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Next UPDATED: NOV 14, 2007 NUMBER ONE – AGAIN! Republicans have repeatedly attacked North Carolina Democrats for being “anti-business” and for the incentive packages that have brought new businesses or retained businesses in North Carolina. North Carolina has been named number one – again – for its business climate by Site Selection magazine. Carefully note that during six of the seven years of Governor Easley’s administration that North Carolina has achieved that ranking: North Carolina has been named the state with the top business climate by Site Selection magazine. It is the third consecutive year North Carolina has won the honor from the magazine, which focuses on economic development. The state has picked up the honor six times in the last seven years. Site Selection says its rankings are based on a survey of corporate site-selection executives as well as a measure of new plant activity. The magazine calls it "a blend of objective, actual new or expansion product announcements, and subjective input from corporate site seekers." North Carolina was cited by site-selection executives as having a good quality of life, a favorable business climate and access to top-notch academic and research facilities. The Republican attack is exemplified by Republican Bob Orr who is running for Governor in 2008: Actually, we've known for years where Republican Bob Orr stands on incentives that go directly to individual businesses. He's against them. As (now former) director of the Libertarian-leaning N.C. Institute for Constitutional Law, Orr has figured in lawsuits challenging grants of plentiful incentives to Dell and Google. He protested, too, the state's recent package intended to keep Goodyear in Cumberland County. While serving on the state Supreme Court, Orr dissented in the main ruling on incentives, which allowed cities and counties to offer them. Now candidate Orr has come out with his alternative to the current incentives system. His plan eliminates special tax credits granted by the legislature, the governor's One North Carolina grant program and Job Development Investment Grants (which is what INC Research will get). Orr would forbid local governments from approving tax rebate programs. They could not offer targeted incentives to North Carolina businesses considering an in-state move. At the local level, he would require much more openness about business recruitment. In state government, Orr would combine all economic development activities under a unified budget. Overall, the emphasis is on treating all businesses -- large, small, existing and prospective -- alike, and making conditions better for them all. But not every incentive would vanish. Orr would replace the existing job training money with a Workforce Development Fund. It would offer qualifying companies up to $2,500 per worker for the costs of training new or existing employees. So some state aid would continue to flow. Would it be enough to entice a Dell Computer to pick North Carolina over Virginia? (Or Toyota to choose us over Mississippi?) There's the rub. The much-criticized incentives aren't offered in a vacuum. In the real world that governors operate in, there's cutthroat competition for major employers. Other states are as addicted to incentives as North Carolina is, or more so. Southern states are hungry. Democrats have worked to meet the challenge to keep businesses coming and growing in North Carolina. Has Democrat policy been successful? Looking at the trends in employment during the last year, North Carolina has performed well. The chart below, from the National Bureau of Labor Statistics, charts States that have had positive and negative job growth that is statistically significant from 2006 to 2007. North Carolina (highlighted in blue) ranks 6th (those ranking higher than North Carolina are highlighted in red) out of 31 states. Table E. States with statistically
significant employment changes from
Democrat leadership has brought tens of thousands of jobs to North Carolina. _____________________________________________ UPDATED: NOV 11, 2007CAREFUL WISHES The old adage goes, "be careful what you wish for, you just might get it." It is an adage that progressive Democrats supporting the public referendums on the real estate transfer tax may well wish they had heeded. Conservatives across the State are celebrating their victories, having defeated most ballot measures for tax increases. Every one of the 16 referendums considering the real estate transfer tax was defeated. John Hood, of the John Locke Foundation, best expresses the viewpoint of the conservatives:
Well, North Carolina voters have spoken in the great local-tax battle of
2007. With some exceptions, the prevailing response was something akin
to, “You’ve got to be kidding!” North Carolina progressives and local government officials had pushed for legislative approval of the real estate transfer tax to finance North Carolina's growth. As noted by Hood, the real estate industry in North Carolina spent hundreds of thousands of dollars to; a) defeat the legislation authorizing the real estate transfer tax, and b) defeating the ballot measures in every county after having lost their fight in the General Assembly. Progressives are obviously stunned. Chris Fitzsimon, of NC Policy Watch (a TPJ favorite), best expresses the progressive view that the defeat was simply "bought” by the powerful special interests opposed to the real estate transfer tax: The cozy troika of the Realtors, homebuilders and the market fundamentalists are still celebrating the elections they bought on Tuesday, especially the rejection of the local real estate transfer tax by all 16 counties that considered it. There is now talk of an effort to repeal the legislation in the short session that gave counties the authority to put the transfer tax and sales tax on the ballot in the first place. There’s no logic in it of course, unless members of the troika want to admit that they simply don’t want people to have their say about how to pay for schools in their communities. The reality is that they are still worried that big Raleigh money might not win every time, that some counties might actually spend time building a coalition of business and community leaders to make the case for demanding that the people who make the billions off the state’s growth pay for some of the costs associated with