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John Hood opines daily on the important issues facing North Carolinians.
Updated: 34 min ago

The unfinished business of school finance reform

Tue, 2019-01-29 01:19

A 2016 report published by the General Assembly’s nonpartisan Program Evaluation Division detailed the distribution of state funds to public schools and concluded that the system’s “features and controls are redundant, counterintuitive, lack rationale, and obscure transparency and accountability.” They recommended either addressing the systemic defects identified in the report or initiating a complete overhaul of the system. Since the publication of the report, however, the way the state delivers funding to public schools is mostly unchanged.  

After lawmakers pass a budget establishing public education funding levels for the following school year, the N.C. Department of Public Instruction distributes state dollars to school districts using a so-called resource allocation model. State funds are dispersed to districts using dozens of allotments or funding categories for components considered necessary for the operation of public schools, such as textbooks and teachers. A series of formulas, published in a lengthy policy manual, determines the amount of money that each district receives for each allotment.  If it sounds complicated, that’s because it is. 

School district officials may also transfer taxpayer funds between categories, so long as they comply with state regulations and statutes. One of the more surprising findings in the Program Evaluation Division report was that districts had conducted nearly 1,000 allotment transfers, moving over $200 million across categories in 2015. Even funds set aside for our most vulnerable populations— low-income, at-risk, and Limited English Proficiency students — were the subject of allotment transfers during that school year. While transfers are not inherently harmful, it makes it difficult to track the movement of state dollars at the district level. A provision in the 2017 state budget provided a short-term fix by requiring districts to publish allotment transfer data on their websites. 

Another provision in the 2017 state budget created the Joint Legislative Task Force on Education Finance Reform. Lawmakers created the task force to receive input on North Carolina’s school finance system from district, state, and national school finance experts. After seven meetings of the task force, the consensus was that the Program Evaluation Division report accurately described the defects of North Carolina’s obsolete school finance system. 

Michael Griffith, school finance strategist at the Education Commission of the States, testified that North Carolina’s funding system falls far short of giving school districts the flexibility to meet the demands of non-traditional education programs. He pointed out that North Carolina’s system was designed at a time when “almost all students attended brick and mortar schools.” Today, students attend a variety of schools due to the increasing availability of charter schools, career and technical schools, dual enrollment opportunities, and alternative programs. North Carolina’s current funding model is ill-suited for schools that increasingly move further away from traditional models of instruction.  

Georgetown University professor and school finance expert Marguerite Roza explained that North Carolina’s school funding system is the exception rather than the rule. In a presentation to the task force, Roza testified that most states now allocate dollars using a student-based model. She pointed out that the type of system used by North Carolina and a handful of other states may lead to the inequitable distribution of funds and limit the ability of districts to use state funds in innovative ways. Roza recommended North Carolina follow the lead of states such as California and adopt a student-based formula that allocates a base funding level for each student with funding supplements based on students’ grade-level, income, disability, and instructional needs. 

Legislators convened the final meeting of the Joint Legislative Task Force on Education Finance Reform in April 2018, but despite council from these school finance experts they failed to advance legislation that would make substantive changes to North Carolina’s school funding model. It remains to be seen whether the Republican majority will choose to make school finance reform a centerpiece of their legislative agenda. Like every legislative session, the 2019 session will include fights about the amount of money we spend on public education. The added complication of fighting about the way that money is distributed may be a battle they will choose to avoid. 

I hope lawmakers have the political will to address the issue during the 2019 session and begin the multi-year process of implementing a student-based funding model. This would be the crowning achievement for a legislative body that has done so much to focus our public schools on the unique needs of children, rather than the demands of the institutions designed to serve them. 

Dr. Terry Stoops is vice president for research and director of education studies at the John Locke Foundation.

Categories: Public Policy

State budget battle is looming

Mon, 2019-01-28 01:01

The single most important issue during every legislative session is the approval or revision of North Carolina’s state budget. For the 2019-20 session about to get underway, the political implications of the budget debate are going to be nearly as important as the policy implications.

For the first time since the administration of Gov. Beverly Perdue, the state capital will feature a Democratic governor tussling over the budget with Republican legislative leaders who do not command a veto-proof majority.

Gov. Roy Cooper’s budget proposals in 2017 and 2018 weren’t exactly dead-on-arrival, because as a practical matter much of what any General Assembly ends up approving was originally requested by executive agencies. But where the two sides’ priorities were in conflict, the GOP legislature generally prevailed.

That’s not the scenario we face in 2019. If — or perhaps I should say when — Cooper vetoes the state spending and revenue plan the General Assembly enacts for the 2019-21 budget biennium, Democratic lawmakers will have enough potential votes to sustain the veto. Republicans will either have to compromise with Cooper or peel off enough Democrats in both chambers to override the veto.

As we saw during the latter Perdue administration, I suspect there will be a partisan standoff over the state budget this summer. But it won’t resemble a federal-style government shutdown. Existing law will allow state government to enter its 2018-19 fiscal year on July 1 under spending levels previously enacted for 2017-18.

In other words, while state employees and vendors may grumble, they’ll keep working and keep getting paid if no budget is passed by July 1. North Carolinians won’t see an interruption of core services or the kind of spectacle we’ve been watching lately on the national news. While good for governance in the short run, that means there won’t be as much public pressure to resolve any budgetary impasse.

Perhaps you are a progressive who thinks North Carolina should increase spending dramatically in 2019 even if it would require a tax hike. Perhaps you are a conservative who thinks, as I do, that the state should maintain spending discipline, eschew higher taxes, and save prudently for a rainy day. Whatever your views, don’t expect some last-minute surplus bonanza to resolve the conflict.

Just to put things in context, our state government spends around $57 billion a year, including state revenue, federal revenue, user charges, and other funds. Some $24 billion of that amount forms the General Fund budget, the share of total spending that draws the most attention and is funded primarily by state income and sales taxes.

Expenditures on education, health and human services, and public safety combined account for more than 90 percent of the General Fund. What about the other $33 billion in the total state budget? It includes lots of additional federal money for Medicaid and other social services, as well as spending on transportation, unemployment insurance, and other jointly funded but state-administered programs.

As of the first half of the 2018-19 fiscal year, North Carolina’s budget is clearly in a healthy condition. General Fund revenues are exceeding projections by a bit over $200 million. If you compare revenue collected with money spent so far, the General Fund is running a cash surplus of nearly $400 million.

We can’t count on a straight-line extrapolation to tell us what will happen during the final six months of the first year, however. State revenues and expenditures are lumpy. As North Carolinians file their income taxes by April 15, for example, state government will receive a disproportionate share of all the income tax revenues for the year. That influx could exceed expectations. It could fall short of them.

And even under a best-case scenario, the resulting surpluses could not possibly finance every spending promise made by every politician running for office last fall. We already know we’ll have to spend more on Medicaid and the state employee health plan under existing law, for example. There’s a budget battle looming. You can bet on it.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.

Categories: Public Policy

N.C. franchise tax: It’s time to reconsider

Fri, 2019-01-25 04:00

North Carolina’s franchise tax is a punitive and opaque tax levied on businesses organized under one of the usual corporate forms, primarily C-Corps and S-Corps. It is inconsistent with both good economics and good government. Most of the problems associated with the corporate income tax are also present in the franchise tax. But it goes a step further by taxing what tax analysts generally agree should be exempt from taxation and as a result it double taxes business assets. At present, only 16 states, mostly in the Southeast, still have a franchise tax.  Ideally, North Carolina should follow the lead of most other states and abolish the tax.

Conceptually the franchise tax is quite simple. It is a tax on the net value or worth of corporations with operations in the state. Net worth is defined as a business’s total assets minus its total liabilities. The rate of taxation for C-Corporations is $1.50 per $1,000 of net value with a floor of $200 that no corporation, no matter how small, can escape. For S-Corps it is $200 on the first million in net value and then $1.50 for each thousand after that. (See NCDOR) The tax is capped at $150,000 or $1,000,000 in valuation.

What North Carolina calls a “franchise tax” is, in fact, a corporate tax placed on top of the existing corporate income tax. The difference is that it is not levied on business income but on the value of its assets, that is, how much it is worth and not how much it earns. What this implies is that expenditures that are deductible from the corporation’s income, ultimately end up being subject to taxation under the franchise tax.

A standard principle of taxation is that expenditures made on plant and equipment meant to generate income should be fully deductible from corporate and other business income, and, in fact, they are.  The franchise tax is a back-door method allowing the state to tax the value of these purchases after the fact.

Imagine that a construction company purchases a bulldozer. When the company goes to pay its income tax, this bulldozer is a deductible expense. But once the purchase is made, the bulldozer becomes part of the company’s stock of capital equipment and therefore part of its asset base. When it is purchased, the value of the bulldozer is deducted under the corporate tax. But once the firm owns it, that same value does get taxed year after year under the franchise tax. This is not only bad economic policy but an underhanded way of taxing something that shouldn’t be taxed at all.  It is also a way of decoupling a business’ tax liability from how well it performs economically. Even in bad years, when the company might be losing money, the state will still require it to pay this tax on its previous asset purchases.

