Economic Growth & Development

Energy-efficiency programs generally have many of the same problems as Duke Energy’s heavily criticized Save-A-Watt program. Energy-efficiency programs force consumers to pay an extra hidden tax on their utility bills to subsidize financial incentives for the purchase of energy-efficient goods and services.

This report on sustainable growth is the third in a series of annual research papers from the John Locke Foundation devoted to explaining the principles of free markets and applying them to current controversies in North Carolina.

Gov. Easley proposed $21.4 billion in state appropriations for continuing operations in fiscal year 2009, up $1 billion (4.9 percent) from the final budget for fiscal year 2008. Combined pay increases, including one-time bonuses, for teachers and state employees total $594 million. Less than a fifth of the $400 million in spending reductions are much more than reclaiming money that would not otherwise be spent.

Last year’s 5.24 percent dropout rate was a four-percent increase from the 2005-06 school year and was the highest rate in seven years. Only 70.3 percent of students in North Carolina graduate in five years. Over the last ten years, the North Carolina General Assembly has repeatedly tried to address the troubling dropout problem with no apparent success. The latest initiative, dropout prevention grants, will likely have little short-term or long-term effect on the dropout rate.

North Carolina cities and towns can spur redevelopment of their downtowns without using economic incentives or eminent domain to seize private property to give to private developers. The city of Anaheim, California, adopted policies that revitalized its downtown without using eminent domain powers or economic incentives. Under the leadership of Mayor Curt Pringle, Anaheim developed a plan that relied on reducing government regulations and stimulating private-sector investment.

The Johnston County commissioners are asking voters to approve a quarter-cent sales tax increase and a 200 percent increase in the real estate transfer tax on November 6. But the county has about $43.1 million over and above its base budget to meet its needs.

The Greene County commissioners are asking voters to approve a quarter-cent sales tax increase on November 6. But the county has about $8.2 million over and above its base budget to meet its needs.

The Senate has passed a major electricity bill that includes something called a renewable energy and energy efficiency portfolio standard (REPS). The REPS consists of two separate requirements: A renewable portfolio standard that requires utilities to provide customers 7.5 percent of their electricity from renewable energy sources, such as wind and solar, and energy efficiency measures that require a 5 percent reduction in energy use.

North Carolina is among the 26 states that have a maximum compulsory age of 16. Among the 50 states and D.C., there is no consistent relationship between the maximum compulsory age and graduation and dropout rates.

Budgets reflect priorities. When families face a new expense, they must cut back on another expense. Governments do not have this limitation. When legislators find they have spent too much or that there are new activities worth funding, they can raise taxes to make sure the budget balances and pass along the tough decisions to businesses, entrepreneurs, and families.