A Candidate's Guide to Key Issues
in North Carolina Public Policy

The Entire Policy Report, Agenda 2014, is available for download as a 7.4MB Adobe Acrobat file.
The free Adobe Acrobat Reader is required to view or print this document.


Introduction

By Roy Cordato, John Locke Foundation Vice President for Research
Every two years since 1996, coinciding with North Carolina's races for the General Assembly, the John Locke Foundation has published a revised edition of Agenda, our public policy guide for candidates and voters. Typically as we enter the campaign season, candidates for public office in North Carolina are faced with a daunting task: to develop informed positions on dozens of public policy issues. In the pages of Agenda 2014 we provide a concise and easily digestible guide covering a wide range of specific issues, from taxes and spending to energy policy and education. More »

Budget, Taxation, and the Economy

Tax Reform
For many years it has been recognized that North Carolina's tax system has been in need of a major overhaul. The system has been a model of hodgepodge tax policy with high marginal rates on personal and corporate incomes and lots of exemptions carved out for the favored few. This has led to a tax system that penalizes investment, entrepreneurship, economic growth, and therefore job creation. More »

Economic Growth
For decades North Carolina has been pursuing what is called "economic development policy." Indeed the Department of Commerce is completely dedicated to this concept. As is emphasized on the DOC website, "The NC Department of Commerce is the state's leading economic-development agency, working with local, regional, national and international companies." And how is this accomplished? According to the DOC, it is "dedicated to giving companies the assistance and resources necessary to meet their unique business needs." Since these resources are not manna from heaven, what the DOC is in reality doing is using the state's taxing authority to transfer resources from the vast majority of North Carolina taxpayers to businesses that the agency determines are worthy of its largesse. More »

Highways and Interstates
It's no secret that North Carolina has the highest gasoline tax in the region. Nevertheless, states differ in how they fund their transportation systems, including varying levels of gas taxes, car taxes, tolls, other charges, and some proportions of property and sales taxes. All those considered, North Carolina's full transportation tax burden per person in 2010 (the most recent data) was below the national average — and below those of regional competitors Virginia and Florida. More »

Federal Aid Dependency
Every state in the nation relies on the federal government for some portion of its budget. Over the last decade, many states have developed a higher reliance on federal funds than they have had historically, and North Carolina is no exception. For the fiscal year ending June 30, 2013, North Carolina spent $20.8 billion in federal awards, which is a 47 percent increase in inflation-adjusted dollars over the last ten years. More »

State Revenue and Spending
The state must generate revenue to pay for government-provided goods and services. The main sources of revenue for North Carolina's government are the personal income tax and the sales tax, amounting to more than 80 percent of the state's tax revenue. The state's major spending priorities have been education and health and human services, with these two categories of expenditure making up 62 percent of last fiscal year's budget. Because the state constitution mandates a balanced budget, the tax burden is a function of spending levels. A lower tax burden depends ultimately on lower spending More »

TABOR — State Spending Restraint
A Taxpayer Bill of Rights, better known as a TABOR, is an amendment to a state's constitution that limits the state's spending. A TABOR limits increases in General Fund spending to a rate of inflation and population growth, in addition to any voter approved changes each year. The overall goal of TABOR is to keep per capita spending constant while allowing for natural growth associated with population and inflation. More »

State Pensions and Other Benefit Plans
The State of North Carolina is the largest employer in the state with nearly 325,000 full-time-equivalent positions. Like most large employers, the State offers its employees a benefits package that includes a retirement plan, health care coverage, and a number of non-monetary benefits. All told, the state adds several thousands of dollars in benefits to the base pay for each of its employees. More »

Film Incentives
The state first got involved in film incentives in 2005. Its original program was greatly increased after 2009 when the governor and state officials were embarrassed to be outbid by Georgia's revamped film incentive for the Miley Cyrus feature "The Last Song." North Carolina's film tax credit program is currently slated to sunset at the end of 2014. More »