it. Fitzsimons’ analysis that moneyed interests were responsible for at the defeat of the referendums is correct, but it is also incomplete. TPJ readers may recall that during the previous session of the General Assembly, Democrats in the State Senate balked at enacting the real estate transfer tax. At the time, progressives focused on the role that Senator Hoyle, a fiscal conservative, played. Fitzsimons wrote at the time (emphasis added): Even Senator David Hoyle has agreed to support the budget deal reached this week by House and Senate leaders, but he is still complaining about it, primarily upset by the local option real estate transfer tax, and still warning his fellow Democrats that they may pay a political price for it. The Insider quoted Hoyle saying he found the budget deal “distasteful.” "I think they (House Democrats) have grossly underestimated the political damage, the demagoguery,” Hoyle said. Hard to think anyone underestimates the demagoguery possible by the Realtors and Homebuilders after their display in the last few months. Hoyle seems almost obsessed with possible political damage, which means he is either unwilling to vote for something because it is the right thing to and then explain it to voters during a campaign, or he actually agrees with the Realtors and is trying to scare his colleagues with claims about their political future. Either way, Hoyle and the Realtors did not get their way this session, and people across the state will have the chance to vote on how their county pays for schools and other infrastructure needs. Fitzimons also observed: The News and Observer quotes Easley saying that members of the General Assembly have to decide, “Do they want to stand with the Realtors or do they want to stand with the people they represent?” Good question, Governor. It is clear that the standoff between the House and Senate over allowing people to vote on a local transfer tax is the main reason lawmakers have not reached a final budget agreement. And the tide is clearly turning against the Realtors and homebuilders despite their misleading ad campaign, thinly veiled political threats, and the access to lawmakers that their $800,000 in campaign contributions buys them. A survey released this week by Public Policy Polling finds that the overwhelming majority of people in North Carolina support the chance to vote on whether or not their county should impose a transfer tax. The margin is astounding, with 84 percent of those surveyed agreeing that voters in each county should be able to have their say. Only 8 percent were opposed. The Realtors and Homebuilders understand that the public wants the right to vote on how to pay for schools in their communities. That’s why they always steer the conversation away from voting and back to their misleading home tax rhetoric. They have no response when asked what’s wrong with letting people decide for themselves how their counties should raise revenue. Tim Kent with the Realtors Association has said that holding local referenda would be “an exercise in futility” since a poll paid for by the Realtors found that people opposed the tax. If Kent really believed that, he wouldn’t be fighting so hard to prevent people from voting. The latest tactic from the Realtors and Homebuilders is to attack their opponents to draw attention away from the right to vote. This week the two groups claimed that supporters of local referenda on the transfer tax were spending far more in lobbying and advertising costs, focusing most of their wrath on The Partnership for North Carolina’s Future, a broad-based coalition of business and community leaders and public interest groups, many of whom have lobbyists in the General Assembly. But that claim by deniers of democracy is as misleading as their television ads. They added up all the lobbying expenses by the members of the Partnership, the vast majority of whom spend most of their time at the General Assembly working on other issues. The free-market fundamentalist allies of the Realtors have jumped into the fray, blasting the involvement of the North Carolina League of Municipalities in the Partnership, claiming that it is “forcing taxpayers to fund lobbying for new taxes.” Putting aside the fact that the debate is about the right to vote, not to raise a tax, the logic, such as it is, from Americans for the Prosperous is that local governments pay dues to be part of the League, so the group shouldn’t be lobbying. Let’s see, local governments need more revenue sources to provide the services their constituents demand and the General Assembly has to pass a law before cities and counties can have more revenue options. Seems like most people would want their mayors and city council members part of an organization working to convince lawmakers to give them the tools they need to improve the quality of life in their cities. Especially when you consider they are fighting a real estate industry with its billions in profits. What did not get a lot of publicity is the fact that some Senate Democrats were advising progressives and local government officials supporting the tax that the legislation needed to tie a passage of the real estate franchise tax to specific local community needs. For example, legislation authorizing the real estate franchise tax could have provided that revenues would be used to support public education. This certainly was not the only program option, but it is an example of how the legislation could have been structured. Neither local government officials nor progressives wanted to be constrained as to how the real estate transfer tax revenues would be allocated within their communities. Their logic was simply that growth has a plethora of economic consequences in every community and local government officials should know best how revenues should be spent. Their position is certainly understandable; but it was very shortsighted. In the end, Senate Democrats gave local government officials and progressives an unrestricted real estate transfer tax. However, as Fitzsimons noted, Senator Hoyle believed that enactment of the real estate transfer tax was "suicidal" politically. In retrospect, Senator Hoyle was precisely correct. Every referendum to pass the real estate transfer tax was defeated, and defeated soundly. The fundamental problem is that in the face of powerful special interests, the real estate transfer tax had no major counterbalancing