Viewed in conjunction with the corporate income tax, this is clearly a case of double taxation. It makes no difference that the revenue that went into purchasing the asset is fully deductible under the corporate income tax. The value of the asset (the bulldozer in our example) to the company comes from the fact that it generates future income, and this will be reflected in the assessed valuation of that asset at any given point. That income will be taxed as part of the corporate income tax.

As such, the corporate income tax reduces, i.e., taxes the value of the asset. So, to tax both the asset and the income that it generates is, in fact, double taxation. The value of the asset is reduced twice. The franchise tax not only discourages investment in the accumulation of assets, it is also punitive. As the Tax Foundation notes in their critique, “taxing a company based on its net worth disincentivizes the accumulation of wealth, or capital, which can distort the size of firms and lead to harmful economic effects.”

If North Carolina eliminated its franchise tax, or what the Tax Foundation calls its “capital stock tax,” its ranking in the Tax Foundation’s “state business tax climate index” would improve from 12th in the nation to 11th and in their sub-ranking for property and wealth taxes the state would move from 33rd to 16th.

Maybe the most pernicious aspect of NC’s franchise tax is its implications for honest and transparent government. It is a hidden tax whose burden is not borne by the businesses upon which it is levied but instead by its customers, employees, and shareholders.

As I have noted in several previous analyses, legal entities like corporations don’t pay taxes. People do. The franchise tax, like all taxes, must come out of the pocket of real people. When the franchise tax is levied, who pays it? Certainly, it is not paid by the legal entity known as the corporation. Rather, customers will pay in the form of higher prices, employees will pay in the form of lower wages, and shareholders will pay in the form of smaller returns. But none of these people actually see a bill labeled “franchise tax.” It is a completely non-transparent tax and is therefore inconsistent with principles of good government.

For citizens to know what government is costing them, they must be made keenly aware of how much they are paying in taxes. Obfuscating these costs by using forms of taxation like the franchise tax and the corporate income tax works well for politicians who want constituents to believe that they are getting something for nothing. On the other hand, it is a great disservice to the residents of the state who, as voters, need to be as informed as possible.

 

 

Categories: Public Policy

Protecting the fruits of college athletes’ labor

Thu, 2019-01-24 04:02

Former N.C. Supreme Court Justice Bob Orr doesn’t want to touch the hot topic of paying college student-athletes. But Orr supports one change that could help star players make money from their skills before they turn pro.

The jurist relies on one of the most important pieces of North Carolina’s fundamental law to make his case.

“I am absolutely confident that the NCAA and certain member institutions within the system who don’t want to see change, and who don’t want to share the gold that the golden goose has delivered, all want us to be talking about paying players,” Orr said Jan. 10 in Raleigh. “They want us to talk about paying players because basically that’s kind of an unpopular position that those of us in the reform movement have advocated.”

“They want us to become mired in the quagmire of compensation models that pit men’s sports against women’s sports, major-revenue sports versus Olympic sports, benchwarmers versus all-Americans, small schools versus big schools — all of the permutations of compensation models that will lead the discussion in circles, provoke controversy and litigation, and ultimately forestall any significant change.”

Orr delivered those remarks to a legislative commission studying fair treatment of college athletes in North Carolina. It’s a topic that has interested Orr since he started representing UNC-Chapel Hill football players in legal disputes involving alleged NCAA rules violations.

The retired justice admits he has no easy answer that would lead the compensation discussion out of the “quagmire.” Yet he offers “one fairly simple and straightforward reform” that could put more dollars in some players’ pockets.

“That simple proposal is to stop punishing college athletes from benefiting financially from their skills and success in a particular sport,” Orr said. “This basic concept can be founded on what I think is one of the truly important provisions in our own state constitution.”

That important provision sits near the beginning of the N.C. Constitution, tucked within Article I, Section 1 of its Declaration of Rights. Among the “inalienable rights” guaranteed to North Carolinians are life, liberty, and the pursuit of happiness. In addition to these rights familiar to all schoolchildren, Article I, Section 1 also guarantees people the right to “the enjoyment of the fruits of their own labor.”

Part of the state constitution since 1868, that provision “was obviously grounded in the history of an enslaved people obligated to work for the benefit of others but unable to benefit for themselves,” Orr said. In the intervening 150 years, the provision has helped protect North Carolinians from “government overreach in the regulatory sphere.”

Now Orr sees an application for “the young men and women working for their respective schools in the big-time business of college athletics,” he said. “Shouldn’t these athletes be able to enjoy the fruits or benefits of their own labor without being punished for receiving those benefits?”

Take, for example, Trevor Lawrence, the 19-year-old quarterback who just led Clemson University to a national football championship in his first year in college. “How much would his presence be worth on another college campus, and how much would the free-market system pay him to make that move?” Orr asked.

“But not only is that type of compensation forbidden and punishable by being forever banned from college sports, but the more mundane types of benefits — from a hometown fan treating him to dinner, to opportunities to make a little extra money doing ads for Uncle Moe’s Used Car Sales — [are] forbidden and punishable,” Orr added.

“The infamous NCAA ‘impermissible benefits’ rule would immediately kick in, and Lawrence or any other college athlete given such a monetary opportunity would find himself or herself ineligible to participate in college sports, lose their scholarship, and perhaps have to leave college if they came from a low-wealth family.”

No other members of a campus community — not chancellors, coaches, research professors, or student “musicians, actors, writers, programmers” — face the same limits on making money from their specific talents, Orr said.

The former justice surmised that it would be hard to come up with a “fair, workable” compensation system without ending the current prohibitions. “When the punishment of ineligibility for receiving financial benefit is removed from the equation, and college athletes and their representatives can be treated like everyone else in the system, then solutions for compensation can be reached.”

It’s clear Orr’s proposal would not address all concerns. One easily can picture a “hometown fan” giving a star player $1,000 to cover the cost of a $20 meal. Or a professional sports agent fronting Uncle Moe $50,000 to funnel to a college athlete who’s a prospective pro client. Even those open to Orr’s suggestions might want to limit that type of dubious activity.

In addition to those potential abuses, North Carolina could disqualify its schools from competing against national peers if it adopts state-level reforms that run afoul of national NCAA guidelines.

Still, it’s good to see at least one participant in the compensation debate citing basic constitutional principles. All North Carolinians benefit when state government strives to help more residents enjoy “the fruits of their own labor.”

Mitch Kokai is senior political analyst for the John Locke Foundation.

Categories: Public Policy

State policy agendas sound familiar

Wed, 2019-01-23 01:01

North Carolina Republicans lost their General Assembly supermajorities in the 2018 midterms, and the GOP nationally lost ground in both legislatures and governorships after years of dominance in state capitals. So, as state lawmakers begin their 2019 sessions, should we expect dramatic changes in state policy?

Don’t count on it. Despite their recent losses, Republicans remain the dominant force in state governments, and conservatives remain the dominant force in GOP politics.

Republicans currently control 31 legislatures (including the officially nonpartisan but operationally conservative Nebraska legislature). Democrats control the legislatures in 18 states. Just a single state, Minnesota, has one Democratic and one Republican chamber. As for state governors, Republicans suffered a net loss of six in 2018 but still comprise a majority at 27 to 23.

Here’s the bottom line. In 23 states, the GOP has a “trifecta,” meaning a governor and full legislative control. Democrats have 14 such strongholds, while North Carolina and 12 other states have split control. These figures represent gains for Democrats at the expense of Republicans, but not gigantic ones.

According to recent reporting from outlets that cover these issues, such as Governing magazine and the Pew Charitable Trusts’ Stateline project, many of the major legislative battles of 2019 will likely represent continuations of preexisting conflicts in state capitals over tax policy, education funding, Medicaid expansion, and voting laws.

Generally speaking, Democrats in state capitals are trying to raise taxes to fund additional spending. Republicans are trying to block this, and in some cases to reduce and reform taxes to spur economic growth and expand freedom.

While at the national level Democrats talk mostly about raising income taxes on the wealthy, at the state level they often focus on sales or excise taxes, particularly on energy, tobacco, and beverages. Indeed, some Democratic governors and legislators are trying to use new state-tax policies to offset the effect of last year’s elimination of the federal income-tax deduction for state and local taxes paid. The direct beneficiaries of such state “workarounds” will be wealthy households, for the most part, although Democrats are (properly) worried that unless they address the issue, many such households will depart for lower-tax jurisdictions, thus imposing broader pain on blue-state economies.

On the spending side of the ledger, both parties typically earmark education to receive the bulk of any new revenues, either to increase teacher pay and reduce class sizes in K-12 schools or to stave off tuition increases at state colleges and universities. For example, big promises on education funding helped propel two new governors to office in competitive elections last year, Democrat Laura Kelly in Kansas and Republican Brian Kemp in Georgia.

Democrats typically seek to outbid Republicans by pitching tax hikes the latter won’t countenance. Most voters favor higher taxes to boost education expenditures in the abstract, but support drops when voters are informed how much their states already spend. The messaging war about taxes and education dominated many state elections in 2018, and will continue to do so.