Education

Charter Schools
Charter schools are tuition-free public schools that have more freedom than district-run public schools but are required to meet certain state regulations. For example, charter schools must participate in the accountability program, the ABCs of Public Education. In 1996, the N.C. General Assembly passed charter school legislation. Eighteen years later, charter schools are among the most popular and successful schools in the state. More »

Child Care
The Subsidized Child Care Program provides vouchers to eligible families for child care services offered in any number of settings — licensed child care centers, family child care homes, religious-sponsored programs, and informal arrangements such as care by a relative or care in the child's home. More »

Childhood Health and Nutrition
As childhood obesity rates continue to rise, the debate over the National School Lunch Program and the sale of junk food in and around public schools has intensified. While elected officials continue their well-intentioned efforts to promote healthy lifestyles, research suggests that new and stricter regulations will do little to make children healthier. More »

Class Size
Support for reducing class size usually cuts across political and ideological divides, garnering accolades from legislators, policymakers, and parents alike. Nevertheless, the relationship between class size and student achievement has been the subject of scholarly debate for decades. While several large-scale studies suggest that students benefit from class-size reductions, a number of high-quality studies conclude that smaller classes are not the "magic bullet" that many believe them to be. More »

Common Core State Standards
Common Core State Standards are mathematics and English Language Arts standards for students in kindergarten through twelfth-grade developed by three Washington, D.C.-based organizations — The National Governors Association, the Council of Chief State School Officers, and Achieve, Inc. The Seattle, Wash.-based Bill and Melinda Gates Foundation also funded a significant portion of the project. More »

Curricula
Curricula are not standards; standards are not curricula. In the debate over the Common Core State Standards, definitions of key terms, particularly "standards" and "curriculum," vary considerably. For some, standards and curricula are one and the same. For others, standards are a framework by which curricular content is developed. More »

Education and the Workforce
Do North Carolinians need four-year degrees to be successful? According to U.S. Bureau of Labor Statistics (BLS) projections, those who decide to enter the workforce without a four-year degree may have more employment opportunities than those with one. BLS analysts predict that jobs requiring a high school diploma or less will abound in the next decade. More »

Federal Education Policy
Before passage of the Elementary and Secondary Education Act (ESEA) in 1965, the United States Congress generally adhered to the principle that the federal government had no authority to undertake functions and duties not enumerated in the U.S. Constitution. Because the power to fund or regulate public education is not expressly stated in the constitution, Congress relied on state and local governments to superintend the education of the citizenry. Consequently, many states, including North Carolina, included passages on public education in their laws and state constitutions. More »

Pre-kindergarten Education
Taxpayer-funded pre-kindergarten education in the United States is a multi-billion dollar hodgepodge of state and federal programs. The North Carolina Division of Child Development and Early Education of the Department of Health and Human Services (DHHS) oversees two large state programs — NC Pre-K and the Subsidized Child Care Program. NC Pre-K is a preschool program for at-risk four-year-olds. More »

Education Spending
In his book Education Myths, University of Arkansas professor Jay Greene points out that the inadequately funded school myth "is simultaneously the most widely held idea about education in America and the one that is most directly at odds with the available evidence." Indeed, empirical research continues to affirm Greene's claim. More »

School Choice
In North Carolina, public education is a core fiscal responsibility of state and local government. In the words of the N.C. Supreme Court, the state constitution recognizes the right to a "sound, basic education" for each child. But education need not and should not be delivered by government monopolies. A diverse array of pre-kindergarten, primary, secondary, and postsecondary schools benefit both those who utilize educational options and those who do not. More »

Teaching Profession
No system of public education can thrive without a high-quality teacher workforce. The problem is that state education bureaucracies enforce rules and regulations that fail to distinguish excellent teachers from poor ones. A large body of research shows that certification status, advanced degrees, years of experience, education school courses, and teacher test scores are unreliable indicators of teacher quality. More »

