Climbing Out of a Hole

The State Treasurer just dropped a bombshell: He reported that the State Healthcare Plan – the plan that pays for health insurance for teachers, state employees, and retired state employees – is $43 billion in the red.

That’s bad news. But there’s more: The State Pension Plan – for the same workers – is $17.5 billion in the red. Combined, the two plans are $60 billion in debt. That’s called an unfunded liability. Taxpayers will have to pay.

And right now, every day, both plans are piling up more debt. So the first step is to stop digging the hole.

The Senate Pension Committee Chairs have proposed legislation to solve one of these two problems and start on the other. Let’s look at the proposed policy changes.

Current Pension Policy: Right now, after working 28.5 years a state employee can retire and, no matter their age, immediately begin drawing a state pension. That pension is guaranteed. It’s a fixed amount. It doesn’t depend on how much was set aside over the years. Or how much the Pension Fund has earned on its investments in stocks or bonds.

New Policy: Under the proposal, new state employees will be offered a 401 (k) retirement plan – the same kind of plan most major corporations offer. The employee will pay into their 401k, the state will match their payments and, when they retire at the age they choose, the total paid in plus how much the 401k has earned on its investments will determine their pension.

There’s one other major change. Right now, if an employee works for the state for 20 years, the state will pay for his or her health insurance for the rest of his life – whether he continues to work for the state, goes to work for a private business, or retires early (say, at age 50).

Under the new proposal, in the future, new employees will receive state health insurance benefits only during the time they work for the state.

The next step deals with how to pay the Pension Fund’s debt. The entire state budget is $22 billion. So, a $17.5 billion debt cannot be paid overnight. It has to be paid over years. The Pension Committee’s legislation makes a $100 million payment on the Fund’s debt in the first year and begins a process that adds $100 million to that payment each following year. In other words the state will pay $100 this year, $200 million next year, $300 million the third year and, after that, each year the payment will increase by $100 million. That will completely pay the Pension Fund’s debt in 15 years.

None of these changes affect current employees or retirees. Except for making sure the money is there to keep past promises about their retirement.

Digging a hole is easy. But climbing out is hard. And there’s no question this is a tough proposal. But every day the Pension Fund’s debt is growing bigger. And the longer we wait to start climbing out of this hole, the tougher it will be.

Who Ya’ Gonna Call?

I’ve been slimed,” as Bill Murray said to Dan Aykroyd in Ghostbusters.

It happened like this: Lisa Sorg – a writer for Policy Watch – sent an email asking for an interview. Normally, I’d say, Sure. But Policy Watch isn’t a newspaper – it’s the media arm of a coalition of liberal organizations associated with the N.C. Justice Center. This wasn’t going to be a normal press interview. It would to be like talking with the press spokesman for the Democratic Party. So, I passed.

Next, Ms. Sorg wrote her article and reported I’ve sponsored a bill to cut government regulations, including environmental regulations, that will cause floods, pollute streams, and that I’d done it all for a rotten reason: To make two parcels of land I’m selling in Catawba County more valuable.

There’s a lot of politics and pure fiction going on here.

For example, I don’t own the two parcels of land.

One has been owned by the same family for sixty years. Last year, the family asked my company – Prism Real Estate – to help them sell the land. And that property is about to be sold to another family to be their new home. And not one change has been made – or proposed – by anyone that will affect the creek that runs through the property.

The same is true of the other parcel: In fact, this time, since the creek runs along the border of the property the buyer can’t build a bridge or culvert with a road over it across the creek because someone else owns the land on the other side.

Twenty minutes on the Internet would have told Ms. Sorg those facts.

More to the point, polluting the creek wouldn’t make either property more valuable. It would make each less valuable.

Ms. Sorg wrote that “last year the Neuse River experienced the worst flooding in recorded history” and added my bill will “ensure more flooding.” But she forgot to mention the Neuse River flooded due to a hurricane.

The poet Carl Sandberg once said: “If the facts are against you, argue the law. If the law is against you, argue the facts. If the law and the facts are against you, pound the table and yell like hell.”

Ms. Sorg was ‘yelling like hell’ and, I suspect, the reason has a lot to do with politics. Policy Watch and the NC Justice Center and the UNC-Center for Civil Rights are all part of the same coalition of liberal groups and, last week, I criticized the UNC-Center for spending state money to file lawsuits that promote liberal causes.

