Advice from a Sinking Ship

You have to admire their brass. The Charlotte Observer, which like many newspapers has been struggling to make ends meet, took a break from terminating paper deliveries and selling off prime real estate to offer business advice to the State of North Carolina.

First, the Observer’s editors tore into President Trump’s Tax Cut, specifically cutting taxes on businesses. Then the Observer tore into Republicans for doing the same thing in North Carolina. We’d all be better off, the Observer argued, if taxes were higher because more money would be flowing into state government.

But they left out a key fact. After Republicans in the General Assembly cut taxes the economy boomed and, as a result, state government had a boost in tax revenues. This spring, a $900 million budget surplus fell in state government’s lap. The State Senate then voted to return a part of the surplus to taxpayers to help working families. But Governor Cooper turned thumbs down on that idea and vetoed the bill.

The State Senate also, since North Carolina is in the worst half of all states in terms of its property tax burden, voted to cut the double property tax on business. But, again, Governor Cooper vetoed the bill.

Six years ago, Senate Republicans cut taxes to turn a terrible economy into a booming economy. It worked. And businesses started moving to North Carolina.

Then we hit two bumps in the road. First, when other states saw how successful we were, they cut their own taxes. And, second, after Roy Cooper was elected Governor, trying to keep our taxes low in order to be competitive with other states went out the window.

Six years ago, North Carolina’s ‘Tax Competition Ranking’ was 44th out of the 50 states. In other words, our state taxes were higher than 43 other states. After the Republican tax cuts, we leaped to 11th – suddenly, our taxes were lower than 39 other states. Over the past two years, under Governor Cooper, North Carolina has fallen from 11th to 15.

It’s a good idea to drain the swamp before we drown in it.

Infant Mortality

The report was good news: Infant mortality rates had dropped to an all-time low, to the lowest point since ratings started 31 years ago.

Hispanic families had the lowest rates. African American families had rates higher than Whites or Hispanics, but African American rates had also dropped the most.

Governor Cooper studied the report, plucked out a fact (African Americans having the highest rates), and said that proved we had to pass his plan to expand Medicaid.

But the Governor also left out a fact: Medicaid already covers low income pregnant mothers.

To put it bluntly, the Governor dabbled in racial politics – he drew a line between black vs. white – to pass his Medicaid plan.

That’s the Raleigh Swamp and it’s time to drain it, too.

An Unanswered Question

State Treasurer Dale Folwell laid it out plain and simple: The state Department of Transportation took in $5 billion and spent $7 billion, he said.

Folwell went on to explain what happened next: To plug the $2 billion hole it had dug, DOT reached into the Highway Trust Fund and took out $1.1 billion. And then it borrowed $900 million using bonds.

That led to two more problems: By law, DOT can’t take money out of the Highway Trust Fund unless Folwell agrees. But he didn’t agree. Because he didn’t know. DOT never told him.

That wasn’t all. When DOT borrowed $900 million, in the bond offering it reported that the Map Act settlements were not ‘material’ to its ability to repay the bonds. (DOT lost the Map Act lawsuit in 2016 and has to pay people for taking their property without compensation.)

However, a month later, Folwell reports, DOT’s Chief Operating Officer told the Board of Transportation the lawsuit settlements may exceed $1 billion.

That sounds ‘material.’

Treasurer Dale Folwell painted a pretty dire picture, but he also offered a solution: He recommended Governor Cooper remove his DOT Secretary Jim Trogdon and replace him. That didn’t suit the Governor at all.

Now, if Secretary Trogdon did single-handedly give the green light to raiding the Highway Trust Fund he has some explaining to do.

But that still leaves an unanswered question.

Did Secretary Trogdon, a retired Major General, raid the Highway Trust Fund on his own? Or was he following orders – to facilitate DOT’s $2 billion spending binge – by the Governor’s office?

Who had the final say: Was it Secretary Trogdon or the Governor’s office?

That’s a question we need an answer to.

In Pursuit of Tweets

A hot-headed young Democratic Senator baited the trap and an old Republican bear fell for it.

A little less posturing by the Democrat might have been kinder but kindness doesn’t count for much on social media; he was out for clicks and meaner works better.

So, he posted a video on Twitter showing his screamed tirade on the Senate floor, followed by the old Republican’s muddled answer, followed by nervous laughter from State Senators who’d just witnessed the latest political spectacle in Raleigh.

And that wasn’t the whole story.

The young Democrat had edited what happened next out of his tweet: The immediate, and thoughtfully gentle, reminder from the Senate President, Phil Berger, to both combatants that they had just violated the Rules of the North Carolina Senate.

In the final days of the Senate Session tirades and tweets ruled. And civility flew right out the window.

The Raleigh Swamp!

The bill was simple: It cut government regulations on small businesses (which Republicans liked); it fixed regulatory problems to help cities (which Democrats liked); and it helped small towns struggling to repair aging pipes and broken pumps that provide drinking water to families (which everyone liked).

After the bill sailed through both the State House and State Senate – with, for once, both Republicans and Democrats saying, Amen – it seemed certain to be signed into law.

But, then, the unexpected happened: Governor Cooper vetoed the bill.

Next politics broke out.

Questions like whether it was a good bill or bad bill fell by the wayside.

Not one Democratic Senator was willing to say to the Governor, Look, this is a good bill. I voted for it. No veto this time.

Politics won. And the bill bit the dust.

There’s not just a ‘Swamp’ in Washington.

There’s one in Raleigh.

And it’s time to drain it, too!

Bureaucratic Bungling or Something Worse?

After years of prudent spending and tax cuts that spurred the economy, when Governor Cooper took office, the Department of Transportation was rolling in cash to build highways.

Governor Cooper’s appointees decided to spend it all – which is the single activity Democrats excel at.

