Since it was proposed by Gov. Jim Hunt in 1993, Smart Start has generated statewide and even national attention for its intriguing promise of combining public and private resources to boost educational achievement through early intervention. But two recent studies, one of its finances and the other of its effectiveness as an educational investment, challenge Smart Start's extravagant claims of success. The program has attracted little support from the private sector, and does not significantly improve the educational attainment of most preschoolers.
A plan to increase North Carolina's sales tax by up to one penny, with a corresponding reduction in tax reimbursements to local governments, could endanger the state's economic recovery and threaten tens of thousands of jobs. No change in expected revenue growth or threat to the state's bond rating would have consequences severe enough to justify a $400 to $800 million tax hike on families and businesses whose tax burden is already the highest in the Southeast.
Author Doug Bandow looks at the ways in which government intervention into the provision of electric power has harmed consumers, and he recommends ways to make the system more competitive. (62 pages-not available online.)
Budget negotiations between the House and Senate typically lead to higher spending, as each side accepts all or part of an item the other wants. Another approach would be to accept only spending common to both budgets, a "reverse logrolling" that lets government expand only when a consensus exists to do so. For FY 2000-01, this approach would save nearly $200 million for future state employee benefit reforms and raise operating spending by only 3.8 percent.
Putting the House's FY 2000-01 budget into proper perspective requires careful consideration of how spending should be measured and how it has changed over time. Furthermore, proposed changes in how the payroll and teacher bonuses are budgeted are more than just accounting gimmicks. They represent a net reduction in state savings. The bottom line for taxpayers: if current trends continue, state leaders will be setting the stage for tax increases in the near future.
Author Charles J. Sykes identifies a growing crisis in North Carolina higher education and suggests reforms to reward teaching, improve curriculum, and to spend scarce resources better. (40 pages-not available online.)
posted March 31, 2001 by Michael Lowrey, John Hood
Co-authors Michael Lowrey and Jonathan C. Jordan examine North Carolina transportation policy and recommend ways of improving it without resorting to more taxation, regulation, and government control. (38 pages-not available online.)
By the Numbers: Comparing the Cost of Local Governments in North Carolina represents an attempt by the John Locke Foundation to help North Carolina citizens get a handle on the total cost of their local governments.
Among the major causes of this year's $800 million state budget deficit is a $108 million increase in projected Medicaid spending. After a brief period of slow growth in the late-1990s, North Carolina's Medicaid program is now a significant threat to the state's long-term fiscal health. It is also the most expensive Medicaid program in the South. The state should enact reforms in eligibility and benefits which could save taxpayers at least $251 million a year.
State policymakers are considering a $43 million request for additional funding for poor school districts and awaiting the resolution of the Leandro school finance case. They should keep in mind that funding disparities among North Carolina school districts are minor due to their primary reliance on state rather than local taxes. Indeed, in inflation-adjusted spending per pupil, the state's 25 poorest districts are better funded today than the 25 richest districts were 11 years ago.
