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North Carolina: Economy will affect new governor’s priorities
By Hastings Wyman
Southern Political Report
May 11, 2008 — “This is not Pennsylvania. This is not Ohio,” says Ferrel Guillory, Director of the University of North Carolina’s Program on Public Life, commenting on the state of the Tar Heel economy. “The state took a hit earlier this decade, and continues to take a hit, in industrial restructuring. We lost jobs in textiles, furniture and tobacco. But the economy is more diversified, with new jobs in research and such, as well as some shift into low-wage service jobs.” A Tar Heel journalist agrees, noting the state is “a little better situated than we were seven years ago,” and less dependent on industrial jobs. While things could be worse, not everything is hunky-dory. North Carolina’s shaky but not poor economic status is reflected in recent statistics. The state’s unemployment rate in March was 5.1%, only a shade higher than the national average of 5.0%, though the employment rate does rank a low 35th among the states. And the state’s tax returns in April-- while they exceeded projections by $90 million -- are down compared to the last two years. For now, both payroll tax revenues and business taxes are ahead of expectations. But the growth in sales tax revenues, which reflect retail activity, was 2.5% for the past ten months, compared with an historic average of 5.7%. “We’re expecting the economy to slow down further,” says the journalist. Charles Prysby, political scientist at UNC-Greensboro, points out that “the budget surplus is larger than anticipated, though it is still smaller than we’ve typically had.” “We’re not going to have much money,” summed up Senate leader Marc Basnight (D) in the Asheville Citizen-Times last week. So when the legislature goes into session on Tuesday to take up out-going Gov. Mike Easley’s 2009 budget, lawmakers will face some budget strictures. So what does this mean for the new governor, be it Democrat Beverly Perdue or Republican Pat McCrory, when she or he takes office in January 2009? If the economy continues to decline, as most observers expect, then money for new programs -- such as a substantial infusion of cash into education -- will be harder to come by. This will make it harder for Perdue, who advocates a more hands-on role for the government in the state’s problems. A moderate Democrat and a former school teacher, she is committed to using the resources of the government to make substantial improvements in education, including raising teacher pay to the national average, providing tuition-free access to community colleges and making sure that “lack of family income will not be a barrier to … earning a college degree” for qualified students. “Every governor since Terry Sanford (D) (1961-‘65) wants to be known as the education governor,” says Guillory. Perdue is firmly in that tradition. Perdue also favors making healthcare insurance more affordable and advocates a more activist approach to environmental protection, including water conservation programs. If the economy continues to slacken and state revenues decline further, Perdue will have to figure out a politically palatable tax increase, or scale back her spending priorities. If, however, the economy proves stronger than has been forecast -- and there are some positive signs in that direction -- she will have more resources at her disposable. In any case, the Tar Heel Democratic Party’s traditionally strong ties to the state’s business community could help her gain broad-based support for a budget that will help her fulfill at least some of her campaign promises. McCrory, while not cut out of the same “cut taxes at all cost” mold of many Republicans, has advocated lower taxes, a promise he will find it extremely difficult to keep if the economy gets worse. In general, however, he favors less reliance on government spending, so he might have an easier time coming up with an acceptable budget during hard times. For example, he opposes Perdue’s free-tuition at community colleges proposal as too costly. He favors giving cities and counties more power to work on problems, rather than having all the solutions originate in the state government. And on education, while he advocates improving public education, he also favors removing the state cap on the number of charter schools allowed in the state. In one area, however, McCrory may appeal to North Carolina’s pro-active government folks. As the state has grown and urbanized, highways have not kept up. As mayor of Charlotte, McCrory advocated a sales tax hike to finance the city’s light-rail system, which opened last year. Thus, he has good credentials to address this pressing problem. However, progress in this vital area, as McCrory well knows, does not come cheap. McCrory, unlike Perdue, has not been part of the Raleigh establishment, but cut his political and policy teeth as mayor of the state’s largest city. He “is campaigning as the outsider, campaigning against the state capital,” says the journalist. In his calls for a “new culture” in state government, he will be aided by a number of high-profile Democratic scandals. Last year House Speaker Jim Black (D) was convicted on corruption charges and is now serving time in federal prison. And this year, state Rep. Thomas Wright (D), an ally of Black, was expelled from the House, later convicted of fraud, and last month began serving a six-to-eight year prison sentence. Finally, in a nod to the GOP’s conservative base, McCrory has already aired a television spot advocating stronger strictures on illegal immigrants, and on his website, touts his anti-crime policies. Policies on these issues are not heavily dependent on state revenues. But overall, sums up the journalist, Perdue is “more for fine tuning the big machine of government, where [McCrory’s] kind of ‘move it the hell out of the way.’ ” |
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