Research Reports: 2005

The Asheville Civic Center is deteriorating and has lost nearly $1 million a year since 2000. The Asheville City Council convened a task force to find a solution. This report offers a solution not currently in the public discussion: sell the Civic Center to a private company.

North Carolina’s tax code distorts economic activity. It penalizes the investment, savings, and entrepreneurship needed for economic growth. But the latest report on taxes from the Department of Revenue only looks at ways the tax code does not bring in as much money as it could.

HSAs are a form of medical savings account, similar to the now-familiar IRAs. These accounts are the property of the employee and can accumulate interest and dividends like other savings vehicles. Funds that are not used for health care-related expenses can be used for retirement living and can also be willed to one’s heirs. When combined with a high-deductible health insurance policy, an HSA replaces traditional health insurance coverage – and does so in a way that results in a more consumer-driven approach to health care.

A new survey of North Carolina’s most politically active business executives suggests that they disagree with the current direction of public policy in the state. A sample of over 600 respondents from every region of North Carolina answered questions about fiscal policy, education, transportation, tax rates, regulation, and ways to improve economic competitiveness. This report provides data not only from the statewide sample, but also from six regional subgroups: the Research Triangle (RTP), the Piedmont Triad (WNC), the Charlotte area, Northeastern North Carolina, Southeastern North Carolina, and Western North Carolina.

In North Carolina and 34 other states, if you are a health care entrepreneur and you want to do anything from adding a new wing or extra beds to an existing hospital, to opening an office that offers MRI or other services, you need a “Certificate of Need” from the state. If this sounds like the kind of central planning one might find in a socialist economy – it is. In North Carolina, the central planning authority is known as the Health Planning Development Agency, part of the North Carolina Department of Health and Human Services. The role of this agency is to plan economic activity provided by medical-care facilities. This is done down to the most minute detail, circumventing the most basic function of private decision-making in a free enterprise system, i.e., the allocation of resources based on entrepreneurial insight and risk taking.

North Carolina is the only state in which counties pay a fixed percentage of Medicaid costs. Counties have no control over how they spend up to 15 percent of their general fund budget and 39 percent of their property tax revenues. Six counties spend more on Medicaid than on education. Program expansions and higher medical costs have pushed Medicaid’s share of county budgets up an average of 18 percent in five years. The General Assembly should act on the recommendation of its own Blue Ribbon Commission on Medicaid Reform to cap and reduce what counties must contribute to Medicaid.

North Carolina recently filed a lawsuit going after private restraints of trade. But if the state really wants to reduce unfair trade practices and help consumers, it should eliminate or modify its own anti-competitive policies. The certificate of need law, occupational licensing, and other state-imposed restraints of trade hurt consumers and the economic freedom of North Carolinians.

The North Carolina Global Warming Commission is tasked with examining the relationship between greenhouse gases and climate change, but only one of its 16 members so far is a climate scientist. It is also supposed to study the economic impact of climate change and policy proposals, but none of its members are economists. Rather than experts, the commissioned is stocked with representatives of environmental pressure groups and particular industries. Such a commission is unlikely to propose reasonable, scientifically sound policies — and far more likely instead to advance their own ideologies and bottom lines.

Governor Easley announced that North Carolina will raise its average teacher salary to the national average in three years. Adjusted for cost of living, pension contribution, and teacher experience, however, the state’s average teacher salary ranks 11th in the nation and is about $1,600 above the national average. There is no evidence to support the governor’s contention that a higher average salary will aid in recruiting and retaining a high-quality teacher workforce or will make students more competitive in the global economy. A system of merit-based pay would provide an incentive for highly qualified individuals to enter and stay in the teaching profession.

Many cities and counties in North Carolina and throughout the nation have benefited from the ongoing revolution in solid waste management. Competition in the private sector has led to larger landfills that are better for the environment and less expensive. Only seven North Carolina counties have failed to take advantage of the market in landfill services. When the North Wake County landfill closes in 2007, the county should not replace it with a new county-owned facility. Instead, it should allow cities and towns to find the best value for their citizens in the landfill market.