing public tasks. The complexity comes in defining these roles.

My take on the matter is that, as much as possible, decisions about governmental operations ought to be made as close to the affected jurisdictions as possible. This principle allows localities to adapt to unique circumstances and changing conditions, fosters experimentation with new ideas, and encourages true citizen participation not just occasionally in elections but also directly in public hearings, grassroots activism, and personal interactions.

However, I believe that another important principle is that, as much as possible, the authority to spend and the authority to tax ought to be married. When you separate the two, you get higher cost and less accountability for results. Still another important principle is that rights adhere to individuals, not to institutions. Properly put, there is no such thing as “states’ rights.” Citizens have the right to organize much – but not all – of their government affairs at the state level, a right specified by the 10th Amendment to the Constitution and frequently abrogated by the post-New Deal federal government. But they do not have the right to deprive their fellow citizens of equal rights, as many segregationists did under the disreputable cloak of “states’ rights.” There is a clear and indispensable role for the federal government to protect individuals from encroachment by lower levels of government, just as it is proper for states to protect their citizens’ rights against abrogation by grasping local busybodies.

These principles are in tension, obviously. Their application is also complicated by issues such as spillover effects – how one local government’s policy choices may affect neighboring communities – and the concept of economies and diseconomies of scale. On the latter point, it’s not always obvious whether local governments banding together to do something, such as purchasing public-school textbooks, will benefit citizens more by reducing the per-unit cost through bulk buying than it will hurt citizens by reducing choice and allowing a few to exercise inordinate influence.

As far as current controversies go, here’s how I think the various principles ought to be applied:

• On taxing authority, I think that the state should continue to place limits on what localities can do to raise revenue. Generally applied property and sales taxes apportion the burden of government spending more fairly and efficiently than narrow taxes on home sales, hotel stays, and the like – which are often intended to stick it to nonresidents who spend time or do business in a particular local jurisdiction but have little means of affecting its tax policies.

• On regulating personal behavior, I’m not exactly a fan of government paternalism in any form, but at least if these decisions are left to localities, people can vote with their feet and choose to live in more- or less-permissive communities. However, there has to be a backstop here: surely we can all agree that there are certain inalienable rights that individuals enjoy no matter where they live in North Carolina or the United States, and that if threatened by local government, these rights can be enforced in state or federal court.

• On education, I recognize that the North Carolina constitution establishes the state’s role as the collector and dispenser of tax dollars to fund public education, and the state in turn 1) creates counties as agents to carry out some of the state’s financing role and 2) authorizes other entities, such as school districts and charter schools, to deliver the service and receive the funds. I think local schools and districts ought to enjoy significant freedom to determine policies on operational matters such as teacher compensation, while being held accountable to state officials and taxpayers for demonstrable results. I further think the state should broaden its authorization of who can deliver tax-funded educational services to include nonprofit and private schools. These schools should be accountable for results directly to parents exercising choice, rather than to the state, and in exchange should receive less state funding.

The list goes on, but this column cannot. As brevity is the soul of wit, I’ll just say that I think government power should be decentralized, except when I don’t. Call me capricious if you like, but if you consider these issues carefully you may find that there is more in heaven and earth than is dreamt of in your philosophy.

Hood is president of the John Locke Foundation.