Thursday, January 15, 2015

NC Budget and Economic Developement

I read with interest an article posted at regarding economic development in the various states, and using North Carolina as an example. The article is located online at

The article explains states wouldn't need to bribe businesses if their taxes and regulations weren't too high. To quote from the article, "In truth, the states should close their economic development offices, cut the size and expense of their governments, and reduce or eliminate the taxes levied on businesses. They should also cut the regulatory red tape required to start a business and then operate that business within their state."

Before the Republican takeover of both houses of the General Assembly in 2012, the state was spending $22B per year. The state is spending roughly the same amount today, not including what WRAL reports as "huge swaths of federal money the state is overseeing". How much is huge swaths? Who knows?

The 2012 General Assembly correctly cut spending, albeit nominally, and cut taxes. In concert, these actions have stopped the bleeding. However, it isn't enough, and why bribes must offered to businesses as explained in the article.

The state budget, as you know, is 90 percent salaries which includes an entire layer of state bureaucrats who are highly paid and perform very little service to the state. Many of these bureaucrats are nearing retirement, and it is in their best interest to continue earning their high salaries and not having to work too hard. It's in the best interest of the taxpaying citizens of this state that they retire. This is the tug of war in which Governor McCrory has been embroiled since 2012. We can't wait 5 years for this issue to sort itself out. One possibility could be to offer severance packages for those employees with over 30 years of service and full retirement to those who are nearing 30 years. The Legislature and the Governor's office should be looking long and hard at ways to reduce the management overhead in all state agencies. We didn't get here by accident, and we can't reverse the last 20 years of growth in state spending by ignoring it. The budget won't reduce itself and will continue to steal resources away from where they're needed, providing economic opportunity for all.

My concern is our economy appears to be headed for a downturn, as evidenced by the announced closing of thousands of retail stores across the country, low employment rates, and the high number of families on public assistance.   North Carolina cannot afford to be dependent on federal spending. Genuinely cutting spending and cutting taxes, will restore prosperity to this state, insomuch as any state is able to provide an environment for their citizens to prosper in these uncertain times.

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