After a few months, with the coffers emptying, DOT decided it would borrow another $300 million using the Build NC Bonds.

Now, to issue a bond you must tell people about any pending financial liabilities you have that may get in the way of your repaying the bonds. And for DOT that’s where things got sticky. Because back in 2016 the State Supreme Court had issued a unanimous decision against DOT in the ‘Map Act’ lawsuit, saying DOT had taken private property without compensating people and it had to pay everyone back for their losses.

When DOT issued those bonds, it admitted it had already paid $220 million to settle those claims – which was true – but then added any future claims were not ‘material’. In other words, they told the bond buyers that future Map Act settlements would be too minor to impact DOT’s ability to repay the $300 million.

DOT borrowed and spent the $300 million then got a shock: It suddenly found it was strapped for cash with red ink piling up.

Seeking a bailout, DOT bureaucrats rushed over to the legislature but this time they told a different story: They said they needed $360 million dollars because they’d been ambushed by ‘unexpected’ Map Act payments.

Imagine if you went down to your bank and borrowed $100 thousand to buy a house but hid the fact that you owed another $100 thousand to settle a lawsuit. You’d have some explaining to do.

So how does DOT get away with saying in June that Map Act payments were not material to repaying a $300 million-dollar bond, but then, four months later, telling the legislature it urgently needs $360 million due to Map Act payments?

At this rate, The Swamp may drain itself.

A Trust Fund, A Couple of Billion Dollars and The Raleigh Swamp

In the private sector, few things will land you in hot water quicker than dipping into someone else’s trust fund to get your hands on cash – we’ve all heard about lawyers who took money out of a trust fund then, in the blink of an eye, ended up disbarred.

The state of North Carolina has what’s called the Highway Trust Fund – a public version of a private trust fund – which has money sitting in it that belongs to taxpayers across North Carolina.

Now, under state law, the money in that trust fund can only be used to do two things: 1) Pay for long-term road building; and 2) In emergencies, when DOT lands in a financial jam, for loans to bail DOT out.

However, those loans can only be made with the approval of the State Treasurer. He’s the Keeper of the Public Purse.

Two years ago, after Governor Cooper was elected, DOT went on a spending spree – it spent $1.8 billion it had in the bank, borrowed $300 million (using bonds) more. As part of all that, the Governor’s folks borrowed $1.1 billion from the Highway Trust Fund and spent it.

What did the Treasurer say about that loan? Nothing. DOT just raided the trust fund without his approval.

Next, after blowing through billions in cash, DOT got a shock: It discovered it had spent too much. It was in a ditch. Watching red ink pile up.

So what did the big spenders at DOT do? They stopped needed projects and laid off hundreds of workers so their legislative allies would give them another $660 million to spend. Immediately.

I know some people hate the term but that’s why it’s called ‘The Raleigh Swamp.’

That’s How Government Works

Two years ago, when Governor Cooper took office the Department of Transportation (DOT) was rolling in cash – $2 billion in cash.

The Governor promptly decided he ought to spend the money as fast as possible – because having less cash on hand meant DOT would be able to borrow another $300 million (using Build NC bonds) and spend it too.

Democrats excel at spending money and cash flew out the door and the Department borrowed the $300 million – then DOT got a shock: It found it had overspent. It was in a ditch. With red ink piling up.

DOT said, We’ll lay off workers and stop road repairs. Then DOT added, By the way, none of this is our fault. We got hit with unexpected bills like the Map Act lawsuit. The department’s allies in the legislature launched a bill to give DOT another $660 million – immediately.

The Map Act is the lawsuit DOT lost because it had taken people’s private property without compensating them.

The pitch supporting DOT sounded good but, when you scratched the surface, it didn’t hold water. Because DOT had lost the Map Act lawsuit three years ago – so it had known about those liabilities before it went on its spending spree.

Spend and spend then borrow and spend more and then, when you land in a ditch, come up with an excuse and say, Don’t blame us. Just give us another $660 million to spend.

And, of course, if the legislature says, Okay. Here’s $660 million. No problem – DOT is likely to just keep on spending like there’s no tomorrow and history will repeat itself.

That’s how government works.

And another reason to drain the Raleigh Swamp.

Cash Management and the Raleigh Swamp

The state Highway Department blew through a whopping $1.8 billion in cash in just 20 months – and now it’s laying off hundreds of workers and cancelling road repairs people need.

The DOT says its cash problems are due to a lawsuit it lost. Let’s look at two facts about that lawsuit: First, the NC Supreme Court ruling in that case goes back three years to June of 2016 – before DOT went on its spending spree.

Second, DOT lost the lawsuit because it violated property owners’ rights (trying to take their land). Our highest court stated that DOT must ‘determine the value of the loss of these fundamental rights’.

Bottom line: DOT knew about the lawsuit but spent the $1.8 billion anyway – and, now, here come the demands, ‘Give DOT more cash.’

Let’s drain the Raleigh Swamp, too.

Senator Andy Wells to Run for Lieutenant Governor

Statement by Senator Andy Wells:

“Earlier this year, in a single month, 130,000 illegal immigrants poured across our border. But, here in North Carolina, Democratic sheriffs in our biggest counties refused to cooperate with federal law enforcement to deport illegals who were arrested for crimes. It’s crazy.

“Republicans in the General Assembly passed a bill to stop Sanctuary Sheriffs. But Governor Cooper vetoed the bill.

“Governor Cooper also vetoed the budget Republicans passed – because he wanted to spend more. A lot more.

“But, this time, there is good news: With no budget the State continues to spend the same amount it did last year. Spending can’t go up. So Governor Cooper can’t increase spending.

“I am running for Lt. Governor to stand up for conservative principles – for less government, less spending and for stopping Sanctuary Sheriffs – just as I have in the Senate.”