Fitzsimon File

A reality check for business

If there is any consensus in the divided General Assembly this session, it is that creating jobs should be lawmakers' top priority with thousands of people out of work as the state unemployment rate hovers near ten percent.

The problem is that with only a few exceptions, there isn't much state lawmakers can do about it. North Carolina's economic struggles are part of the nation's economic struggles and the state's recovery is closely tied to the national recovery.

Lawmakers could increase public investments to stimulate economic activity but that's unlikely with the state facing a $3.7 billion budget shortfall. They can continue to tinker around the edges by increasing small business tax credits and Governor Beverly Perdue is likely to recommend some version of tax changes to help small companies in the budget she presents to the General Assembly this month.

State lawmakers can however make the job picture much worse by addressing the shortfall with cuts alone and laying off at least 21,000 state workers, taking hundreds of millions of dollars out of the economy. They could also cripple the state's education and worker training infrastructure that companies rely on when they come to North Carolina.

That was one of the messages House Minority Leader Joe Hackney brought to the North Carolina Chamber of Commerce this week at the groups legislative affairs meeting.

Chamber officials are clearly excited about using the economic downturn to repeal state laws and regulations they don't like and to tweak the civil justice system to make it friendlier to corporations.

Chamber leaders also want lower taxes and explicitly endorsed the Republican leadership's position that the temporary tax increases passed in 2009 should expire regardless of how deep the budget cuts must be to make up for the lost revenue.

House Speaker Thom Tillis and Senate President Pro Tem Phil Berger told the chamber members what they wanted to hear, that most of their dreams and wishes would be on the table, all part of making the state more "business friendly."

That's all based on the assumption that the current tax system and regulatory climate are the reason the state's unemployment rate is still high. That doesn't make sense since other states are also struggling with high jobless rates and it flies in the face of statistical evidence that Hackney presented to the group.

The numbers come from a recent publication compiling state statistics and rankings prepared by the Program Evaluation Division of the General Assembly, a relatively new part of the legislative structure widely praised by conservatives for its in-depth examination of state programs and services.

It shows that North Carolina has the 18th lowest state and local taxes per capita, lower than several southeastern states including Virginia, Florida, and Louisiana. The state ranks 17th best in state and local taxes as a percentage of personal income, better than Kentucky, Mississippi, Kentucky, and West Virginia.

There are similar findings on the spending side too. North Carolina ranks 15th lowest in per capita expenditures, less than Virginia, South Carolina, Alabama, Arkansas, West Virginia, Kentucky, Maryland, South Carolina, Mississippi, and Louisiana.

North Carolina is one of only states with a coveted triple A bond rating and has the ninth lowest state debt, better than all but two other southeastern states. North Carolina's number of state government employees per 100 people is also well below the national average.

Then there is the regulatory environment, cited by Forbes Magazine as the third best in the country for business. Add to that what even Tillis agrees are university and community college systems that are among the best in the country and you have what is clearly a well above average business climate.

None of that is likely to stop the efforts of the Chamber and other corporate interests to use the economic downturn to weaken regulations, slash corporate taxes, and damage the state's education infrastructure, but it ought to serve as a reality check for lawmakers and force them to think twice before they do.

Like this article?


Our work is supported by readers like you.

Help us to continue expanding our aggressive reporting and thoughtful commentaries. Make a tax-deductible financial contribution today!