Most states have now expanded Medicaid under the Affordable Care Act, with Idaho, Nebraska, and Utah doing so by referendum in November. In the remaining holdout states, a powerful alliance of medical providers and left-wing activists will deploy its considerable resources again in 2019, offering to negotiate with GOP lawmakers on reassurances such as work requirements, eligibility caps, and fiscal controls.

As for voting laws, look for a conflict of ironies in state capitals. Citing North Carolina’s own disputed election in the 9th Congressional District, Democrats accuse Republicans of paying too much attention to in-person fraud while ignoring potential misdeeds with absentee ballots. For their part, Republicans point out that Democrats are actively promoting in many states the very “absentee-ballot harvesting” practices that are alleged, and currently illegal, in our state.

North Carolinians no doubt will see a lot that was familiar here. When it comes to state policy disputes, there may be regional differences in accent, so to speak, but not so much in vocabulary.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.

Categories: Public Policy

Democrats may help GOP in 2020

Tue, 2019-01-22 01:01

The promise of “Medicare for All” polls well. But if Democrats endorse the concept in large numbers, and make it or some other large-scale expansion of government health plans a centerpiece of the party’s brand going into the 2020 election cycle, Republicans will be among the prime beneficiaries.

How can a popular idea be politically damaging? Because it’s only popular in the abstract. A 2017 survey by the Kaiser Family Foundation, for example, found that 54 percent of Americans favored a single-payer plan for financing health care. The phrase “Medicare for All” polled even higher, at 62 percent.

Once voters heard some of the details, however, support dropped. When told that a single-payer plan would dislodge the role that employers play in sponsoring health plans, 17 percent of respondents switched sides, raising opposition to 60 percent. When told a single-payer plan would require higher taxes, 23 percent switched sides, raising the opposition to 66 percent.

Politicos who spend lots of time debating the finer points of public policy need to remember that most Americans, focused on their own private affairs most of the time, do not necessary hear what the politicos mean to say. According to the Kaiser poll and others, significant percentages of voters believe that even if the country adopts a single-payer system, they will be able to keep their private health plans.

North Carolina politicos who favor Medicaid expansion face a similar challenge when it comes to interpreting public opinion. If a survey question presents Medicaid as a cost-free way to extend services to the poor, you may get a favorable response.

That will change when voters learn that 1) we aren’t talking about poor children and their parents, who are already covered, but childless adults; 2) many advocates either refuse to require these childless adults to work for Medicaid benefits, or plan to subvert any work requirements that may be included in expansion; 3) emergency-room usage is likely to go up, not down, as Medicaid expands; and 4) North Carolinians will end up paying higher state taxes or receiving fewer educational services in the long run, as the extravagant promise of near-complete federal funding of Medicaid expansion gives way to fiscal reality.

Progressive Democrats reject several of these premises. They argue, for instance, that a Medicare-for-All plan can be financed merely by taxing the super-rich, so average folks won’t get taxed more. Their math is faulty and their assumptions are dubious.

Consider the recent proposal to slap a 70 percent federal tax rate on income in excess of $10 million. The Tax Foundation recently estimated that such a marginal tax rate would raise about $300 billion over 10 years under the most favorable of assumptions, and would actually cost the federal government $64 billion over 10 years if one assumes that rich people will hire smart accountants, lawyers, and advisors to restructure their capital-gains realizations and otherwise shelter investment income from confiscatory tax rates.

Even the Panglossian number, $300 billion, would fall far, far short of paying for some sweeping new health program. It would only modestly reduce the projected deficits already baked into the federal cake.

In 2016, Donald Trump won the presidency despite the fact that he was deemed unqualified, unprincipled, and untrustworthy by a solid majority of Americans. Why? Because he was running against Hillary Clinton, about whom a similar share of voters had pretty much the same unflattering view. Both candidates lost support from voters who had previously voted the other way. Trump’s losses were disproportionately in places where he was going to lose anyway (e.g. California) or going to win anyway (e.g. Texas). But Clinton’s losses were disproportionately in Midwestern battlegrounds, producing a defeat in the Electoral College.

In the 2020 cycle, Trump and the GOP again face strong headwinds. But elections are comparisons, not plebiscites. If the Democratic Party makes a sharp left turn, on health care or other issues, it will lose winnable races. Republicans will gladly pocket those victories.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.

Categories: Public Policy

School choice gets personal

Mon, 2019-01-21 01:57

Happy National School Choice Week!

Today at noon, the John Locke Foundation will host Mike Long, President of Parents For Educational Freedom in NC, to discuss the quest to empower families in North Carolina with the freedom to choose an education that best meets the needs of their child.  Rallies in Raleigh, Wilmington, and Fayetteville are among the thousands of National School Choice Week events planned by schools, communities, and organizations across the country.

National School Choice Week takes on a special significance for me this year.  The charter school that my wife and I co-founded, Carolina Charter Academy, will open its doors in August.  It is one thing to talk about school choice as a policy, concept, or an ideal.  I have done so for many years.  It’s quite another to interact with hundreds of parents who are desperate for educational options for their children.

Families who are interested in Carolina Charter Academy (or any charter school for that matter) are not shy about asking questions. As one of two volunteers who manage communications for the school, I am pleased to have the opportunity to answer them.  Corresponding with parents offers a unique insight into the various considerations that families must consider when selecting a school for their children.

We often receive questions about basic instructional and operational concerns, such as grade levels, class size, school hours, and calendar. It’s clear from the questions and comments we receive that parents want school uniforms, a technology policy that minimizes screen time, particularly for younger children, and physical education.  Families with special needs children ask about physical and educational accommodations, which charter schools are obligated to provide.  Despite claims that transportation and food service are focal concerns for parents, those who are interested in our school rarely ask about them.  If the lottery is kind enough to allow their children to attend the school, then school leaders will help families find a way to transport and feed them.

We even had a parent ask if it’s possible to secure a spot for her infant.  As much as we appreciated her enthusiasm, we were unable to accommodate the request.

Without a doubt, one of the most common questions deals with the cost to attend the school.  Too many families remain unaware that charter schools are tuition-free public schools, and I fear that it may deter them from considering a charter school for their children.  More broadly, it is indicative of the need for charter school advocates to expand their education and outreach efforts.  North Carolina charter schools may enroll nearly 110,000 students in 184 schools across the state, but the concept is still foreign to many families.

The most satisfying messages come from parents who are grateful that we are locating a charter school in a community where few educational options exist.  The following comments have been passed along to Carolina Charter Academy via email and Facebook:

  • Prayers that my girls will be able to have a chance at such an awesome opportunity.
  • We are hopeful that our daughter…can be lucky enough to join Carolina Charter Academy; and she will be able to reach her academic potential with support from both home and school.
  • I’d really love for my girls to be able to attend this school!
  • So excited for this!! I’m praying my two get in
  • Excited as well!! Praying for mine to have this wonderful opportunity!!
  • And yes, this area has needed school choice for the 11 years I’ve lived here! I hope this is just the beginning!
  • Looking forward to many more posts about y’all’s school.

Prayer.  Hope.  Potential.  Excitement.  Opportunity.  The Carolina Charter Academy board of directors, our partner TeamCFA, the town of Angier, and many others who have helped us along the way do not take these sentiments for granted.

Dr. Terry Stoops is vice president for research and director of education studies at the John Locke Foundation.

Categories: Public Policy

Add craft brewers — and beer drinkers — to list of people affected by government shutdown

Fri, 2019-01-18 04:00

Much of the media coverage of the continuing government shutdown has focused on stories of federal workers who aren’t getting paid. Stories about irregular inspections of our food and longer, slower lines at airports.

Expect more of the same.

But some things we enjoy — workers in the private and federal sectors alike — and things that make our lives better are affected, too. Things such as zoos, museums, and national parks.

Things such as beer.

The shutdown is affecting craft brewers, of which North Carolina has many. The shutdown, as the Associated Press reported, has put a hold on new releases, prevented new breweries from opening, and stopped shipments of some beer across state lines.

The partial shutdown halted operations at the federal agency that regulates alcohol production and distribution, the AP says, meaning government employees can’t issue the necessary permits.

The shutdown, which began Dec. 22, hurts craft brewers who offer wider varieties of beer and seasonal selections — in smaller batches. The biggest brewers are largely unaffected because they already have government approval for their top national brands.

“I’ve been joking with people that if you’re going to want a new beer coming out pretty soon, you’re going to have to drink your brother-in-law’s home brew,” said Russ Klisch, founder and president of Lakefront Brewery in Milwaukee, told the AP.

At Lakefront, the release of a new beer has been postponed because the Alcohol and Tobacco Tax and Trade Bureau is not open to approve labels for the bottles and cans. The brewery can sell beer in Wisconsin, but sales in other states require federally approved labels.

The TTB holds holds federal regulatory control, including tax oversight, over alcohol and tobacco.

The bureau, while still performing some functions, is effectively closed.

“TTB,” the site says, “will suspend all non-excepted TTB operations, and no personnel will be available to respond to any inquiries, including emails, telephone calls, facsimiles, or other communications.”

It is, however, accepting payments and returns for excise taxes.

