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C a R O L I N a Not Just in N.C • Researcher Blends • College Budget Cuts Education, Economics C A R O L I N A Not Just in N.C. New Tool for Taxman N.C. Museum of History Volume 12, Number 9 A Monthly Journal of News, September 2003 Analysis, and Opinion from JOURNAL the John Locke Foundation www.CarolinaJournal.com www.JohnLocke.org State Budget: Higher Taxes, More Borrowing, Federal Handout N.C. leaders continue Freedom Budget 2003 heavy spending, avoid rearranges priorities, efficiency and solutions offers different approach By PAUL CHESSER By PAUL CHESSER Associate Editor Associate Editor RALEIGH RALEIGH awmakers on June 30 heralded the riorities, priorities — every person’s “balanced” budget they produced lies in a different place. So does ev- L through bipartisanship, which sur- P ery agency’s. prised many political observers because it Lawmakers have to decide what is most emerged before the beginning of the new important for all of them. Democratic Rep. fiscal year July 1. Martin Nesbitt of Asheville voted in favor However like recent years, legislators of the budget and believed it was “pretty depended on tax increases and nonrecur- good,” considering the General Assembly’s ring revenues, which included $551.6 mil- struggle to find revenue and cuts. lion in relief from the federal government. “On balance I think they did the right In each of the last two years Democrats, things in terms of priorities,” he said. Still, despite possession of the governorship and some budget deletions troubled him. majorities in both chambers of the General “We cut teachers aides, and I think Assembly, failed to produce a balanced that’s terribly shortsighted,” he said. “We budget before mid-autumn. Delays were can get 2 1/2 aides for one teacher…and largely blamed on the near equally split Carolina Journal photo by Richard Wagner that allows teachers to teach. They are very House, where a group of liberal Democrats Easley advises the House to alter the budget at a press conference June 25 at the State Capitol. cost-effective.” often joined unified Republicans’ 58 votes The budget reduces the dollar allot- to block regressive tax increases. ment. Of those two funds the Health & million in fiscal 2003-04 and $698 million in ment for teacher assistants by $16 million This year, loyalties shifted. Despite a Wellness Trust Fund, which was to finance fiscal 2004-05. The total $1.3 billion is miti- over the two-year period. Nesbitt also 60-60 vote split between Republicans and public health programs, will lose $50 mil- gated by nonrecurring expenditures of thought cuts to the Vocational Education Democrats in the House, the liberals’ lever- lion the next two years. The Tobacco Trust $197.2 million over the two years. In 2005 Program, also $16 million, was a bad idea. age diminished and GOP solidarity, already Fund, which was established to give to- lawmakers will need to replace what Whether cutting those line-items was fragile, dissolved. Instead, a small group of bacco farmers relief for their product’s di- amounted to a nonrecurring $1.1 billion in appropriate is in the eye of the beholder. Republicans led by Co-Speaker Richard minished demand, will lose $80 million. revenue in the 2003-05 biennium. The John Locke Foundation’s Freedom Morgan joined with now-unified Demo- Budget writers also took: $10 million Budget 2003 offered the organization’s ad- crats to craft a timely budget. The new from funds recovered as the result of the Brother, can you spare a prison? vice on priorities for government. The plan, coalition marginalized legislators who op- attorney general’s lawsuit settlements; $58 which is on the Internet at www.John posed tax increases and budget growth. million from taxes earmarked for the im- Lawmakers also expanded plans this Locke.org, recommends cuts in many pro- The realignment didn’t change budget- provement of the 911 emergency telephone year to borrow money for capital projects grams and the elimination of other appro- ing habits from recent years. Government system; $109 million from the Hurricane through a controversial method they began priations where the foundation thinks gov- spending will grow by 3 percent in 2003-04 Floyd Disaster Relief Funds; and $40 mil- two years ago. In 2001 the legislature autho- ernment shouldn’t have a role. and will grow 5 percent by 2004-05. More lion originally headed to other special funds. rized a new way to get financing without One way to restore the reductions in than $1 billion in higher taxes will be col- Lawmakers in recent years have trans- the need for voters to approve new debt, as teacher assistants and vocational training lected through the end of fiscal 2005. ferred increasing amounts from the High- the constitution mandates. The method was would have been to follow the Freedom way Trust Fund. The reserve was sold to