A few days later Policy Watch started hollering.

Muzzling Liberals?

One of the UNC Board of Governors explained recently UNC-Center for Civil Rights was a political group filing political lawsuits using tax dollars and ought to be stopped. The News and Observer disagreed and wrote an editorial saying the whole idea was ‘preposterous.’

If conservatives set up a Center at UNC-Chapel Hill, staffed it with professors paid by the state, and then the Center worked hand in glove with conservative groups, like the Civitas Institute – attacking Democrats and filing lawsuits to advance conservative causes, Democrats would cry foul. And they’d be right

Now, let’s look at what the UNC-Center for Civil Rights has done.

The UNC-Center says it is not “state funded.” But that’s a red-herring. The UNC-Center is part of UNC-Chapel Hill. It is not an independent corporation or non-profit. It is a state entity. Its funds are state funds.

As the Martin Center for Academic Renewal explained, the UNC-Center’s Chairman and Executive Director of UNC-Center for Civil Rights are professors drawing state salaries. Its other employees are state employees as well. The legislature hasn’t directly appropriated funds to the UNC-Center, but it has received other state funds and support under the control of UNC-Chapel Hill. For example, the Center has stated it uses the resources of the UNC School of Law.

The UNC-Center for Civil Rights has opposed Amendment One, charter schools, school vouchers and supported Moral Monday protestors on its state website and Facebook page.

It has worked with ACLU, the NAACP, the Reverend William Barber and other liberal groups by filing lawsuits to advance their political agendas.

The UNC-Center’s lawsuit against the Pitt County School Board is an example.

When the school board passed a neighborhood school plan the UNC-Center called it ‘resegregation’ and promptly sued – which led to an odd event: Government lawyers (for the UNC-Center) arguing with government lawyers (paid by Pitt County) in court. Pitt County won the lawsuit, but only after spending $500,000 defending itself. That’s only the cost for one side, so taxpayers lost even more.

The UNC-Center has attacked multiple North Carolina counties. It filed three legal complaints against the Wake County School Board alone. How much did that cost taxpayers?

We also know one other fact: The Center flies the UNC brand like a flag. When it sued Pitt County School Board, it wasn’t a political group (like the ACLU) accusing the school board of ‘resegregating’ its schools. It was the University of North Carolina.

Last week, after a member of the UNC Board of Governors finally said, Enough – the News and Observer said he was trying to ‘muzzle liberals.’

But that’s another red-herring.

Will shutting the UNC Center mean a liberal professor won’t be able to advocate for his, or her, political beliefs? No.

Will closing the Center mean a liberal professor, or political activist, won’t be able to use state tax dollars to support his political beliefs? Yes.

And that’s the real issue. A state entity spending tax dollars on politics.

Last week, four members of the UNC Board of Governors proposed the University stop the UNC-Center’s political lawsuits. Unfortunately, so far, they’ve failed. Other trustees opted to ask the university’s administrators to conduct a ‘study’ instead.

It’s time for the Board of Governors, along with Margaret Spellings and Carol Folt, to openly and promptly address the UNC-Center’s political activity. If they fail to do that – if UNC sweeps the problem under the rug – then it will be time to ask another question: How well is the Board governing the university – and spending the taxpayers’ money?

Better Late Than Never

I admit it looked a little odd. Last week, I filed a bill in 2017 titled: The Regulatory Reform Act of 2016. It was odd. But the reason was simple.

Everything in the bill (except a couple of technical corrections) was in a House or Senate Regulatory Reform bill last year and although these parts were not in dispute, the bill got lost in the scramble at the close of last year’s Session and never passed.

Originally, when I drafted the bill I gave it a different title. But after listening to Cato Institute’s briefing for legislators about Freedom in the 50 States, explaining NC’s need for less regulations, the new name made a valid point.

As Cato pointed out, when it comes to the burden of government regulations and making it easier for working families to earn a living, NC isn’t doing well. We’re doing worse than most other states. And we missed an opportunity to correct that problem last year. Tax reform is important but, alone, it’s not enough. To fuel growth and create more jobs, it’s time to pass regulatory reform. And the reforms were all approved, last year, by both the House and Senate.

No doubt there are those who will say introducing a bill titled The Regulatory Reform Act of 2016 sounds like I’m revisiting past history. But this bill is about the future. When we cut government regulations we’re giving working families – from Newton to New Bern – more freedom.

