Research Reports: Spending & Taxes

State agencies should not be allowed to issue regulations that exceed federal requirements, and cost-benefit analysis should be required for all agencies. These two regulatory reforms should have a positive impact on the economy, but they are first and foremost about promoting good government.

Commissioners of debt-ridden Cabarrus County want taxpayers to bail them out by approving a quarter-cent sales tax increase on May 17. If the voters do not approve the tax increase, commissioners threaten to hit them with a 2.2-cent property tax increase.

The John Locke Foundation asked The Beacon Hill Institute at Suffolk University (BHI) to use its North Carolina State Tax Analysis Modeling Program (NC-STAMP®) to analyze three state tax proposals. The tax changes would provide a powerful stimulus to the North Carolina economy. Employment would increase by 14,922 in 2012, and when fully implemented in 2013 would create 17,016 by leaving more money in the hands of the state’s households and businesses. The combination of individual income tax and sales tax changes would increase real disposable income by $1.1 billion in 2012 and $1.6 billion in 2013. (Revised May 10, 2011)

North Carolina has one of the most expensive Medicaid programs in the Southeast, and Obamacare will expand enrollment from 1.3 million people to potentially over 2 million people in 2014. Without Medicaid reform or tighter eligibility, North Carolina will need to cut some services and payments to doctors. Both options will mean worse care for every person on Medicaid. Gov. Bev Perdue and the General Assembly need to push Washington for exemptions from Medicaid restrictions and greater ability to innovate with premium support and encourage patient control of their own care.

County and municipal governments provide many key services while taking in billions of dollars in revenue, but finding comparative data is hard. That's why this report provides information of how much local government costs in every city and county in North Carolina.

This budget proposal would spend $18.4 billion and return spending to the same levels, adjusted for population and inflation, as in the mid-1990s. In addition to ending the temporary sales tax and income tax surcharges, this budget would reduce the tax rates on personal and corporate income, setting the stage for future tax reform.

Over the last decade, North Carolina has led the way among southern states in advancing a more extreme environmentalist agenda. The General Assembly's new Republican majority should start anew on environmental issues. Legislators should put environmental policy into the context of the ideas of liberty, personal responsibility, and economic growth that the party ran on last fall.

North Carolina needs a thorough review of the number and types of courses offered in its public schools, especially during tight budget times. There is no evidence that school districts or the state has conducted an audit of the costs and outcomes or elective courses. A statewide curriculum audit would be a sound way to reduce costs and refocus our curriculum on the core skills that many of our public school students so desperately need.

The North Carolina Education Lottery was sold as a way to boost education spending, but N.C. boasts the same problem found in other lottery states: a declining rate of spending for education, especially in comparison with the rest of the state budget. Furthermore, poverty, unemployment, and property tax rates remain the best predictors of lottery sales.

This report highlights eleven action items that North Carolina’s new General Assembly should seek to implement in the first 100 days of the 2011 legislative session. These items touch upon a cross section of public policy areas, including education, economic development, property rights, energy and the environment, health care, the budget, and transparency. We at the John Locke Foundation believe that these items represent straightforward actions that would greatly enhance the liberty and prosperity of North Carolina’s citizens.