This week, The Hill reported, a Washington, D.C., brewery sued the acting U.S. attorney general over its inability to sell labeled beer during the shutdown.

In the lawsuit, the brewer, Atlas Brew Works, argues the shutdown has affected its ability to sell labeled beer, and this represents a violation of the First Amendment.

“The brewer says in the lawsuit that the [TTB] approved labels for cans of a beer called The Precious One. But labels for kegs of the beverage did not receive an approval before the shutdown and shipping them outside of the D.C. area would violate federal law.”

We’re not taking sides or assigning blame. But, the reality is, the government is heavily invested in regulating alcohol, and the details of the rules, codes, and laws are, at best, intricate. At worst, they’re twisted and convoluted.

North Carolina has some 300 breweries and brew pubs, the N.C. Craft Brewers Guild says. So far, the state’s brewers have so far rumbled just a little about the consequences of the federal shutdown. Expect them to get louder as the shutdown drags on.

“Anybody distributing beers outside North Carolina is going to be affected,” says Kristie Nystedt, president and CEO of Raleigh Brewing Co.

Sister companies Atlantic Brew Supply and ABC Commercial provide supplies to home brewers and brewing equipment to brewers, with clients throughout the U.S. and beyond. Nystedt said ABS is moving equipment and helping brewers to get up and running. But, without TTB approval, upstart brewers can’t hit “go.”

Nystedt’s company, she says, is — and has been — dealing with crushing tariffs on steel.

“That has the largest impact on our business,” she said of the tariffs. “Things will change, for sure … but hopefully they’ll change sooner rather than later.”

 

 

Categories: Public Policy

Party should explore policies that bring people to the polls  

Thu, 2019-01-17 01:00

North Carolina now has its second voter identification law. A federal court voided the first because it would not consider forms of ID disproportionately used by minorities, such as cards or documents given to government employees, students, and people on public assistance.  In this past November’s referendum, the state’s residents approved a voter ID amendment to the N.C. Constitution. The General Assembly then swiftly passed into law, overriding a gubernatorial veto, a bill permitting many more forms of identification than the original.  Another successful legal challenge is unlikely, since the Supreme Court has upheld the constitutionality of near-identical statutes in other states. 

North Carolinians have been debating the legitimacy of voter identification for many years. A central feature has been a dispute over the prevalence of election fraud enabled by the lack of an ID requirement. Opponents, generally on the left of the political spectrum, say incidents of illegal voting by people claiming to be others are exceedingly rare. Supporters point to contradictory data and worry such fraud violates the rights of those who vote legitimately. 

Regardless of the true extent of voter impersonation, the events of the past couple of months suggest conservatives who wish to maintain the integrity of American elections are looking in the wrong place. We shouldn’t be so worried about who turns up at the polls, but who doesn’t and yet still casts a vote. “Ballot harvesting,” where individuals drop-off a large number of others’ postal absentee votes, is in vogue.   

It’s a worrying trend. 

California made ballot-harvesting legal in time for the 2018 elections. The postal-vote-only states of Colorado, Oregon, and Washington also permit the practice, but the Golden State has in-person voting, as well. Still, the Democrats who monopolize the state’s politics quickly saw its utility, passing the California Voter’s Choice Act and liberalizing absentee procedures greatly in 2016. Outgoing Republican House Speaker Paul Ryan of Wisconsin noticed the results of ballot harvesting in the weeks following last year’s election. Republicans appeared to be holding on to seven closely contested California congressional seats based upon in-person and early voting tallies. Those leads melted away as dropped-off absentee ballots were counted and all of the GOP candidates ultimately lost, some by astonishing margins given the figures initially reported on election day. 

Democrats are not the only ones who have benefited from this dubious procedure. Last November, at least one political operative appears to have illegally harvested the ballots of voters in Bladen County. There’s significant evidence that McCrae Dowless unduly influenced or tampered with and then delivered the absentee votes of many residents for Republican Mark Harris, who currently leads Democrat Dan McCready in the Ninth Congressional District contest by less than half a percentage point. Some voters Dowless approached were reportedly high on drugs, others handed over signed but blank ballots for which they were paid. Dowless worked for a company that the Harris campaign gave over $400,000. 

These incidents suggest manipulation of absentee voting is a threat graver than voter impersonation.  The 9th District aside, ballot harvesting is something Democrats can do and have done “better.” Labor unions in the public and service sectors and advocacy groups like the Center for Popular Democracy and their state partners have grassroots operations that facilitate access to voters who don’t want to go to the polls or are willing to have others deliver ballots for them. Such citizens, often the elderly, ethnic or racial minorities, and low-income, are the types of voters Democrats have accused Republicans of wanting to disenfranchise with voter ID laws. Their frequent ambivalence about politics and residence in many insular communities with cultures of political corruption make them especially vulnerable to ballot harvesters. We saw in the past how they were exploited by Acorn, the discredited and defunct organization CPD has risen to replace.   

The Democrats own an infrastructure capable of registering voters, canvassing them on their doorsteps, and driving them to the polls. It facilitates direct contact with subjects, communication that, unlike texts, emails, and social media activity, doesn’t leave a lasting record to assist investigators. The GOP has spent decades beefing up its voter database, but it uses the information to inform strategies executed using tools such as robocalls, direct mail, and media advertising. The object is to get registered voters to the polls under their own steam.   

Except in less-affluent rural areas where they can hire shady mercenaries like Dowless, Republicans will always be disadvantaged where ballot harvesting is permitted. In its efforts to protect the integrity of elections, the party should be exploring policies that make people come to the polls to vote, not give them the third degree upon their arrival.   

Andy Taylor is a professor of political science at the School of International and Public Affairs at N.C. State University. He does not speak for the university.

Categories: Public Policy

Straight answers needed on pipeline

Wed, 2019-01-16 01:01

Consider this scenario. A couple of years before a politician is elected to his current job, he signs a lease agreement worth as much as $1 million with a large private company. Later, the CEO of the company gives the politician a large campaign contribution.

After taking office, the politician is confronted with a thorny regulatory issue in which the private company expresses a strong interest. The CEO of the company asks the politician to intervene, to take his side over that of another large business. The politician appears to do so. When subsequently pressed by reporters, the CEO denies asking the politician to intervene, and representatives for the politician deny linking the CEO’s request to the thorny regulatory issue. Both denials conflict with written evidence to the contrary.

Would this scenario concern you? If I told you that the politician in question was North Carolina Gov. Roy Cooper, the “thorny regulatory issue” was a water-quality permit for the Atlantic Coast Pipeline (ACP), and the company in question was Strata Solar, one of the state’s largest renewable-energy firms, would that heighten or lessen your concern?

The answer to the first question should be yes. This story should concern all North Carolinians. While it may be impossible to wall off fully the exercise of a governor’s power from attempted influence by affected parties who may be either political supporters or opponents, the executive branch should at the very least be transparent and forthright.

But when WBTV reporter Nick Ochsner asked Gov. Cooper whether his administration’s action on the pipeline project was tied in any way to Strata Solar’s dispute with one of the utilities constructing the pipeline, Duke Energy, Cooper said that they were “completely separate issues.”

Really? Ochsner pointed out a text that Cooper’s senior adviser, Ken Eudy, sent to the governor’s general counsel, Will McKinney, on the morning of Jan. 2, 2018. That was the day Cooper was originally scheduled to sign a memorandum of understanding with Duke Energy regarding the pipeline permit.

“Not sure we should sign the ACP agreement unless solar deal works,” Eudy texted. “OK,” McKinney replied. “Don’t disagree.” The “solar deal” in question was a demand by Strata and other solar companies that Duke purchase more power from them, even if it required costly new transformers to handle the load.

The Cooper administration is now claiming the Eudy-McKinney exchange was just a discussion about the messaging of the announcements, not evidence of a connection between the two “separate issues.” This claim becomes implausible in light of a memo drafted a few weeks earlier by Cooper’s Department of Environmental Quality. It lists as one of the options for “ACP mitigation” that Duke Energy would “revisit the use of higher-capacity transformers to allow for more renewable-energy projects to access the grid.” That’s precisely the concession the solar industry wanted — and precisely the issue on which Strata CEO Markus Wilhelm, a Cooper donor in 2016, had personally asked the governor to intervene in personal meetings and an email, according to Ochsner’s reporting.

To put this in its larger context, recall two stories previously broken by my colleagues at Carolina Journal. First, the aforementioned “memorandum of understanding” between Cooper and Duke Energy included a $58 million “mitigation fund” that would have been distributed to renewable-energy or economic-development projects selected by the Cooper administration, rather than being received as state revenue and appropriated by the North Carolina General Assembly as required by the state constitution.

The second fact is that two years before his election as governor, Roy Cooper struck a deal with Wilhelm’s Strata Solar to lease property Cooper and his brother Pell owned in Nash County. Based on market data, Strata’s lease payments over 20 years would likely range between $400,000 and $1.12 million.

Now, let me restate my second question from earlier in the column. If you are a Democrat who supports Cooper, can you honestly say these events wouldn’t trouble you if the governor in question were a Republican?

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.