constituencies supporting the referendums. While local county officials certainly supported enactment, their effort was and will most probably never be sufficient in most instances. While we all see the need to meet the financial demands for population growth, we did not equally appreciate the financial concerns of North Carolinians. Without tying the real estate transfer tax to specific community needs, the public was being asked to impose a new tax and trust their local governments to spend the revenues appropriately. The days in which government enjoys such a level of confidence are over. The economy is faltering and many North Carolinians are already feeling severe financial pressure of rocketing gasoline prices and adjustable-rate mortgages. The price of commodities, i.e. food and clothing imports, are rising as well. In the context of this financial pressure, the voting public is rightfully insisting that any tax increases meet essential needs. If the local referendums had been tied to education, as just one example, many local groups may have worked for passage. Educators and parents have a remarkable history in passing local bonds throughout North Carolina. Conservatives who contend that the public will support no new taxes are equally wrong. The message that taxpayers appear to have rendered is that they are willing to support new taxes when they are convinced of their need. While John Hood notes that tax increases were generally defeated last week, five tax measures were approved by North Carolina voters. Therefore, there was not a wholesale rejection of imposing new taxes, but the voting public is being highly selective. Would the real estate transfer tax have passed if the revenue generated was tied to specific community needs? The true answer to that question cannot be known. In our estimation, however, tying the real estate transfer tax to specific community needs would have certainly improved the chances for enactment. At the least there would have been an organized counterbalance to the well financed conservative forces who simply oppose the concept of any new taxation.In the final analysis, progressive forces got what they wanted from the North Carolina General Assembly -- perhaps they now wish they had heeded the advice of some Senate Democrats. VOTER REGISTRATIONTPJ returns to one of its favorite topics, voter registration in North Carolina. The data below covers the period from January 6, 2006 through November 3, 2007. Democrats continued to lose share in voter registration in the first nine months of 2007. One chart documents the continuing fractional decline in Democratic voter registration:
The pattern is unmistakable. The Democratic and Republican Parties continue to lose share among registered voters, while Unaffiliated voters continue to rise. On an encouraging note, the gradual drift downward in Democrat Party registration appears to be slowing while Republican losses are accelerating. Republicans lost -.11% share in the third quarter alone, more than their loss for the entire first six months of 2007. In fact, the percentage of Republican loss almost equaled Democrat losses. For Republicans, this is a reversal of fortune. Republicans had been posting gains in voter registration in recent years. The chart below is a county by county breakdown of the change in voter registration for the first nine months of 2007. There are several important points: 1. Both Parties lost registrations in most counties. This is attributable to “list maintenance” procedures dictated by law. Voters who have not voted in the last two Federal Elections are removed from the active list of voters. Obviously, in most counties, neither Party has been able to register more new voters that those removed from the active list of voters. (Some counties performed list maintenance procedures at the end of last year.) 2. In relative terms, Democrats gained voters over Republicans in only 24 counties. In the first six months of 2007, it was only 14 counties. Therefore, there has been some improvement. 3. Nearly half of the total Democratic Party loss statewide (-21,810) comes from Robeson County. The number of voters lost in this one County might suggest the State Democratic Party determine the reason for the removal of so many voters from the active voter lists. 4. Voter registration in two counties should be specially noted. First, Mecklenburg County continues to demonstrate a highly active effort to register new voters by both Parties. ACORN has been highly active in Mecklenburg County and the results are obvious. The results that ACORN is producing, not only in North Carolina but in other states, explains Karl Rove’s apparent obsession to have Federal Prosecutors criminally indict ACORN members at every opportunity. Second, Democrats in Guilford County are successfully registering new voters relative to Republicans. 5. Several other counties deserve mention. Note that in Buncombe County, Democrats lost less voter registrations than Republicans, even though Democrats had more registrations. We attribute the result to the fact that Democrats are better recruiting new voters to offset the losses. Democrat voter registrations in Cabarrus County continued to outpace Republican voter registrations. Cabarrus County is generally considered “Republican territory." Therefore, the performance and Democratic registrations, even though small in number, is encouraging. New Hanover County is another bright spot for Democrats. Democrats have gained relative advantage in voter registration. We surmise that Sen. Julia Boseman is getting ready early for another spirited election in her District. Pitt County is proving solid ground for Democratic registrations. We ascribe the increases to student voter registration. If correct, it is another indication that younger voters are fertile ground for the Democratic Party. It is difficult to fathom that Democrats still trail Republicans and Unaffiliated in net voter registrations in the context of the current political climate. Bush's approval ratings are at historical lows and the Republican Party is generally viewed unfavorably by a substantial number of Americans. Therefore, TPJ continues to ask the question; "if not now, when?" We are within one year of the 2008 General Election. The time to start reversing these trends for this crucial election in American history is now.
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