used to build three prisons. Budget’s recommendation on cultural and Finding new money taxpayers as a way to finance special road Called “certificates of participation,” recreational attractions. It estimated that if projects through gas taxes and car taxes. the legislature authorized the treasurer to the Tryon Palace, NC Maritime Museum, The extra levies didn’t alleviate the need This year the legislature moved $252 mil- create a nonprofit corporation, which would NC Museum of Art, NC Museum of His- to find other sources of revenue, though. lion out of the designated fund. be owner and landlord of the prison prop- tory, the division of Forestry, NC Zoo, NC North Carolina joined most other states, Fee increases brought in another $11.5 erties. The state was able to skirt the voter- Aquariums, and the Museum of Natural which are in similar budgetary difficulty, to million in revenue to the General Fund. approval requirement because technically Science could recover 50 percent of their plead for relief from the federal govern- Legislators think also that the state will it is the finance corporation taking on the costs through fees and donations, the an- ment. After much hand-wringing, Congress be able to gain $216.3 million through im- debt, then turning around and allowing the nual savings would be $32.4 million. came through with $20 billion, which in- proved tax collection measures. And they state to use the facilities under a lease-pur- But the Freedom Budget also proposed cluded $551.6 million for North Carolina. expect to raise $40 million through the sale chase agreement. a more dramatic reduction in teacher assis- Lawmakers also took $130 million from of surplus property. tants, recommending that $122 million two of the state’s trusts that were funded by According to legislative staff, the bud- worth of positions be converted into full its share of the 1998 tobacco lawsuit settle- get relies upon nonrecurring funds of $618.2 Continued as “Efficiency,” Page 3 teaching positions. CJ Best Way to Solve Fiscal Crisis The John Locke Foundation NONPROFIT ORG. Contents 200 W. Morgan St., # 200 U.S. POSTAGE Cut Spending 64% Raleigh, NC 27601 PAID Raise Taxes 4% RALEIGH NC PERMIT NO. 1766 Do Both 32% Calendar 2 State Government 3 Education 6 Higher Education 10 Local Government 14 Books & the Arts 18 Opinion 20 % of NC Business Execs in March 2002 JLF Poll Parting Shot 24 C A R O L I N A Contents ON THE COVER • Three different testing standards — the • Six North Carolina cities are proposing JOURNAL National Assessment of Educational incentives of $5.4 million to help establish •What was the General Assembly’s solu- Progress, the state ABCs, and the federal No additional airline service. Page 15 tion to the state’s budget problems this Child Left Behind Act — are creating con- year? Higher taxes, onetime money, more fusion and frustration over accuracy in • Many landowners along the border be- borrowing and ignoring efficiency ideas North Carolina. Page 8 tween Orange and Chatham counties re- seemed to be the answers. Page 1 main uncertain what their county of resi- Richard Wagner • Now that high-stakes testing has begun dence is, 14 years after the counties agreed Editor NORTH CAROLINA in North Carolina, parents and policy mak- to redraw their border. Page 16 ers want to know whether the process is Paul Chesser, Michael Lowrey •Two reports released in August conclude working to improve student performance. • An interview with U.S. Rep. Richard Burr Donna Martinez that North Carolina’s primary job creation Page 9 of North Carolina’s 5th District. Page 17 Associate Editors program, the William S. Lee Act, rarely cre- ates any jobs. Page 4 HIGHER EDUCATION THE LEARNING CURVE Karen Palasek, Jon Sanders • The length of time for copyright protec- • A recently released report found that • Editorial intern Jonathan Jones reviews Assistant Editors tion, which exceeds 100 years in most cases, North Carolina’s institutions of public North Carolina’s Museum of History in is excessive and society would benefit if the higher education are hardly the only ones downtown Raleigh. Page 18 period were shortened, the dean of the in the nation affected by an economic down- Andrew Cline, Roy Cordato, Charles Davenport, Ian Drake, Barton College School of Business says. turn in their home state. Page 10 • George Leef reviews the book Pieces of Tom Fetzer, Nat Fullwood, Page 5 Eight by Edwin Vieira, Jr., and a review of John Gizzi, David Hartgen, • One of the last actions of the General As- the book The Great Tax Wars by Steven R. Summer Hood, Lindalyn Kakadelis, • Approval of the state budget June 30 also sembly before the legislative session ended Weisman. Page 19 George Leef, Kathryn Parker, marked the beginning of the fulfillment of was to pass a bill that increases eligibility Marc Rotterman, R.E.
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