While it may look awkward for the General Assembly to be passing the Regulatory Reform Act of 2016 in 2017, as my grandmother used to tell me, “Better late than never.”

 

Freedom

When the Cato Institute arrived in Raleigh to brief legislators on Freedom in the 50 States, I was hopeful.

My hope faded quickly.

My optimism, I thought, was well founded. After all, over the last 4 years, the NC General Assembly had led the nation in tax reform. NC’s business tax climate ranking by the Tax Foundation had risen dramatically, from 44th to 11th among the 50 states. And, in fact, Cato did give North Carolina high marks on tax freedom.

But freedom is bigger than money.

And, it turns out, in categories like regulatory freedom and the ability to make a living, NC isn’t doing well at all. It still trails most other states. That needs to change. We should continue our work on tax reform but, to fuel more economic growth, it’s time to double down on regulatory reform.

There’s a lot of talk about working across the political aisle – about the left and right working together to make the lives of our citizens better. And hopefully, freedom, and lifting burdens off the backs of working families, is a place where both sides can actually do that. But, to be realistic, there are two roadblocks standing in the way:

One is simple. Overcoming inertia. Sitting in the Senate listening to state agencies, I sometimes wonder how the Latin would read on a second state motto, “We have always done it that way.” Because that’s what you hear over and over: Not it’s the best way. Or the most effective way. But that’s how we’ve always done it.

The other roadblock is even more challenging. Every time a freedom gets trampled by a government regulation or government agency, someone makes money. It may be an increase in state employees’ pensions or benefits, a business that feeds on – or gains an advantage over competitors due to – a new regulation, or simply a new area for the practice of law. Whatever the reason, it’s a hard fact that once the money starts flowing to a special interest it’s hard to cut it off.

Hard or not, for a nation founded on freedom, the result is worth the fight.

Eye to Eye

Battle lines are forming in Raleigh. But it’s not what you think.

The ophthalmologists and optometrists are having a turf battle. While a clash of eye docs may not raise your pulse, it does open up a secret world to public view.

Here’s the broad picture: Optometrists want to expand their practice into things only ophthalmologists now do – involving needles and lasers around the eyes. They say that, in some communities, optometrists are the only available treatment specialists. That’s true.

Ophthalmologists say they have more training and can do those things better, and no matter where you live, if you drive far enough, there is a medical doctor available. That’s true, too.

If you are wondering why the state department that supervises these two boards can’t resolve the problem…well, that is the problem. There is no state department that supervises North Carolina’s 55 occupational licensing boards.  In our state, each of those 55 boards report directly to 170 part-time legislators, who have limited medical training.

Which amounts to no supervision at all.

Which is one of the issues raised by the U.S. Supreme Court two years ago when NC became the poster child for maverick licensing boards who, at times, use the power granted them by the state to limit competition.

In fact, most people in NC who need a state license are going to pay more for it than people in our neighboring states, like VA and SC. Which adds up to a burden on consumers who ultimately pay the bills.

To be clear, I’m looking to avoid a bruhaha. Not start one. There is enough conflict in government already. Hopefully, a ‘diplomatic mission’ – and the specter of a little active supervision – can bring the ophthalmologists and optometrists together before their debate gets too heated.

The Great Divide

Charlotte’s booming. Raleigh’s booming. But in Hoke and Hyde and dozens of other rural counties working families are struggling to make ends meet. It’s the ‘Great Divide.’ The distance between the urban world and the rural world in our state. The divide has now gotten the attention of the politicians but the result is not what you’d hope.

Last week with the best of intentions, newly elected Democratic State Representative from Charlotte, Chaz Beasley tackled the problem in an interview with the Charlotte Business Journal. Beasley explained he wants to build a bridge across the divide: “I’m one of the few urban representatives that actually grew up in rural North Carolina – I grew up in Catawba County – and that’s a bridge we have to build.”

From Charlotte, Catawba County may look like a rural county on the far side of the great divide. But it’s not. If you want to see a rural community, struggling for jobs, drive to Raeford or Swan Quarter or any of a hundred other rural small towns.

Rep. Beasley meant well but showed us how far apart the two worlds are. I appreciate his connection to Hickory, but bridging the great divide will be a different, and bigger, job.