Categories: Public Policy

Chief justice says rule of law requires setting aside preferences, opinions

Tue, 2019-01-15 04:02

If party labels tell the story, Chief Justice Mark Martin could end up on the losing end of a lot of N.C. Supreme Court decisions this year.

Martin’s remarks during the recent celebration of the court’s 200th anniversary suggest he’s looking forward to a different outcome.

“Alexander Hamilton posited that the judiciary is the least dangerous of the three branches of government,” said Martin, citing the famous American founder’s words in the 78th Federalist Papers essay. “As such, he theorized that the general liberty of the people can never be endangered from that quarter.”

But Hamilton, “like any good lawyer,” added a caveat, “that the judiciary remain truly distinct from both the legislature and the executive,” Martin added. “With this warning in mind, he went on to urge that the courts must declare the sense of the law, and if they should be disposed to exercise will instead of judgment, the consequence would equally be the substitution of their pleasure to that of the legislative body.”

In other words, judges should refrain from acting like legislators.

That doesn’t mean judges always will reach the same conclusions. “Each of us, as unique individuals, and thus as unique jurists, may not always administer the principles of Federalist 78 in the same exact way as other judges,” Martin explained. “The key is that we each strive to do so — that we understand that the judicial office is not a political office. Courts are a co-equal branch but with a different function than the legislative and executive branches.”

“We understand that judges should defer to the other branches on issues of policy as long as constitutional standards are observed,” Martin said. “By assuming a seat on this bench, we lay down our preferences and opinions in joint pursuit of upholding the rule of law.”

“If judges do strive in good faith to observe the principles of Federalist 78, then the courts will in fact be the least dangerous branch,” the chief justice added.

Martin aimed his words at a room full of federal and state judges, along with other lawyers and political leaders, including Democratic Gov. Roy Cooper and Republican Lt. Gov. Dan Forest, potential combatants in the 2020 race for the state Executive Mansion.

But one suspects that the chief justice hoped colleagues sitting to his left and right would take special notice. Martin is now one of just two registered Republicans on the seven-member Supreme Court. His newest colleague, Democrat Anita Earls, donned the black robe this month after decades of displaying her “preferences and opinions” as a lawyer pursuing causes for left-of-center advocacy groups like the Southern Coalition for Social Justice.

Democratic partisans have hoped and their Republican counterparts have feared that a new 5-2 Democratic majority on the high court will lead to a substantial shift in court rulings. They predict a shift toward the political left. That outcome is possible. It’s not guaranteed.

With a 4-3 advantage during the past two years, Democratic justices rarely displayed any evidence of a desire to secure partisan outcomes. Democrats and Republicans split along party lines in just three of 155 rulings handed down in 2017 and 2018. (In a fourth instance, the seven justices agreed on the result of a case while splitting along party lines on the legal reasoning.) Only one of those cases, the Cooper v. Berger ruling on a disputed reworking of the state elections board, involved a political dispute.

In other political cases, the court has acted in ways that worked to partisan Democrats’ disadvantage. In March 2018, a unanimous one-sentence order signed by Democratic Justice Michael Morgan denied a request from Cooper. The Democratic governor wanted the high court to block the Republican-led General Assembly from merging state elections and ethics boards. The Supreme Court refused to go along. (A later trial-court order prompted state lawmakers to reverse the merger anyway.)

In September, the court rebuffed Cooper’s attempt to block two proposed constitutional amendments from appearing on the fall election ballot. Without comment and with no sign of dissent, justices followed the standard appellate process and ultimately endorsed the conclusions of a Superior Court panel.

In December, a unanimous court sided with Republican lawmakers in their fight with Cooper over confirmation of the governor’s Cabinet appointments. Martin wrote for the court — including all four Democrats — in reaffirming the GOP-led General Assembly’s “general power to legislate, which it retains as an arm of the people.”

No one can say with certainty how Earls will influence the court’s direction. Martin, for one, signaled during his Jan. 7 remarks that he hopes justices will continue to “lay down our preferences and opinions.”

“It is often quoted that freedom is a fragile thing and is never more than one generation away from extinction,” the chief justice said. “It is not ours by inheritance and must be fought for and defended constantly by each generation. Our freedoms as Americans are secured by the rule of law, by respect for our Constitution, and by each of us doing our part to promote and support the public good.”

“The members of this court are the ultimate guardians of the rule of law in this state,” Martin added. “It is the responsibility of the members of this court — both now and in the future — to heed Hamilton’s charge, to decide each case as the law requires.”

Follow that guidance, and avoid playing partisan political games, and the Supreme Court will give North Carolinians more reasons to celebrate its accomplishments in another 100 years.

Mitch Kokai is senior political analyst for the John Locke Foundation.

Categories: Public Policy

State regulatory reform is working

Mon, 2019-01-14 01:01

Milton Friedman once observed that “nothing is so permanent as a temporary government program.” To be sure, spending bills or regulations initially sold as limited responses to specific conditions often take on a life of their own. They create constituencies that receive funds or protection from the program and thus have a strong interest in converting the temporary into the permanent.

But these constituencies need not always win. Citizens who desire to control the size and scope of government have some tools at their disposal to defeat the special interests. Some are constitutional, such as spending limitations and referendum requirements for public debt. Others are statutory.

A good example of the latter is North Carolina’s regulatory-sunset law. Enacted in 2013, it subjects every rule on the books to a 10-year lifespan. If the administrative agency responsible for the rule fails to review the regulation within the time allotted, or concludes that its costs exceed any continuing benefits, the regulation goes away.

On the other hand, if the agency concludes that the rule remains relevant and cost-beneficial, it stays in force. If such a rule has attracted public comments over the preceding two years, then it must be go back through the regulatory process for re-adoption.

As of early 2018, some 13,500 rules had been subjected to periodic review by state agencies. Most, 62 percent, were kept in place unchanged. Regulators deemed 26 percent to require a re-adoption process. The remaining 12 percent, about 1,600 outmoded rules, went “poof.”

While policies enacted by the North Carolina General Assembly on taxes, spending, education, and election laws may have attracted more attention, regulatory reform may well be the most important legacy of the state’s conservative governance since 2011. There have been meaningful changes in specific rules or regulatory procedure every single year.

Unfortunately, while Friedman’s observation turns out not to apply to every government program, the effects of special-interest pleading and bureaucratic torpidity remain powerful. Despite the efforts of some state lawmakers and activists, North Carolina has yet to make much headway on occupational licensing, which artificially constricts labor markets and entrepreneurship, and the certificate-of-need law, which artificially constricts consumer choice and competition in medical services.

I hope that state lawmakers return to these two specific regulatory matters, at least, during the 2019 session of the General Assembly. But they should also consider building on the periodic-review-and-sunset system they created in 2013 with more broad-based reforms to North Carolina’s regulatory process.

My John Locke Foundation colleague Jon Sanders has some suggestions along these lines. For example, he recommends North Carolina add a “regulatory throttle” — a requirement that if the estimated costs of proposed state regulations exceed a certain threshold, executive agencies can’t issue them on their own. A vote of the General Assembly would be required.

Sanders also points out that North Carolina is one of only six states lacking formal protections of small business in regulatory proceedings. Agencies should be encouraged to “make common-sense adjustments to small businesses’ regulatory burdens, such as compliance and reporting requirements,” he writes, so small firms aren’t disadvantaged in competition with large companies that can afford teams of specialized compliance officers and attorneys.

State regulations certainly can be necessary to protect public health and safety. When households or businesses act in ways that damage the lives, liberty, and property of others, lawsuits by the affected parties are not always a feasible or sufficient remedy. Provided the health or safety benefits exceed the cost of the rule, government should respond with properly designed regulations.

But as Friedman observed long ago, and everyday experience confirms, those who administer government programs tend to act in ways to ensure the continued existence of those programs. That doesn’t make them villains. It makes them human. Inertia, familiarity, and self-interest influence their behavior, just as they affect us all.

That’s why we need procedural and constitution safeguards against imprudent expenditures, excessive public debts, and perpetual regulations. These policies serve the public interest by maximizing the public’s freedom.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.

Categories: Public Policy

One way to draw the maps: Just follow the rules 

Fri, 2019-01-11 04:00

Rules are important. Whether it’s a sporting event, a corporate meeting or a board game, rules set the parameters of the interaction. Without rules there’s confusion, uncertainty, ambiguity with participants jockeying for an advantage.  

Nowhere are rules as important as in apportioning districts to ensure fair and equal representation in government. Our state constitution lays out who draws the maps and the guidelines. Even so, nowhere has there been as much controversy and litigation over redistricting than in North Carolina. Historically, the party in control of the General Assembly following the national census uses redistricting to give itself an electoral advantage. This has resulted in many lawsuits for decades. The courts have become rule arbitrators. 

In 2002, the N.C. Supreme Court handed down a historic redistricting decision in Stephenson v. Bartlett, throwing out the gerrymandered maps drawn by Democrats who controlled the General Assembly after the 2000 census. The court determined what the constitution said, and what it didn’t — clarifying the rules for redistricting. 

The N.C. Constitution under Article II empowers the General Assembly, after each decennial consensus as ordered by Congress, to revise and apportion districts. 