Testing and Accountability
Since 1996, the N.C. Department of Public Instruction (DPI) has authored, field-tested, administered, and analyzed nearly all end-of-grade and end-of-course tests under the ABCs of Public Education accountability program. During that time, state tests were subject to countless modifications, deletions, and additions. Some of these changes were for the better, but most were for the worse. More »

Virtual Schools
In general, a virtual school is an Internet-based learning environment that allows students to participate in a class using a computer rather than being present in a classroom. Students can access all class materials, including lectures, notes, assignments, and handouts, through the Internet. Students can also access audio and video content not available to those in traditional classrooms. Certified teachers offer one-on-one communication with the student, and they often recruit experts in the subject area to engage with virtual school students through interactive lectures and online chats. More »

Higher Education Policy
North Carolinians are proud of their higher education system — both the University of North Carolina, which has sixteen college campuses, and the 58-school community college system. But much of their reputation is based on a belief in quality that may not be accurate. More »

North Carolina Education Lottery
The North Carolina Education Lottery was born of corruption, from its inception as a bill, to its lobbying, to its rushed enactment in the N.C. House and Senate in the face of the state's constitutional requirement that revenue bills face multiple votes on successive days, to its false promise to and exploitation of the state's poorest and most desperate citizens. More »


Government Regulation

Renewable Energy Portfolio Standard
In 2007, the North Carolina General Assembly passed far-reaching electricity regulations (typically referred to as Senate Bill 3). At the heart of this bill is a 12.5 percent "renewable energy and energy efficiency portfolio standard." The renewable portfolio standard requires utilities to provide customers 7.5 percent of their electricity through renewable sources of energy. More »

The Map Act
The Map Act is a state law that allows road planners to establish official maps of future road corridors in order to freeze development within the maps, reducing property values, and thereby reducing the amount of just compensation that must eventually be paid to property owners. More »

Quick Take in Eminent Domain
Under North Carolina Law, "quick take" refers to a legal process whereby the government can take title to property under the power of eminent domain without first allowing the landowner to have a hearing in court. The Fifth Amendment to the U.S. Constitution recognizes the use of the power of eminent domain to take private property for public use, but it also requires that property owners receive just compensation. More »

Treatment of Juvenile Criminals
North Carolina is one of only two states in the nation that treats minors ages 16 and 17 as adults in the criminal justice system. Forty-eight states keep these minors in the juvenile justice system. Research suggests that raising the age of eligibility for the juvenile justice system may reduce crime and reduce costs. The State of North Carolina has studied raising the juvenile age for a number of years now. Legislative proposals in the General Assembly would raise the age of juvenile jurisdiction for certain low-level, non-violent offenses. More »

Regulatory Reform
North Carolina's regulatory environment has improved steadily in recent years. Under Republican leadership since 2011, the General Assembly has passed Regulatory Reform Acts in 2011, 2012, and 2013. Expect this annual effort to continue. While there are still plenty of areas to address, keeping on this arc would make North Carolina a national model for other states seeking ways to boost employment and job creation, especially as it fights expanding federal interference with those goals. More »

Occupational Licensing
At its core, an occupational license is a government grant of permission — obtained at the expense of time and money — to an individual to enter the field of work he desires. North Carolina's Constitution, Article I, Section 1, recognizes a fundamental right of all persons to "the enjoyment of the fruits of their own labor." A fundamental right ought not require petitioning and paying the state to be enjoyed. More »

ABC
In 2009-10, a succession of scandals in North Carolina's Alcoholic Beverage Control (ABC) system — including exorbitant salaries, nepotism, and lavish parties for ABC board members and staff hosted by liquor representatives &mdash prompted then-Gov. Beverly Perdue to raise the issue of privatization. The effort was mostly political theater, but it revealed the issues with trying to reform this remnant of the Prohibition Era. More »