St. Joseph Abbey

For years the 38 Benedictine monks at St. Joseph Abbey in Louisiana paid for their healthcare by selling timber. Then Hurricane Katrina wiped out their timber stand, so, to pay for their healthcare, the monks started building caskets – cheap, inexpensive, wooden caskets.

The monks’ new enterprise got the attention of a local undertaker who filed a complaint against them with the Louisiana Board of Funeral Directors and Embalmers. The monks, he said, didn’t have a state license. And the Board ordered the monks to stop.

Here in North Carolina, we have 55 of the same type of state licensing boards. Many of those boards are necessary – like the medical board that licenses doctors. But it’s also true many of our licensing boards exist for less public spirited reasons.

According to the Goldwater Institute, a John Locke-type think tank in Arizona, state licensing boards can stifle competition, drive up costs to consumers, and create a “drag on the economy” each year.

A simple first step toward reform – here in North Carolina – would be for the General Assembly to conduct a study to classify licensing boards into one of two categories: Essential (like doctors) or Nonessential.

Then the General Assembly could go to work to figure out which of theNonessential Boards create a drag on our state’s economy and should be reformed or disbanded.

A Rigged System

The other day, of all things on earth, I got wacked by a lobbyist, in a video.

Over a dozen different groups pay Ches McDowell to lobby for them – including the Association of Acupuncturists.

In his video, Ches said I’d introduced a bill that could ‘make acupuncture illegal.’ Then, just to make sure no acupuncturist misunderstood his message, he added, if my bill passed acupuncturists could be ‘out of business.’

There’s a lot of fact-twisting going on here – so let’s clear the air: There are 541 acupuncturists in NC and each one has to pay for a license. I introduced a bill to merge the acupuncture licensing board with other small boards to lower the cost of getting a license. If my bill had passed the worst thing that would have happened to acupuncturists would be their license fees going down.

Virginia charges $130 to apply for a license and $135 to renew the license for two years. North Carolina charges $100 to apply, $500 when the license is issued, and $300 for two-year renewal. Those are the fees I’d like to cut. But, I expect, Ches is focused on a different problem.

Cutting license fees will save working people money. But it also means less money flowing into licensing boards in Raleigh who hire insiders like Ches McDowell – who then tried to mislead acupuncturists by telling them my bill could ‘make acupuncture illegal.’

We’ve heard a lot of talk over the last year about how powerful people with lobbyists rig the system at the expense of working people. Don’t get me wrong, there are licensing boards that are needed. And do good work. But it’s also true there are other licensing boards that are an example of how a ‘rigged system’ works in Raleigh.

What’s the Price?

Democratic legislators quarreled with Jim Hunt. Republican legislators quarreled with Pat McCrory. It’s one of the oldest feuds: Legislators battling Governors.  It can even end up in court: When Republican legislators took control of the new Coal Ash Commission away from Governor McCrory he sued.

Whether they’re fighting over patronage, appointments, or regulations, whenever legislators and governors bump heads there’re fireworks.

More often than not, when the legislature passes a law, it’s a broad policy statement – followed by instructions to a state department (controlled by the Governor) to devise regulations to implement the policy.

Generally, I’m not a fan of government regulations. But when they’re unavoidable the goal is simple: To make the rules clear, fair, and consistent with (what lawyers call) the intent of the law.

However, no system devised by man is perfect. Especially politics. Sometimes state agencies (or Governors) don’t like a new law. They dig in their heels and resist. They even, at times, act as if the law doesn’t exist. And the result can be a nightmare. Because when the rules are not clear a citizen will suddenly find himself – or herself – face to face with a bureaucrat who, basically, says, “The law means what I say it means” – and that’s not the answer any citizen deserves in a society based on the rule of law.

Here’s one small example: Twenty years ago, in 1997, the General Assembly told the State Board of Elections, in statute, to make rules clarifying which campaign contributions and expenditures are legal and which are illegal. That wasn’t an earthshaking reform. It didn’t affect many people – only candidates for office. However, through four governors – one Republican and three Democrats – the Elections Board did nothing. It passed no rules defining which expenditures are proper and which are not.

What harm is done by these kinds of obtuse regulations? Part of our national debate over the past year has been about the fact that we are a constitutional democracy where there is no special, privileged class of people who are above the law. In our Democracy, everyone plays by the same rules. Everyone caught on the highway driving 80 in a 65 pays the same price.

But vague regulations, or no regulations, lead straight to loopholes that one group can use to its advantage.