Article II, Sections 3 and 5, lay out four requirements that apply to drawing the districts: 

  1. Each state senator and representative represent as nearly as possible an equal number of inhabitants, total in state divided by 50 for Senate district; 120 for House seats. 
  1. Each district must consist of contiguous territory. 
  1. Counties must be kept whole in the formation of districts. 
  1. Once established, the districts remain the same until the next national census is taken each decade. 

Even with these constitutional rules in place, there was enough wiggle room and self-interested intent that Republicans sued Democrats for gaming the system to ensure an advantage in elections. The case is Stephenson v. Bartlett 355 N.C.354, 358-60, 562 SE2nd 377, 381-83 (2002), also known as Stephenson 1. This is the state Supreme Court decision that litigation over the past 16 years has relied on. And that Democrats have sued Republicans over for their alleged efforts in gaming the system. 

Stephenson 1 lays out the fundamental principles in the state’s role in redistricting and establishes the N.C. Supreme Court as the final word on what is constitutional and what isn’t. The court laid out nine clarifying rules that “must be present in any constitutionally valid redistricting plan.” 

  • To comply with federal law, voting right districts have to be drawn first and be consistent with federal law, must not have a retrogressive effect on minority voters, and keep counties whole as much as possible. 
  • To comply with one-man-one-vote principal, population numbers can deviate no more than 5 percent of the ideal number based on consensus count. 
  • Keep counties whole in non-voting rights districts 
  • In non-voting rights districts whose population numbers warrant two or more districts, each district will be single-member districts. 
  • When population warrants combining counties for a cluster, group the minimum number of whole contiguous counties to form one compact district. 
  • The whole county provision must be enforced to the maximum extent possible, with the smallest number of counties per district. 
  • Communities of interest should be considered. 
  • No multi-member districts, unless there’s a compelling governmental interest. 
  • No plan can deviate from these rules unless it’s necessary to comply with federal law.  

Subsequent cases have returned to and insisted on strict compliance with the Stephenson 1 criteria over the years, mandating that in “creating legislative district, counties shall not be divided except to the extent necessary to comply with federal law, including the one-person, one vote principle and the voting rights act.” Districts must be compact, contiguous and keep communities of interest intact. 

Even with the Stephenson 1 criteria clearly laid out, litigation over redistricting continues. North Carolina has more pending litigation in federal courts than any other state by far, currently with three separate cases challenging the state’s 2016 remedial congressional plan.  Common Cause and the N.C. Democratic Party sued in state court on Nov. 13, 2018, asking that legislative districts be re-drawn for the 2020 election. 

The 2019-20 General Assembly will consider many things — reining in the growth of government, fair taxes, reasonable regulations and investments in education and infrastructure, and likely redistricting for the 2020 elections. Luckily, there’s rules for the latter. Follow the rules, and there’s only one way to draw the maps.  

 

 

 

 

 

 

Categories: Public Policy

Land grabs don’t enhance growth

Wed, 2019-01-09 01:01

Over the past eight years, conservative lawmakers have done much to constrain the excesses, expenses, and abuses of governmental power in North Carolina. They have cut taxes, controlled spending, slashed regulations, and increased the cost-effectiveness of services by introducing more choice and competition.

As the size, scope, and cost of government contracted, freedom expanded. Not only have North Carolinians regained more ability to make their own decisions — a worthy goal in itself — but also the expansion of freedom has made our state a more attractive place to live, work, invest, and create jobs.

In the midst of many accomplishments, however, are some missed opportunities. One of them is North Carolina’s failure to reform eminent domain, the power governments enjoy to condemn and purchase private property for public use.

In the aftermath of the 2005 decision in Kelo v. City of New London case, in which the Supreme Court declared it consistent with the property-rights protections of the U.S. Constitution to permit eminent-domain abuses, most states decided to limit or block their governments from condemning land merely to convey it from one private owner to another, as New London had done with Susette Kelo’s “little pink house.”

Advocates of the practice argue that if a prospective private owner — a real-estate developer, let’s say, or a manufacturer — promises a “higher-value” use that will generate higher property taxes per acre, governments should be able to employ eminent domain to convey the land to the new owner. The general public will benefit from the transaction, they argue, and thus condemnation is a permissible tool to make it happen.

Most Americans disagree with this argument, and for good reason. The Takings Clause of the Fifth Amendment states that “private property” shall not “be taken for public use without just compensation.” The plain meaning of “public use” is, well, a use by the public — the placement of a courthouse, school, or street, for example. The public-use concept has also traditionally been applied to “common carriers,” as well, to private firms that operate infrastructure such as railroads, pipelines, and power lines.

While such public uses of acquired property offer the promise of benefitting the general public, lots of purely private uses generate public benefits, as well. Public use is a subset of public benefit, not a synonym for it. It is, and was intended to be, a restrictive concept. The federal judiciary has decided in its infinite folly to refine the terms broadly, removing the restrictions.

To say that the federal government won’t stop states and localities from abusing the property rights of their citizens is not to preclude other remedies. Some states have enacted statutes to constrain the use of eminent domain. Others have amended their constitutions. The best approach is to do both, as exemplified by the excellent property-rights protections adopted by two of our Southeastern peers, Florida and Virginia.

Former Rep. Skip Stam, R-Wake, and other state lawmakers have repeatedly tried to enact eminent-domain reform in North Carolina, including the placement of a constitutional amendment on the ballot. So far, no dice.

Special-interest lobbies say that our state’s economic competitiveness would suffer if localities and the state were forbidden from using, or at least threatening to use, eminent domain to assemble land parcels for business recruitment or urban redevelopment. Otherwise, they say, lone holdouts who refuse reasonable offers will slow or kill economic development projects with significant public benefits.

This claim is empirically testable, since some states acted more quickly than others to reform eminent domain after Kelo and a few haven’t acted at all. In a recent study for Economic Development Quarterly, Washburn University economist Paul Byrne found that limiting the use of eminent domain produced “no adverse effects in terms of state employment and gross state product.” These results “give credence to critics of eminent domain,” Byrne concluded, “who contend that local governments can achieve their economic development goals without relying on eminent domain to compel property transfers to developers.”

Yes, they can. Let’s reform eminent domain.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.

Categories: Public Policy

Newspaper’s loss offers cautionary tale to activists, advocates

Tue, 2019-01-08 04:02

Journalists aren’t the only ones who should learn a lesson from the Raleigh News & Observer’s recent loss in a multimillion-dollar libel case.

The case offers a warning to other reporters, producers, pundits, activists, and advocates: Be careful not to let your favorite “narrative” blind you as you pursue the truth.

A unanimous three-judge panel of the N.C. Court of Appeals affirmed last month a trial court’s November 2016 ruling against the N&O. The appellate judges’ decision followed years of legal battle connected with a 2010 newspaper series, “Agent’s Secret.” It focused on alleged abuses within the State Bureau of Investigation. Those abuses reportedly led to wrongful criminal convictions.

A key target of that series, SBI firearms analyst Beth Desmond, argued in court that the N&O and reporter Mandy Locke had illegally defamed her.

Because Desmond worked for a government agency, she had to prove that the newspaper did more than commit an honest mistake or engage in careless or sloppy reporting. Legal precedent forced Desmond to prove that the newspaper and Locke perpetrated “actual malice” in maligning her character.

A jury agreed that six separate statements in the series met that high bar. Jurors awarded Desmond more than $9 million, including more than $7.5 million in punitive damages.

To its credit, the News & Observer reported the Appeals Court decision in a prominently placed, 1,100-word article the morning after the ruling. Yet the newspaper’s report omitted some of the most disturbing evidence.

Twenty-two pages into her 56-page opinion in the case, Judge Donna Stroud notes that the reporter Locke first became aware of Desmond’s firearms analysis through a defense attorney, David Sutton. After unsuccessfully seeking a mistrial for a murder defendant, based in part on criticism of Desmond’s work, Sutton disparaged Desmond in communications with the reporter.

As Locke “began to put the story together,” her first draft included a quote from Sutton, the appellate opinion notes. Desmond “just made it up. She made it up because she could, and prosecutors needed her to. It’s just that simple,” according to Locke’s notes.

Desmond later argued in court that Sutton’s quote appeared to have motivated much of Locke’s work on the story. “Plaintiff’s theory was that defendant Locke had decided at this point ‘That’s what she wanted the story to be,’” the court opinion states, “but what she wanted the story to be was simply a contention from a defense attorney — not an impartial source and not an expert.”

“And this accusation — that plaintiff ‘just made it up’ — was perhaps the worst accusation possible against any witness, but particularly an agent of the SBI laboratory whose credibility is paramount when testifying regarding evidence in a murder trial.”

If the accusation were true, Desmond would have “fabricated evidence,” “perjured herself,” and “intentionally or recklessly” helped secure a wrongful conviction, the court opinion continues, “with the logical corollary that the actual murderer would remain free to commit more crimes.”

To write her story, Locke “needed experts in firearms analysis to substantiate Sutton’s claim.” Over the next dozen pages of the court ruling, Stroud documents how Locke tailored various experts’ responses to her questions so they would fit her pre-existing narrative.

