Research Reports: Spotlight Report

There is consensus in the education research community that school choice raises student achievement for the average participating student. Vouchers tend to be more transparent and easier for parents to understand than other types of choice options, but require additional safeguards and protections for participating children, families, and schools.

A 1997 bill that exempted “payday lenders” from state usury laws was allowed to sunset in 2001, and the last storefront lenders were shut down in 2005. Getting rid of payday lending in North Carolina left consumers worse off, leading to more bounced checks, more complaints about lenders and debt collectors, and more filings for Chapter 7 bankruptcy. North Carolina policymakers should expand lending options in this state by legalizing small-scale, short-term and payday lending again.

North Carolina features over 50 occupational licensing boards, more than most other states. In practice, it protects current members of a profession from competition, while increasing costs to consumers and would-be professionals blocked from the field. Economists studying occupational licensing generally find it restricts the supply of labor and drives up the price of labor and services. Without state licensure, private providers of reviews and certification, internet sites and consumer applications, social media, and competitors and market forces would ensure quality and safety. The government would still enforce safety and quality through the court system.

North Carolina has an Amazon tax, which categorizes out-of-state firms as in-state, and thereby liable for sales tax, under certain conditions. However, the tax has not proved effective at increasing revenues, it does not level the playing field, and it may drive firms out of the state.

Once a popular off-Hollywood venue for filmmakers before state film tax incentives, North Carolina is now one of the leaders in a race to the bottom among other states and nations in giveaways to movie production companies. The incentives show that state leaders know that lower taxes and regulations attract industry. So why play favorites with industries? Why not just lower taxes and regulations altogether?

The General Fund portion of North Carolina’s $51.7 billion state budget for 2013 is now $20.18 billion, which exceeds planned spending as passed in 2011. All of this year’s General Fund proposals from the House, Senate, and governor have been for more spending than planned. By taking the lower cost of each General Fund component from the House and Senate proposals — “reverse logrolling” — with a couple of exceptions, one could achieve a General Fund total of $19.85 billion. That would save $330 million from the enacted General Fund and $87 million from last year’s plan.

North Carolina is one of only two states which automatically send all 16 and 17 year-olds to the adult justice system. Adult court jurisdiction of juveniles does not deter juvenile crime and results in poor rehabilitation of juveniles. Minors in criminal justice systems have less access to education and other age-specific programming than those in the juvenile justice system, putting them at a serious disadvantage upon release. Methods to improve the juvenile justice system in North Carolina include both adjusting the age of juvenile court jurisdiction and creating a system of blended sentencing.

Total state spending per capita is at its highest level ever in the 2012 fiscal year and has more than tripled since 1970. Over the past four decades, state spending has grown much faster than personal income, and in real, per capita terms, spending on all reported categories has more than doubled since the mid-1970s. That includes education, corrections, health and human services, transportation, and debt servicing. General fund spending per capita has declined by 16 percent since 2009, but per capita spending outside of the general fund increased by 26 percent and more than compensated for the general fund’s decline. Federal aid continues to comprise an ever-larger portion of the state budget, and North Carolina’s cash-basis accounting conceals spending and is generating unfunded liabilities

Declining fish stocks are affecting N.C. fishermen and fishing communities despite the U.S. government spending $70 million a year to bail out failing federally managed fisheries under traditional management systems. Catch shares are a transformative approach to fisheries management that inject property rights into the fisheries to produce a sea change in incentives. Catch shares eliminate race to fish, encourage a more discriminating harvest, and reduce bycatch. Research finds strong links between catch shares and improved economic and biological performance of fisheries and that switching fisheries to catch share systems not only slows their decline but possibly stops (or even reverses) it.

North Carolina’s state income tax penalizes people’s income generating activities, those that lead to the production of goods and services and spur economic growth. By reducing the rewards to all income-generating activity — work, saving, and investment — the income tax discourages those activities relative to non-income generating activities — leisure and consumption. The tax that should be adopted as a replacement for the existing income tax is what is called a “flat rate consumed income tax.”