Health Care

Medicaid Reform and ACOs
In just one year, plans for North Carolina's Medicaid reform have changed quite a bit. One year ago, Gov. Pat McCrory proposed a Medicaid reform that would have statewide managed care organizations (MCOs) compete to provide health care services to North Carolina's Medicaid patients. Each patient would be risk-adjusted for individual health status. These MCOs would be awarded fixed contracts from the state to have providers deliver care, and would bear full risk in the event of cost overruns. Taxpayers would only be on the hook for Medicaid enrollment fluctuations. MCOs would be responsible for all Medicaid populations, coordinating both mental and physical health care needs. More »

Medicaid Expansion
Obamacare is 2,000 pages of bad policy. It would be wise for North Carolina legislators to prevent further implementation of the Patient Protection and Affordable Care Act, including the law's optional Medicaid expansion. Medicaid is a program jointly funded by the state and federal governments that delivers medical services to low-income parents and children, pregnant women, the elderly, the blind, and the disabled. The federal government currently funds two-thirds of North Carolina's $14 billion Medicaid program. More »

Health Insurance Exchanges
Full implementation of the Patient Protection and Affordable Care Act, or Obamacare, relies largely on the states. Within the federal health law’s 2,700-plus pages, one key provision is the implementation of health insurance exchanges — online marketplaces where individuals can shop for federally qualified health plans offered by participating insurance companies. Through the establishment of the exchanges, the Obama administration intends to offer affordable, quality health care coverage to all, including those who were once denied due to pre-existing conditions. More »

CON Laws
North Carolina's Certificate of Need (CON) law was enacted in 1978 to comply with the federal Health Planning Resources Development Act of 1974. Based on the theory that the economics of health care is unusual and unlike any other market, CON laws use central planning to try to reduce health care costs by keeping health care facilities from buying too much equipment, building too much capacity, and adding too many beds. More »

Mental Health
North Carolina's management and delivery of mental health, substance abuse, and developmental disability services (MH/SAS/DD) have undergone an array of changes since the 2001 Mental Health System Reform Act. In December 2013, the McCrory administration announced that the state's 10 mental health managed care agencies (LME-MCOs) will be consolidated into four regional entities. More »


Additional Information

Fast Facts
North Carolina Fast Facts FY 2013-14. More »

Suggested Resources
The brevity of this briefing book obviously precludes lengthy discussion of many of the important and complicated issues that face state and local policymakers. We recommend that interested North Carolinians visit the following Locke Foundation Policy Reports and Spotlights for additional information. More »


About the John Locke Foundation

The John Locke Foundation is a nonprofit, nonpartisan policy institute based in Raleigh. Its mission is to develop and promote solutions to the state's most critical challenges. The Locke Foundation seeks to transform state and local government through the principles of competition, innovation, personal freedom, and personal responsibility in order to strike a better balance between the public sector and private institutions of family, faith, community, and enterprise.

To pursue these goals, the Locke Foundation operates a number of programs and services to provide information and observations to legislators, policymakers, business executives, citizen activists, civic and community leaders, and the news media. These services and programs include the foundation's monthly newspaper, Carolina Journal; its daily news service, CarolinaJournal.com; its weekly e-newsletter, Carolina Journal Weekly Report; its quarterly newsletter, The Locke Letter; and regular events, conferences, and research reports on important topics facing state and local governments.

The Foundation is a 501(c)(3) public charity, tax-exempt education foundation and is funded solely from voluntary contributions from individuals, corporations, and charitable foundations. It was founded in 1990. For more information, visit www.JohnLocke.org.


Material published here may be reprinted provided the Locke Foundation receives prior notice and appropriate credit is given. Submissions are welcome.

The John Locke Foundation welcomes comments and ideas for improvement. Please contact our webmaster with questions or suggestions.

The views expressed in this report are solely those of the authors and do not necessarily reflect those of the staff or board of the John Locke Foundation. For more information, call 919-828-3876 or visit www.JohnLocke.org.

©2014 by the John Locke Foundation

Who Is John Locke

JLF Network Websites & Blogs