Stroud and her fellow appellate judges reached a damning conclusion: “Defendant Locke’s research for the series did not support the proposed premise but ultimately showed that none of the experts defendant Locke consulted would give any opinion based upon the photographs [of bullet fragments], and none of the experts had any personal knowledge of plaintiff’s work and could give any opinion about it.”

Yet the N&O moved forward with the story, even though Locke knew an independent firearm analysis was under way, “and if she waited for the analysis, it was possible that it may confirm that plaintiff’s work was correct, thus eliminating the premise of the entire article.”

The court opinion reminds readers that First Amendment case law gives news outlets “much leeway” in reporting about public figures engaged in matters of public concern. First, there’s the stringent legal standard of “actual malice,” “which is knowledge that the publication was false or a reckless disregard for the truth.” The judges also remind us that reporters enjoy legal protection even when they make reasonable interpretations that turn out to be wrong.

“But there is a limit, and here plaintiff presented substantial and voluminous evidence that defendants exceeded that limit,” the judges conclude.

The N&O and Locke could appeal the decision, but the state Supreme Court faces no obligation to take up a case that secured a unanimous Appeals Court ruling. So the newspaper and Locke could end up paying a substantial price.

The rest of us can learn a lesson for free.

Locke made no mistake when she started looking into alleged misdeeds at the SBI. She made no mistake when she listened to a defense attorney’s concerns about one SBI analyst. She didn’t even make a mistake if she, as the court suggests, adopted that attorney’s accusations as her own theory. That theory helped drive research for her article.

But Locke ran into trouble when conversations with multiple experts failed to back up her theory. She could have adjusted the story — or dropped it — in response to new information. Instead documents linked to the lawsuit suggest Locke twisted the experts’ words to fit her preconceived theory. Evidence “tended to show that the primary objective of defendants was sensationalism rather than truth,” according to the Appeals Court.

Pundits and activists should strive to avoid that type of error. Even if there’s no multimillion-dollar court judgment on the line.

Mitch Kokai is senior political analyst for the John Locke Foundation.

Categories: Public Policy

Get ready for smaller districts

Mon, 2019-01-07 01:01

The average public-school district in the United States enrolls about 3,700 students, according to a recent Governing magazine analysis. In North Carolina, the average school district enrolls more than 12,500 students. Only six other states in the nation exceed North Carolina in this regard (including Hawaii, where all 187,000 students are in a single district).

Although North Carolina politicos and activists normally exhibit a great deal of interest in state education comparisons, most either ignore the fact that we stick out like a sore thumb on school governance or attempt, rather awkwardly, to label it virtue rather than an oddity.

For example, when it comes to the gargantuan districts in Wake (enrolling 159,000 students this school year) and Mecklenburg (146,000), increasing numbers of parents — many residing in suburban communities or hailing from other states where multiple districts per county are the norm — seem skeptical that countywide school governance serves the interests of their children and neighborhoods.

Some are explicitly demanding the creation of smaller, more manageable districts. Others aren’t waiting for policymakers to catch up with their preferences, opting instead for chartered public schools (each of which has its own governance board) or private alternatives if they can swing them.

In the face of these developments, the education establishment offers two defenses: cost and race. Countywide school districts reduce the cost per student for delivering education, the argument goes, while combating re-segregation. Neither argument can withstand close scrutiny, which is why the powers-that-be keep trying to change the subject as quickly as they can.

This strategy isn’t going to work in the long run. It would be wiser to prepare for a future in which North Carolina public schools are organized differently, with multiple districts coexisting in at least a dozen or so of our counties. I believe this future is inevitable.

The efficiency argument for big districts just doesn’t comport with the available evidence. While consolidating sparsely populated rural districts into larger entities probably did exploit economies of scale to reduce operating cost per pupil, there is very little evidence of such benefits when school districts run into the tens of thousands of students.

Moreover, even if construction costs and other expenses are lower at large enrollment scales, the purpose of public schools is to educate students, not merely to house them. While the empirical literature is mixed on the subject of optimal district size, there is a compelling body of evidence suggesting that competition is good for school quality — that the more options families have within a given geographic area, the better those options tend to be.

Debates about competition in education tend to focus on alternatives to public schools, but in this case I’m just talking about having multiple school districts within a metropolitan area rather than just one. One recent study found that, everything else being equal, pupils score lower in states that restrict the number of districts, an effect that “makes school districts less efficient.”

As for race, browbeating recent arrivals from high-scoring states such as Massachusetts (averaging 3,300 students per district) and New Jersey (2,300) for not understanding the need to combat educational disparities by race and income isn’t going to cut it. Disadvantaged students in those states perform very highly by national standards, thank you very much. And even among Southern states, North Carolina’s districts are significantly larger than those in Virginia (9,700), Georgia (9,400), South Carolina (8,800), and Tennessee (7,400).

Here’s a fundamental reality progressives have yet to accept: regardless of how big the district may be, the days of busing larger numbers of kids around according to race- or income-based school assignments are over. Most parents, of all backgrounds, do not support it.

A more constructive approach would be to get ahead of the trend. Subdivide the largest districts thoughtfully, minimizing any disparities, while ensuring that state and local funding formulas send more money to districts with higher rates of poverty or special needs.

Still, I am under no illusions. Prudence is both praiseworthy and rare.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.

Categories: Public Policy

Words matter, and each carries in its meaning a unique gravity — real and perceived

Fri, 2019-01-04 04:00

Throughout my career in journalism, I’ve tried to make it a point to learn something from all each of my editors, even those I often questioned, or even disliked.

One such editor, who falls into that latter category, sometimes made points that were both salient and eloquent.

Words matter, he once said.

Each and every word has its own meaning, though to many the synonymic difference is imperceptible.

Words matter, in meanings specific to situations and to ideas.

Sunday’s sermon, at my church in Cary, reminded me of that editor’s teachings, that words can be as easily divisive as they can harmonious. Today’s political environment offers daily examples, though, again, the outcome typically leans toward the latter.

In the similar vein, a Facebook friend last week posted a question: “For 2019, what’s your ONE word?”

A simple question? Yes. Simple answers? Not so much.

Because each word carries in its meaning a unique gravity, real and perceived.

The year will bring more threats — of lawsuits and retaliation. More political hand-wringing and more ideological spats. More needless insult and rebuke.

Much of this can’t be avoided.

But words matter. They always will. Common, elementary words could mean so much if thoughtfully considered and used as a moral guide.

I’ve looked at that Facebook thread and chosen a few I think are pertinent, especially in a politically tumultuous 2019. No one expounded on their words in the thread, but I wanted to.

I’ve tweaked the narrative with my own words, too, which I think better encompass our polar and tribal political environment. 

Brave: The word, to me, at first conjures images of war and of personal strength while facing sadness and tragedy. “Courage” may be more apt. To remain courageous in all things we do, regardless of our fears and anxieties. To hold fast to ideals and conviction, staying true to our beliefs while thoughtfully and respectfully considering the beliefs and ideas of others. That brings me to the next word.

Respect: Political disagreement and passionate discourse is essential to the health of our republic, but personal insult, spite, and blatant vindictiveness should have no place in that arena. Logic, sound judgment, and persuasive arguments grounded in fact, research and experience should prevail, as opposed to pettiness, meanness, unsubstantiated claims, and unwarranted attacks.

Curiosity: This words plays off the first two. Much of today’s political polarization and reluctance to consider alternate ideas is a general lack of curiosity, a reticence by some to explore disparate ideas and to become more aware, of not only personal convictions but also of the views and opinions of others.

Truthfulness: No explanation needed.

Kindness: This word, which dovetails with “respect,” was my contribution to the group. One can espouse their beliefs while still being cordial and civil. Life, for all of us, isn’t easy. Each day each of us faces a personal struggle. Some of us are grieving, others are anxious — about their jobs, their finances, their children, and on and on. We know something about the lives of our family, friends, colleagues, and neighbors. But not a lot. About strangers, we know nothing.

It’s all a simplistic exercise, but it could be a start. In dangerous world, a world of political antipathy and power mongering, we should choose any path that at least tries to end in civility.

Categories: Public Policy

Solving the trust problem between teachers and parents 

Thu, 2019-01-03 04:00

Teachers and parents, we have a trust problem. Just 36 percent of public school teachers express “complete” or “a lot of” trust in parents, EdChoice’s new “Schooling in America Survey” says. 

What’s eroding trust? One likely culprit: Parental expectations are sky-high. Harried millennial parents want schools to teach skills once considered part of child-rearing. In a new Walton Family Foundation/Echelon Insights survey, millennial parents say schools bear more responsibility than they do not just for academics, but also for teaching kids how to balance a checkbook, set personal goals, build good relationships — even how to change a tire. 

Wow. No teacher has the time or mandate to lead on all that. Teachers assume numerous roles in the classroom. But they aren’t bankers, life coaches, therapists, or mechanics. Nor should parents expect them to act as if they were. 

What’s a first step toward rebuilding relationships? Remember the kids and work to get along. It sounds trite, but optimal outcomes occur when kids are supported by adults working in harmony. Allies on the same side, cooperative teachers and parents can improve everything from academic achievement to conflict resolution, research shows. Of course, trust cuts both ways. But on this, schools should lead. A study from researchers at Ben Gurion University, assessing Israeli schools of choice, found that “parents who feel trusted by the school staff are more inclined to trust and therefore engage in school. This implies that trust, being a component of social capital, is rooted in norms of reciprocity.”  

Where to look for inspiration? Atlanta’s Ron Clark Academy, “a private school with a public mission,” is a model for positive partnership. Founded by teachers, RCA serves 120 mostly low-income students in grades five through eight. The school is small, but its reach is global: RCA has trained 50,000 educators from 50 states and 26 countries; 90 percent are public educators. Academic growth is the stuff of educators’ dreams. Yet RCA’s culture stands out most. Each fall, staff pile into a van, logging 12-hour days to conduct home visits to new families.  

“What we’ve found is that when the parents recognize how dedicated we are to their kids, there’s also a sense of trust that is being established,” says Junior Bernadin, RCA’s dean of Students. 

Parent get-togethers provide input on how to support students. Staff members have even hosted parents in their own homes, says Bernadin. On Parent Day, moms and dads attend school; those failing to suit up for PE class get an F. 

School expectations are clear. Parents are asked to “trust the process,” says Bernadin. Parents sign a contract of obligation, committing to support school policies. They must volunteer 40 hours annually; most give hundreds of hours. During Teacher Appreciation Weeks, parents have catered food, redecorated the school, and brought in massage therapists, says Bernadin. 

What do teachers wish parents knew? “We’re all on the same team. When there are issues, we might not always agree with one another, but we still have the best interests of your child in mind,” says Bernadin, known on campus as the “parent whisperer.” 

Parents should respect teachers’ professional expertise just as they would a doctor or lawyer, says Bernadin. They should ensure communication is effective. Negative or accusatory emails can offend teachers who are working hard to help kids succeed. Conveying concerns is fine, but “the tone in which you have a conversation is really important,” Bernadin adds. 

About those earlier non-academic skills: Schools can help with some. But most are the work of parents — especially the one requiring a lug wrench. 

Kristen Blair is a Chapel Hill-based education writer. 

 

Categories: Public Policy

Democratic govs get failing grades

Wed, 2019-01-02 01:01

Want yet more one signal that American politics has changed markedly in the past decade? Look no further than the annual report card issued by the Cato Institute to grade the fiscal performance of the nation’s state governors.

Cato is a libertarian think tank, so on economic matters you might expect Republican politicians to be more in line with Cato’s policy preferences than Democrats would be (the situation might be different on social issues). And, generally speaking, you’d be right.

But even just 10 years ago, there were quite a few Democratic officeholders whose views on fiscal policy were moderate-to-conservative. Their budgets were constructed to prioritize education and other core programs without committing to reckless spending growth. Some Democratic governors proposed tax cuts to enhance their state’s economic competitiveness while giving residents more freedom to decide for themselves what to do with their money.

Employing both revenue and expenditure variables, Cato analyst Chris Edwards assigned letter grades to each governor. Of the 17 who received As or Bs in 2008, six were Democrats: governors Joe Manchin of West Virginia, Ted Strickland of Ohio, Bill Richardson of New Mexico, Brad Henry of Oklahoma, John Baldacci of Maine, and Phil Bredesen of Tennessee.

In the 2018 report card, however, the 16 governors earning above-average grades were all Republicans, including five with As: Susana Martinez of New Mexico, Henry McMaster of South Carolina, Doug Burgum of North Dakota, Paul LePage of Maine, and Greg Abbott of Texas. Only one Democrat, Steve Bullock of Montana, managed even a C.

Our own Roy Cooper, alas, was one of the six Democrats and two Republicans who received failing grades on the 2018 report card. Cooper deserved it, in my opinion, for the utterly irresponsible budget plan he proposed in 2018. (In fairness, you should know that I also thought the Republican legislature’s 2018-19 budget plan raised spending too much.)

Quite apart from whether you agree with the fiscal-policy preferences that the Cato Institute and I share, however, think for a moment about what these two snapshots in time reveal about the increasing polarization of American politics.

Although political parties can disappoint their hardest-core supporters by going too slowly or straying from their ideological moorings on occasion, it is essential to recognize that the Democratic Party is much more consistently liberal than it used to be, while the Republican Party is much more consistently conservative.

These terms mean different things to different people, I grant you. The term “liberal” has become an umbrella term that describes an alliance of progressives (left on economics and social policy) and communitarians (left on economics but not on social policy) while the term “conservative,” in its modern context, describes an alliance of traditionalists (right on economics and social policy) and libertarians (who often dissent on the latter).

Something like the same coalitions were evident in 2008. But the partisan umbrellas were open a bit wider, capturing a more diverse assortment. On the Democratic side, Joe Manchin is now a U.S. senator and Phil Bredesen tried to become one in 2018. But few up-and-coming Democrats are following in their footsteps.

For one thing, the Democratic politicians who inspire party activists — and who dominate the field of presidential candidates for 2020 — tend to be in Congress, not leading executive branches in state capitals. And to the extent Democratic governors are helping define the party’s current brand, they are fiscal liberals such as Jerry Brown of California (who got a D on the Cato report card), Mark Dayton of Minnesota (D), Tom Wolf of Pennsylvania (F), and Jay Inslee of Washington (F).

The events of the past two years have presented Republicans with big political challenges, no question about it. But to the extent Democrats cede both right and center to Republicans when it comes to economics, both in Washington and in state capitals, they are making a long-term bet that the public wants vastly more government and vastly more taxes to pay for it. Seems risky.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.

Categories: Public Policy

Evidence ought to shape policy

Mon, 2018-12-31 01:01

As dysfunctional as Congress has become, it does manage to enact some useful bills. One of them, the Evidence-Based Policymaking Act of 2018, was championed by outgoing Republican House Speaker Paul Ryan of Wisconsin and Sen. Patty Murray, D-Washington. It promotes data-sharing and policy evaluation throughout the federal government.

As popular as the concept is across the spectrum, however, we should all have realistic expectations about its application. While few question the value of basing public policy on careful study of solid evidence, human nature is not easily eluded.

It’s easy to endorse evidence-based policymaking when you assume it will reinforce your existing beliefs, and to assume that your adversaries are the ones whose policies will fail the evidentiary test. To varying degrees, we are all prone to such cognitive temptations as selection bias (noticing and remembering information that fits our preconceived notions or personal interests) and confirmation bias (viewing favorable evidence in the best possible light and contrary evidence in the worst).

While it would be reassuring to assume otherwise, it’s demonstrably clear that motivated reasoning is rampant throughout the political discourse. That doesn’t mean we can’t have informed debates. And it doesn’t mean minds are never changed by solid evidence presented persuasively. But there is nothing automatic about it, because human beings are not automatons.

Over the years, I’ve spotlighted numerous examples of motivated reasoning in action, of what Manhattan Institute fellow Oren Cass has termed “policy-based evidence making.” Although I am politically conservative, I don’t limit my examples to those in which progressives are the transgressors.

For example, conservative policymakers are right to observe that the majority of peer-reviewed academic studies show a statistically significant negative relationship between taxes and economic growth. All other things being equal, economies subjected to higher tax rates tend to grow more slowly than those featuring lower tax rates.

However, conservatives often exaggerate the finding far beyond the preponderance of the evidence. Some assert that tax cuts pay for themselves in the short run by stimulating so much growth that governments collect more revenue at the lower rates than they would have at the higher ones. This is theoretically possible, if the initial tax burden is high enough, but rare. It essentially never happens at the state and local level.

At least issues of tax policy are a bit cloudy and debatable. That’s not the case with regard to one of the most egregious errors made by progressives in North Carolina and other states: defending pay supplements for teachers who obtain graduate degrees.

The evidence on this question is overwhelming: teachers with advanced degrees are not more effective, on average, than teachers with only undergraduate degrees.

Here’s what I mean by overwhelming. By my count, there have been more than 100 peer-reviewed studies published since 1990 testing the relationship between advanced degrees and teacher effectiveness. More than 80 percent found no link. Of the handful of studies finding a positive association, the graduate degree is question was typically in science or math, which represent a very small percentage of the graduate degrees for which teachers have received pay bumps.

If we were all truly committed to allowing evidence to guide our policy decisions, the decision of the North Carolina General Assembly several years ago to eliminate any new supplements for graduate degrees would be widely acclaimed. Instead, Democratic lawmakers, candidates, and activists — not to mention some of the policy’s key beneficiaries, education schools — have continued to demand the policy’s reinstatement.

It is certainly the case that no single study or small group of studies, no matter how well designed, can settle any longstanding dispute. That’s not a realistic model for employing evidence in policymaking. Data do not actually “speak for themselves.” They require interpretation. Few interpreters are free from bias.

The best we can do, I suspect, is to ensure that there is a diversity of interpretation in public policymaking — and to commit to reading all of it, not just results that can be expected to confirm our brilliance.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.

Categories: Public Policy

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